Jamaica: Selected Issues
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International Monetary Fund. Western Hemisphere Dept.
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Publication Date:
15 Feb 2022
eISBN:
9798400203459
ISBN:
9798400203459
Language:
English
Keywords:
IMF staff calculation; wage bill; FRL debt target; exchange operation; IMF FAD Expenditure Assessment Tool; Income and capital gains taxes; Caribbean
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1. Jamaica has a long history of fiscal and debt crises. Between 1972 and 1980 GDP per capita declined by almost 30 percent. The decline was partly the result of external shocks (including the two oil crises and a decline in bauxite prices) but policies also played a role. Government spending rose from 23 percent of GDP in 1972 to 45 percent of GDP in 1978 resulting in large fiscal deficits of 15 percent of GDP. Much of the debt was foreign-currency denominated, and when the exchange rate depreciated sharply in the early 1980s, the debt-to-GDP ratio shot up to near 200 percent of GDP.

Abstract

1. Jamaica has a long history of fiscal and debt crises. Between 1972 and 1980 GDP per capita declined by almost 30 percent. The decline was partly the result of external shocks (including the two oil crises and a decline in bauxite prices) but policies also played a role. Government spending rose from 23 percent of GDP in 1972 to 45 percent of GDP in 1978 resulting in large fiscal deficits of 15 percent of GDP. Much of the debt was foreign-currency denominated, and when the exchange rate depreciated sharply in the early 1980s, the debt-to-GDP ratio shot up to near 200 percent of GDP.

Fiscal Strategy for Jamaica: Reducing Public Debt and Restoring Fiscal Buffers

A. Background—A History of Fiscal Crises, 1970–2009

1. Jamaica has a long history of fiscal and debt crises. Between 1972 and 1980 GDP per capita declined by almost 30 percent. The decline was partly the result of external shocks (including the two oil crises and a decline in bauxite prices) but policies also played a role. Government spending rose from 23 percent of GDP in 1972 to 45 percent of GDP in 1978 resulting in large fiscal deficits of 15 percent of GDP. Much of the debt was foreign-currency denominated, and when the exchange rate depreciated sharply in the early 1980s, the debt-to-GDP ratio shot up to near 200 percent of GDP.

uA001fig01

Fiscal Balance

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: WEO databases, April 2021 and October 1993.Note: Prior to 1990, data is from the central government, but from 1990, data is from the general government.

2. A banking crisis in the mid-1990s led to a fiscal and debt crisis. During the 1980s the financial sector had been liberalized, but without adequate strengthening of the regulatory and supervisory framework. The result was a boom in private sector credit, and the emergence of new large financial conglomerates, including of banks and life insurance companies. From 1991 onwards (when inflation reached 80 percent), monetary policy was tightened, and real interest rates rose sharply. Real estate prices fell, which created problems for life insurance companies which had invested heavily in this sector and the banks associated with them. In 1996, a banking crisis ensued. A blanket deposit guarantee helped restore stability but added almost 40 percent of GDP to the debt. High interest rates and rising debt then led to a renewed vicious cycle, with interest payments peaking at 17 percent of GDP in 2009 and debt reached 142 percent of GDP.

uA001fig02

Interest Expenditures

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: WEO database, October 2021.
uA001fig03

General Government Debt

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: Haver Analytics.

B. The Great Adjustment During 2009–2019

3. Between FY2009/10 and FY2019/20, and in the context of two IMF programs, Jamaica improved its fiscal balance by 12.4 percentage point of GDP, from a deficit of 11.2 percent to a surplus of 1.2 percent (Figure 1 and Table 1).

Figure 1.
Figure 1.

Jamaica: Revenue and Expenditures, 1990–2020

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: WEO database, October 2021; Jamaican authorities; and IMF staff calculations.
Table 1.

Jamaica: Fiscal Balances, FY 2010–2019

(In percent of GDP)

article image
Source: Jamaican authorities and staff estimates.

