Janiel McEwan | The cost of running Jamaica: when fiscal discipline must become a way of governing

Standfirst: The Government’s October spending restrictions are a necessary signal, but a signal is not a system. Jamaica cannot keep discovering fiscal discipline in the middle of a crisis. It must build it into how the State plans, spends, and accounts for every dollar.

The circular from the Cabinet Secretary was brief and unambiguous. Public-sector entities were instructed to “pause the acquisition of assets and the entering of any new leases until further directives are received”.

Assets already ordered but not yet paid for were to be held. Hotel retreats were paused. A directive on end-of-year activities was promised.

Days earlier, an October 21 memorandum had instituted an immediate moratorium on official overseas travel across the public sector until March 31, 2027, applying even where travel is fully funded by external organisations.

The Government’s rationale is not frivolous.

The Office of the Prime Minister has stated plainly that Hurricane Melissa placed “significant demands on Jamaica’s fiscal resources and public sector capacity”, and that the Government must “manage expenditure strategically, counterbalancing increased spending on recovery and growth with savings and tighter controls elsewhere”.

The Prime Minister has acknowledged the continuing hardship of families still without secure roofs, and has expressed dissatisfaction with the pace of recovery.

The fiscal pressure is real: data from the Ministry of Finance show a revenue shortfall of J$31.3 billion for April to August 2026, with tax collections J$21.7 billion below target. The Government has responded by reducing total expenditure by J$34.5 billion, including a nearly J$30 billion cut to recurrent spending.

But a restriction is not a saving. An underspend is not an efficiency gain. And a lower expenditure bill is not automatically evidence of better economic management.

Jamaica’s fiscal problem is not that the Government has suddenly discovered restraint in October 2026. It is that the cost of running the State has been rising faster than the economy that must sustain it, and the institutional machinery for questioning that cost has been too weak for too long.

THE ARITHMETIC OF A STATE THAT COSTS MORE

The most uncomfortable numbers are not about travel or retreats. They are about pay and rent. Since 2021-22, the last year before compensation restructuring began, the central government wage bill has risen from J$242 billion to J$522 billion, an increase of 116 per cent. Over the same period, nominal GDP increased by 39 per cent, while real output increased by just 2.6 per cent. Compensation of employees has moved from 9.5 per cent of GDP to 14.8 per cent.

Before restructuring, 36 cents of every tax dollar went to public wages. It is now 49 cents, and the Independent Fiscal Commission has reported that wages and salaries consume more than half of all tax revenues collected, reaching 54.4 per cent in the 2025-26 financial year.

This is not an argument that public servants are overpaid. The restructuring was necessary because public-sector wages had fallen behind, and fair compensation is essential to attract and retain capable people. The problem is that the bargain was only half-delivered. The pay side has been honoured. The productivity side has not.

A Jamaican worker produces about US$8.81 of GDP per hour, less than half the Caribbean average of US$20.50, and World Bank data show that output per worker was lower in 2024 than in 2015. The skills are present. The systems that allow those skills to produce more are not.

As Aubrey Stewart and Keenan Falconer put it in their October 25 commentary in The Gleaner, “Jamaica cannot spend more than J$500 billion annually on public-sector compensation without being able to tell taxpayers what that expenditure produces.”

The rental bill tells a similar story. Central government expenditure on rent for ministries, departments, and agencies has grown from J$5.1 billion in 2019-20 to J$13.6 billion in 2025-26, an increase of about 166 per cent, and is projected to reach J$16.9 billion by 2029-30.

The NaRRA lease of approximately J$115 million annually has attracted public attention, and rightly so. But as Stewart and Falconer note, it represents less than one per cent of what central government spends annually on rent. The controversy is a window into a larger problem: a State that has not treated its property portfolio as a strategic asset, has not systematically compared lease versus buy, and has not maintained a public register of what it rents and why.

The capital side is equally troubling. Capital expenditure was just 1.6 per cent of GDP in 2025-26. For every dollar the State invested in roads, schools, buildings, and other capital projects, it spent more than nine dollars on pay.

Meanwhile, the Independent Fiscal Commission reported that for April to June 2026, the Specified Public Sector recorded a fiscal deficit of J$8.4 billion, better than the budgeted J$13 billion, largely because J$17.3 billion in capital projects was not spent.

The Commission cautioned explicitly that “capital under-execution does not amount to true fiscal savings” and urged agencies to resolve procurement and capacity hurdles. A better fiscal balance produced by failing to build roads, water systems, and schools is not a success. It is a deferred cost that will be paid later, with interest.

WHAT FALCONER GETS RIGHT, AND WHAT THE DEBATE MISSES

Economist Keenan Falconer has made a contribution that deserves more attention than it has received. His central point, reported in The Gleaner on October 27, is that identifying cost-saving measures should be a routine exercise, regardless of how much revenue the Government collects. He has also suggested that the current moment is an opportunity to practise zero-based budgeting where resources make it feasible, so that every expenditure item is justified and prioritised for each new Budget period before approval. This is not a call for austerity. It is a call for a different budget culture, one in which the base is reviewed, not just the increment.

