‘Not abnormal or suspicious’… Finance Minister responds to concerns raised by Fiscal Commissioner

Finance Minister Fayval Williams has responded to concerns raised by Fiscal Commissioner Courtney Williams that the Government’s nominal Gross Domestic Product (GDP) growth projection and GDP deflator are inconsistent with current inflation trends and with historical post disaster price behaviour.

Opening the 2026/2027 Budget Debate in Parliament on Tuesday, the finance minister said she respects the views of the Fiscal Commissioner, but argued that it is incorrect to conflate the Consumer Price Index with the GDP deflator.

“Madam Speaker, the Consumer Price Index, CPI, measures the change in the cost of living for consumers. This figure includes the cost of imports and locally produced goods, while the GDP deflator measures how the prices of everything produced within Jamaica have changed,” she said.

The finance minister contended that while CPI and GDP deflator usually track together, the post-hurricane environment from Hurricane Melissa creates a "wider than usual variance" between the two due to localized scarcity and domestic production shifts.

“In normal times, they track closely and there is little difference. However, in the aftermath of an event like a Category Five hurricane, where domestic production in certain areas has been decimated with scarcity influencing prices of locally produced goods, and there is a surge in demand for reconstruction from citizens and businesses, we can have a wider than usual variance between CPI and the GDP deflator. It is not abnormal or suspicious,” she said.

The Fiscal Commissioner, in his Economic and Fiscal Assessment Report, said that the fiscal year 2026-2027 nominal GDP growth projection of 9.2 per cent, which implies a GDP deflator of 9.7 per cent, “appears inconsistent with current inflation and historical post-disaster price behaviour. Inconsistency creates a significant risk of overstating nominal GDP, over-projecting revenue and understating debt ratios.”

The Minister, in the meantime, said the Fiscal Commissioner was correct when he pointed out that the government's reconstruction activity in Jamaica has historically been delayed, and that capital underspending at the level of government is an issue.

But she said GDP deflator projection does not rest entirely on government-executed reconstruction, but is driven by private sector activity, financed by insurance payouts and foreign direct investment, which is “in full bloom.”

“The primary driver of near-term reconstruction price pressure will be the private sector by way of insurance-financed hotel refurbishment, household rebuilding, and foreign direct investment in damaged commercial infrastructure. That activity does not pass through our procurement system, and it will not wait. That activity is in full bloom all over Jamaica,” she said.

- Sashana Small

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