4. Most of the improvement in the fiscal balance was due to a reduction in interest payments, which fell by almost 11 percentage points to 6.3 percent of GDP. The primary balance increased by only 1.4 percent points. The reduction in interest payments was not just the result of the decline in debt. Jamaica also undertook two domestic debt exchange operation (in 2010 and 2013), which reduced interest payments and extended the maturities of the domestic securities). The government also bought back debt owed under the Petro caribe agreement which further reduced public debt. The low global interest rate environment further benefitted Jamaica (Figure 1).

  • Revenue increased by 3.1 percentage points of GDP. The revenue measures included an increase in the general consumption tax (GCT) rate; and an increase in the personal income tax rate for high income earners.

  • Primary expenditure increased by 1.8 percentage point. Several expenditure measures were implemented to contain spending categories, including a nominal freeze on wages and purchase of goods and services. But overall primary spending increased as program spending, especially on the social safety net program (PATH) was increased.

Overall, by FY2018/19, the primary balance had increased to 7.5 percent of GDP, the overall balance to 1.2 percent of GDP and public debt had declined to 94 percent of GDP (Table 1).

5. In short, prior to the pandemic, Jamaica had made good progress in stabilizing its macroeconomy. Macroeconomic stability was restored, foreign reserves were built up, and the current account deficit reduced. Access to domestic and international financial markets had been restored,1 buoyed by upgrades in credit ratings and high business confidence indicators. Fiscal discipline and proactive debt management helped place public debt on a downward trajectory.

uA001fig04

EMBIG Spreads

(Basis Points)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: Bloomberg.

C. The Covid Crisis and the Impact on Public Finances

6. The Jamaican economy was severley affected by the pandemic. An early lockdown in the Spring of 2020 helped contain the number of Covid-19 cases but the impact on the economy was severe, especially the tourism and transport sector, with real GDP shrinking by 10 percent. According to World Bank, the headcount poverty rate is estimated to have increased to 23 percent in 2020 (from 19 percent in 2017).

uA001fig05

Sectoral Growth Rates

(In percent, year on year)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: WEO database, October 2021.Note: Sectoral growth rates are calculted from 2019 Q4 to 2020 Q4. Wholesale 8i Retail Trade sector includes the installation and repair of machinery.

7. The fiscal rule was suspended for one year. As stipulated under the Fiscal Responsibility Law (FRL), the fiscal rule can only be suspended in case of a severe economic downturn, natural disaster, health and other disasters, and public emergencies, after an independent verification by the auditor general that the fiscal impact of the event exceeds the threshold of 1.5 per cent of GDP, and approval by parliament. The target date for reducing the public debt to 60 percent of GDP was shifted back two years, to FY 2027/28.

uA001fig06

Central Government Balance

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: Bank of Jamaica and IMF staff calculations.

8. The fiscal balance turned into a deficit in FY2020/21. Tax revenues (tax to GDP) in 2020 were 1½ percent of GDP lower relative to 2019, due to revenue shortfalls from cyclical slowdown (notably in travel and accommodation taxes), cuts in the GCT rate and increased tax credits to SMEs. Spending of nearly 1.6 percent of GDP was used to support the COVID Allocation of Resources for Employees (CARE) program, aimed at providing temporary income support to workers, grants to businesses, and social assistance payments to vulnerable segments of the population exacerbated by the crisis. Accordingly, the overall fiscal deficit for FY2020/21 reached -3.1 percent of GDP (versus surplus of 0.9 percent of GDP in FY2019/20), and the debt to GDP ratio increased by about 14 percentage points to 108 percent in FY 2020 (mainly due to the decline of GDP and currency depreciation which increased the domestic currency value of foreign-exchange denominated debt). The authorities primarily used the existing fiscal buffers (government deposits from divestment) to finance the increase in fiscal deficit. Additional budgetary financing was also provided by IFIs (WB, IDB and CDB).

uA001fig07

Central Government Current Spending

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: Bankof Jamaica and IMF staff calculations.

D. Revenue System: History of Tax Reforms and Current Shortcomings

History of the Tax System

9. During the1960s and 1970s, tax rates were raised, and the system became very complex. Income taxes were raised several times and by 1985 there were six tax brackets with a zero threshold and the highest rate set at 80 percent. The tax system became very complex. For example, the corporate income tax regime offered preferential terms and incentives to the agricultural sector to promote local production.

10. In the 1980s and 1990s taxes were simplified, and rates reduced. This included the simplification of the personal income tax (PIT) with a single rate of 33⅓ per cent and the implementation of the general consumption tax (GCT). In 1990s, the PIT rate was further reduced to 25 percent. The agricultural bias was also removed from the corporate income tax structure. The standard GCT rate is currently at 16.5 percent (lowered to 15 percent during the pandemic) with a lower rate of 10 percent for the tourism sector.

11. In the 2000s the tax base was broadened by repealing tax incentives and lowering income tax thresholds. The exemption threshold for the personal income tax was raised to J$1.5 million in 2017. The marginal tax rate for earnings above J$6 million was increased from 25 to 30 percent. The 2013 reforms repealed a wide array of incentives and exemptions for entities ranging from hotels to industry to charities to the government itself. In addition to improving tax policy, the government also undertook numerous measures to improve tax and customs administrations. These include introduction of the ASYCUDA,2 improved collection of arrears, expansion of e-filing for large taxpayers, and improved audit capacity in the Large Taxpayers’ Office (LTO). At present, in addition to PIT, several payroll taxes (7.25 percent) related to pensions, education and housing are also applicable.

Table 2.

Jamaica: Payroll Tax Rate

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Source: Ministry of Finance and Planning, Jamaica.

12. After a series of tax reforms in the last decade, the income tax system has become more progressive. The lowering of the income tax threshold and the introduction of a top rate for higher earners has increased the progressivity of the tax system. The standard PIT rate is 25 percent and for high earners it is 30 percent. The CIT rate is 33.3 percent. The PIT rates are comparable to other LAC countries, but top PIT rates are relatively high (see Appendix Table 1; IBFD 2011). The income tax threshold (JD$1.5 million) is twice the per-capita GDP which indicates that many individuals do not pay tax. When combined with payroll taxes for social programs (7.25 percent), the “tax wedge” is about 16 percent at lower income levels. At higher income levels the wedge increases to 30 percent3.

uA001fig08

PIT and Contributions

(In percent of total worker’s compensation)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: IMF staff calculations.

13. The composition of tax revenue has been shifting from direct to indirect taxes. The tax policy reforms aimed to rebalance the tax system from direct taxes to indirect taxes as the latter was more efficient and growth friendly. The share of direct taxes in total tax revenue has declined from 38 percent in FY2010/11 to 32 percent in FY 2020/21. However, when compared to other countries in the Caribbean region, Jamaica share of direct taxes in tax revenue is still relatively high.

uA001fig09

Tax Revenue

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: Bank of Jamaica and IMF staff calculations.

Current Shortcomings

14. Jamaica’s tax regime is complicated, with relatively high rates, a narrow base, heavy reliance on direct taxes, and numerous exemptions and waivers. Both direct and indirect taxes are complex. The main tax instruments are consumption taxes (general consumption tax and special consumption tax), income tax, a stamp duty, general and customs duties, transfer tax, property tax, education tax, travel tax, and betting and gambling tax. Statutory rates are relatively high but yield relatively little revenue given the high level of informality and weak tax compliance. Despite the recent removal of several GCT exemptions, the uniformity of the tax code is adversely affected by numerous tax incentives, exemptions, and discretionary tax waivers.

15. There is limited room to mobilize additional revenues by reducing tax exemptions and discretionary tax waivers. A recent government report estimates that tax expenditures have fallen to 2 percent of GDP in 2019 (from 9 percent in 2008), with tourism, mining, and food items accounting for two thirds of tax expenditures. Discretionary tax waivers are only used for charitable causes and capped at JD$120 million annually (less than 0.01 percent of GDP). Thus, the revenue potential from tax expenditures is low. The potential yield from major categories are: reduced VAT rate for tourism (0.25%), zero rating on food items and health care (0.21%), tax incentives for mining sector (0.07%). Reviewing and streamlining tax exemptions could help in curbing tax expenditures that are inadequately targeted.

uA001fig10

Central Government Total Spending

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: Jamaican authorities and IMF staff calculations.

16. Given the large share of the informal sector and the low economic growth, a further shift toward indirect taxes may be desirable. Jamaica has a large informal sector, with weak tax administration and weak tax compliance, and direct taxes may not yield much in tax revenue. Many countries in the region collect a large share of tax revenues from indirect taxes (Figure). Also, indirect taxes are more growth friendly than direct taxes. Of course, tax incentives, exemptions and discretionary waivers can narrow the tax base for indirect taxes and as such loses from tax expenditures need to be minimized.

uA001fig11

Direct Taxes in 2020

(In percent of tax revenues)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: IMF country reports and staff calculations.

E. Expenditure Measures

Brief Overview of Historical Trends in Spending

17. Public spending has steadily increased since 2015. Public spending during FY 2009–19 has been a story of two periods. (Table 3). During FY2009–14, primary spending declined by 2.6 percent of GDP even though program spending increased modestly. Bulk of the decline in total spending came from lower interest payments (from lower debt and lower global interest rates) and the overall balance improved by 10.7 percent of GDP. On the contrary, during FY2015–19 primary spending rose by 4.7 percent of GDP, mainly from program spending and capital expenditures. Interest payments fell modestly by 1.8 percent of GDP. In FY2020/21, primary spending further increased by 2.7 percent of GDP due to the sharp contraction in GDP and higher spending on Covid-19 related measures, and the overall balance declined to -3.1 percent of GDP.

Table 3.

Jamaica: Public Spending FY 2009/10–2020/21

(In percent of GDP)

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Source: Jamaican authorities and staff projections.

Current Shortcomings

18. The wage bill is relatively high, limiting the scope for capital spending. Jamaica’s wage bill (11 percent of GDP) is above the LAC average. Wages account for one-third of public expenditures, while the share of capital spending and social spending (CARE and PATH) is 8 percent and 6 percent, respectively.

uA001fig12

Wage Bill

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: IMF FAD Expenditure Assessment Tool (EAT), IMF FAD Government Wage Bill and Employment Dataset, IMF FAD Public-Private Wage Premium Dataset, and World Bank.

19. Infrastructure needs are significant. The level of investment has been declining, and the quality of infrastructure is relatively low.

Figure 2.
Figure 2.

Jamaica: Investment and Infrastructure

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: IMF FAD Expenditure Assessment Tool (EAT), World Economic Outlook, World Development Indicators, IMF Investment and Capital Stock dataset, and World Economic Forum.Note: LAC, EMEs, and OECD aggregates are averages.

20. There is scope to make existing expenditure more effective. Spending on primary and secondary education, for example, is in line with other countries in Latin America and the Caribbean, but education test scores and the number of years of schooling are relatively low.

Figure 3.
Figure 3.

Jamaica: Efficiency of Expenditure in Health and Education

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: IMF FAD Expenditure Assessment Tool (EAT), World Bank, and World Health Organization.Note: LAC, EMEs, and OECD aggregates are averages.

F. Completing the Restoration of Fiscal Sustainability

21. Once the pandemic is over, adherence to the fiscal responsibility law targets will be needed to preserve debt sustainability. The government aims at a fiscal surplus of 0.3 percent of GDP for FY2021/22 and the next three fiscal years. IMF staff estimates suggest that a surplus of 0.3 percent of GDP is not high enough to attain the FRL debt target of 60 percent of GDP by 2027/28, and in later years higher fiscal surpluses would be needed (see Figure). Running a surplus of 1 percent of GDP from FY2023/24 onwards could avoid the need for much sharper adjustments later on. Jamaica will be facing gross financing needs of between 4–6 percent of GDP over the medium term.

22. Publication of a fiscal framework that extends to FY2027/28 and shows how debt reduction will be achieved would further increase the credibility government’s fiscal target. This would go beyond the requirements of the Financial Administration and Audit Act Regulations, which only require publication of a fiscal framework for the next four fiscal years. The soon to be established fiscal council will further strengthen policy credibility. The law to establish a Fiscal Council was passed recently and the government is now working on the composition of the council. The task of the council would be to ensure that Government’s policy commitments are consistent with the Fiscal Responsibility Law.

23. Lower interest payments from lower debt and by retiring expensive debt would create fiscal space for growth enhancing expenditures. Lower debt and the maturing of the (high interest-rate) bonds from the debt exchange operation of 2010 and 2013 would further reduce interest payments and create more fiscal space for spending in growth critical areas. Many infrastructure projects were nearing completion and would provide fiscal space to undertake new projects.

Possible Revenue Measures

24. A fiscal surplus of 0.3 percent would not be enough to get to FRL debt target of 60% of GDP by FY 2027 and would necessitate sharp increases of the surplus in later years. Raising the surplus to 1.0 percent from FY 2023/24 onward would avoid the need for sharper adjustment in later years. Unwinding of Covid-19 related GCT rate cuts once the pandemic is over could yield 0.7% of GDP and help attain the debt target.

uA001fig13

Fiscal Developments

(In percent of GDP)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: Ministry of Finance and IMF staff estimates.

25. Tax expenditures are about 2% of GDP, so the potential is low. However, minimizing losses from tax incentives would help broaden the tax base. An in-depth rationalization of the cost and effectiveness of all tax incentives would be useful, while continuing to improve the methodology for measuring tax expenditures. A close monitoring of “specialized zones or single entity” SEZs would help prevent transfer pricing and migration of existing domestic businesses.

26. There is scope to further strengthen tax administration. A key reform of the Tax Administration of Jamaica (TAJ) has been the strengthening of the Large Taxpayers’ Office (LTO) which yields half of total Corporate Income Tax (CIT) revenues. Amendments to the Revenue Administration Act have allowed TAJ to access third-party information to cross-check taxpayers’ information and activities. TAJ was empowered to collect outstanding arrears and seize and sell taxpayers’ property. Reforms could address inaccurate taxpayer data, low on-time filing and payment rates, delays in the payment of GCT refunds, and low quality of audits leading to high rates of objections. In terms of tax policy, a continued broadening of the GCT base will not only reduce the policy gap but also improve compliance as exemption loopholes are closed.

Potential Expenditure Measures

27. The new wage structure is more transparent, standardized and equitable, but it will also further add to the wage bill. The new public sector compensation structure is a long-overdue reform. It could make the wage structure more transparent, standardized and equitable, and reduce the large differences in pay with the private sector. But it will also further add to the wage bill, which is already one of the highest in the region, reducing the room for other critical expenditures.

28. Increasing efficiency in the provision of public services could facilitate a reduction in the size of the public workforce and help offset the costs of the new wage structure. A reassessment of the various roles and responsibilities of government, as well as increasing efficiency in the provision of public services, could facilitate a reduction in the size of the public workforce, and could help offset the costs of the new wage structure. The figure indicates that General government employment in Jamaica is high relative to other countries in the region.

uA001fig14

Government Wage Bill and Employment

(Latest value available)

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: IMF FAD Expenditure Assessment Tool (EAT), IMF FAD Government Wage Bill and Employment Dataset, and IMF FAD Public-Private Wage Premium Dataset, World Bank.Note: Dashed lines indicate LAC medians for wage bill and general government employment. EMEs and OECD aggregates are medians.

29. Undertaking Public Investment Management Assessment (PIMA) would help identify key areas where investment efficiency could be improved.

30. Minimize fiscal costs through better management of potential fiscal risks from Public bodies and public private partnerships. In Jamaica, the main sources of fiscal risks are contingent liabilities from public bodies and public private partnerships (PPPs). A comprehensive assessment of contingent liabilities of the consolidated public sector would be useful. PPPs can be useful to access private sector expertise and efficiency, but they also come with risks. The selection process needs to be transparent, with clear rules on the accounting for risks as well as the monitoring of the execution of the projects.

G. Conclusion

31. Jamaica has a long history of fiscal and debt crises. In the decade preceding the pandemic, Jamaica made good progress in restoring macroeconomic and financial stability. The economy was heavily affected by the pandemic, which severely affected its fiscal position. However, the availability of fiscal buffers built-up during the pre-crisis period and the policy response to the crisis ensured that the pandemic related shock was not followed by a fiscal, financial, or balance of payments crisis.

32. As the crisis recedes and the recovery advances Jamaica should restart debt reduction and rebuild buffers, given high susceptibility to external shocks and risks to debt sustainability. A fiscal surplus of 0.3% of GDP is too low to attain the FRL debt target of 60 percent of GDP by FY2027. Raising the fiscal surplus to about 1 percent of GDP in FY 2023/24 and beyond would help attain the debt target and avoid the need to raise the fiscal surplus much sharper in later years to meet the debt target. Reverting the VAT tax cut that occurred during the pandemic would help towards that goal.

33. Increasing revenue and re-orientation of expenditure could free additional resources for growth-enhancing expenditures. Tax expenditures are about 2% of GDP, so the potential is low. However, minimizing the losses from tax expenditures could help broaden the tax base. Given the large share of the informal sector and the low economic growth, a further shift toward indirect taxes may be desirable. Indirect taxes such as VAT have the greatest revenue generating capacity and are the most efficient. Jamaica’s wage bill is high (relative to countries in the region) and is crowding out growth-critical spending. The new wage structure will likely increase it further. Increased efficiency in the provision of public services could facilitate a reduction in the size of the public workforce and help offset the costs of the new wage structure. Lower interest payments (from lower debt) could also create fiscal space for much needed growth critical spending.

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Appendix 1. International Comparison of Main Taxes

Table AI.1.

International Comparison of Main Taxes

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Source: IBFD, IMF. Information is indicative only and must be interpreted within the context of each country’s income tax laws. Base might be different, as well as thresholds and various trigger conditions.

Regular gains from the disposal of real property that is part of trading stock are taxed as business income.

25% if paid out of profits that are exempt/have not been taxed; 0% under certain conditions.

42.5% rate applies to dividend income exceeding GBP 150,000

28% generally for higher income earners; 10% for gains qualifying for entrepreneurs relief; Short‐term gains part of business income

A 5% withholding at source is collected on commercial importers.
1

The issuance of the 2045 global bond in September 2019 —at a historically low yield—reflects Jamaica’s restored credibility in international markets.

2

ASYCUDA is the UNCTAD Automated System for Customs Data. It is an integrated customs management system for international trade and transport operations in a modern automated environment.

3

The “tax wedge” shown in the Figure, calculated as the ratio of total wage taxes and social contributions divided by total employer costs (including wages), measures the burden of labor tax and social contributions on formal employment incentives. Most formal employees with wage income below the J$1.5 million face a marginal tax rate of about 7.25 percent—the sum of the various social charges (Table 2), excluding the HEART charge (which applies only to larger employers). Employees above the PIT threshold face a marginal tax rate of about 25 percent which increases to 30 percent for high earners.

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Appendix I. Complexity Determinants

Table AI.1

Regional Classification of Countries

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Table AI.2

Determinants of Complex Exports

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Notes: * p<0.1, ** p<0.05, *** p<0.01. Panel regressions based on Hausman and Taylor (1981) technique with groups consisting of all combinations of reporter and partner countries in UN Comtrade database. Observations are non-overlapping 5-year averages within the 1962–2018 period, depending on data availability. Regression specification based on equation (7). Multilateral resistance terms and partner country’s policy variables included (coefficients not reported). Dependent variable is the logarithm of the value of complex exports, defined as exports of products with a Product Complexity Index (PCI) above zero according to Hausmann and others (2013).
Figure AI.1
Figure AI.1

Export Complexity and Proximity to Other Markets

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: Salinas (2021).
Figure AI.2
Figure AI.2

Export Complexity and Governance

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: Worldwide Governance Indicators (World Bank) and IMF staff calculations.Note: The accuracy of these indices can be biased by experts’ views.
Figure AI.3
Figure AI.3

Export Complexity and Education

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: I luman Development Report (United Nations).
Figure AI.4
Figure AI.4

Export Complexity and Infrastructure

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: Logistics Performance Index (World Bank).
Figure AI.5
Figure AI.5

Export Complexity and Import Tariffs

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: World Integrated System (World Bank).
Figure AI.6
Figure AI.6

Export Complexity and Remittances

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: World Development Indicators (World Bank).
Figure AI.7
Figure AI.7

Export Complexity and Crime

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Source: World Development Indicators (World Bank).
Figure AI.8
Figure AI.8

Export Complexity and Labor Costs

Citation: IMF Staff Country Reports 2022, 044; 10.5089/9798400203459.002.A001

Sources: U.S. State Department and Salinas (2021).
1

International trade theory and empirics indicate that remote countries are expected to have lower exports per capita.

2

Horizontal” policies target broad sectors by improving their business environment, for example by improving governance, education, or infrastructure.

3

industrial policy is defined as government intervention in a specific sector which is designed to boost the growth prospects of that sector.

4

As suggested in a recent review of the empirical evidence on the effectiveness of these policies Rodrik (2019), it is too early to suggest that research on the effectiveness of industrial policies has taken off. For sure, there is yet no cross-country statistical evidence supporting their contribution.

5

East Asian Emerging Markets have a high PM because they are part of the large East Asian economic agglomeration, including the large Japanese, South Korean, and Chinese economies. Besides the relatively short distance among them, their connection is sea-based (a most efficient means of transportation).

6

Note, however, that regression analysis in Table A.2. suggests there is a negative relation between population size and per capita exports of non-tourism services.

7

Risk-based inspection systems are already in place, but IMF technical assistance experts and government officials agree their use could be extensive.

8

Panel Figure A.1. shows a strong negative relation between the minimum wage per capita ratio and per capita exports.

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Cover IMF Staff Country Reports
Jamaica: Selected Issues
Author:
International Monetary Fund. Western Hemisphere Dept.
Volume/Issue:
Volume 2022: Issue 044
Publisher:
International Monetary Fund
ISBN:
9798400203459
ISSN:
1934-7685
Pages:
40
DOI:
https://doi.org/10.5089/9798400203459.002

Fiscal Balance

(In percent of GDP)

Interest Expenditures

(In percent of GDP)

General Government Debt

(In percent of GDP)
Figure 1.

Jamaica: Revenue and Expenditures, 1990–2020

EMBIG Spreads

(Basis Points)

Sectoral Growth Rates

(In percent, year on year)

Central Government Balance

(In percent of GDP)

Central Government Current Spending

(In percent of GDP)

PIT and Contributions

(In percent of total worker’s compensation)

Tax Revenue

(In percent of GDP)

Central Government Total Spending

(In percent of GDP)

Direct Taxes in 2020

(In percent of tax revenues)

Wage Bill
Figure 2.

Jamaica: Investment and Infrastructure
Figure 3.

Jamaica: Efficiency of Expenditure in Health and Education

Fiscal Developments

(In percent of GDP)

Government Wage Bill and Employment

(Latest value available)
Figure AI.1

Export Complexity and Proximity to Other Markets
Figure AI.2

Export Complexity and Governance
Figure AI.3

Export Complexity and Education
Figure AI.4

Export Complexity and Infrastructure
Figure AI.5

Export Complexity and Import Tariffs
Figure AI.6

Export Complexity and Remittances
Figure AI.7

Export Complexity and Crime
Figure AI.8

Export Complexity and Labor Costs