Falconer’s observation that there is “no recent financial data” that would indicate why the restrictions have become “particularly necessary” is a fair challenge to the Government’s narrative. The fiscal pressure did not begin with Hurricane Melissa. Revenue underperformance and recurrent expenditure overruns were visible before the storm. The Independent Fiscal Commission had already warned about capital underspending and procurement bottlenecks. The Government deserves credit for acting when the hurricane made the pressure acute, but it should not pretend that the underlying weaknesses were created by the hurricane alone.

The debate also misses a crucial distinction. There are three different things happening at once: expenditure restraint, expenditure deferral, and genuine savings. A travel moratorium may restrain cash outflows in the short term, but it may also defer necessary international engagement, delay financing negotiations, and push costs into the next fiscal year.

The OPM itself acknowledges that overseas travel is often necessary to secure financing, attract investment, and maintain partnerships, which is why it has exempted reconstruction, national security, tourism promotion, and standing multilateral engagements. A cancelled trip that is replaced by a more expensive virtual engagement is not a net saving. A postponed negotiation that leads to less favourable borrowing terms is a false economy. The Government must measure the net effect, not just the gross announcement.

The J$11.45 billion travel and stipend allocation that has circulated in public debate is a case study in the danger of category errors. That allocation is not the cost of overseas travel. It includes domestic travel, stipends for local duties, and other allowances. The relevant figure for an overseas travel moratorium is the avoidable overseas travel component, net of cancellation and replacement costs.

Without a published baseline, neither the Government nor the Opposition can credibly claim to know what the restrictions will save. That is the transparency gap at the heart of the current controversy.

THE OPPOSITION’S QUESTIONS ARE LEGITIMATE, BUT THE STANDARD MUST BE UNIVERSAL

Julian Robinson, the Opposition Spokesperson on Finance, has asked the right questions. He has questioned the timing of the restrictions, pointed to NaRRA’s office space and salaries as areas requiring scrutiny, and called on the Government to disclose the savings expected from the moratorium and provide a full account of NaRRA’s expenditure. These are legitimate accountability demands. The Government’s dismissal of his criticism as “superficial, shallow and misguided” does not answer the substance of the questions.

But the Opposition’s critique must also meet a standard. Calling the measure a public relations exercise is a judgment about motive, and the evidence for that judgment is not public. The more precise criticism is that the measure is currently unverifiable. That is a criticism of transparency, not of intention, and it is one the Government can remedy by publishing the baseline, the expected savings, and the protected expenditure list.

The Opposition has not yet published a fully costed alternative fiscal programme. It is easier to criticise a restriction than to show where one would cut, what one would protect, and how one would finance the difference. A credible Opposition should put its own numbers on the table. Democracy works better when both sides are forced to justify their choices with evidence.

On NaRRA specifically, the Government’s defence of the J$115 million annual lease and the J$40 million CEO salary has pointed to international benchmarking and the scale of the reconstruction mandate. That defence may be valid.

NaRRA’s task is unprecedented: damage and losses have been put at US$12.2 billion, against an international financing package of up to US$6.7 billion over three years, much of it repayable. The authority needs capacity to deliver. But unprecedented reconstruction does not mean unquestioned expenditure. The Government should publish the lease terms, the cost comparison with public facilities, the staffing rationale, and the five-year operating budget. The public deserves to see that the money is being used well, not merely to be told that it is.

THE ECONOMICS OF CUTTING IN A RECOVERY

The macroeconomic context matters. Jamaica’s real GDP contracted by 2.9 per cent in the June 2026 quarter, the third consecutive quarterly contraction following Hurricane Melissa. Inflation reached 7.5 per cent in July 2026, above the Bank of Jamaica’s target range. The net international reserves stood at US$6.5 billion, providing 26.6 weeks of import cover. The buffers are strong, but the economy is weak.

In this environment, the composition of expenditure adjustment is not a technical detail. It is the central policy question. Fiscal multipliers are not uniform across spending categories. Low-value administrative expenditure, such as hotel retreats and unnecessary leases, has a small domestic multiplier.

Cutting it reduces demand only marginally and frees resources for higher-value uses. Productive capital investment, such as roads, water systems, and school repairs, has a larger multiplier, particularly when the economy has spare capacity and the spending stays domestic. Cutting it during a contraction can reduce employment, incomes, and tax receipts, worsening the very fiscal problem the cut was meant to solve.

Transfers and social protection have a high multiplier for vulnerable households, who are likely to spend quickly and locally. Emergency reconstruction spending can be countercyclical and productivity-enhancing if it restores assets that allow businesses to operate and households to earn.

The appropriate policy is therefore not to cut spending indiscriminately. It is to cut the low-value recurrent expenditure, protect productive capital investment and social protection, and sequence the adjustment so that it supports rather than undermines the recovery. Procyclical consolidation, in which spending is cut precisely when the economy is contracting, can be self-defeating.

The Government’s stated intention to pursue “carefully targeted, counter-cyclical measures to stimulate economic activity, restore productive capacity and support employment” is the right framework. The test is whether the budget follows the framework.

A REFORM PROGRAMME, NOT A RESTRICTION PROGRAMME

If the Government wants fiscal discipline to become a way of governing rather than an emergency response, it needs a reform programme with measurable milestones.

Within 90 days, it should publish a consolidated expenditure baseline covering overseas travel and stipends, hotel retreats and official functions, government leases and accommodation, asset acquisition commitments, procurement and contract variations, and capital project execution. This baseline should be independently reviewable, and every savings claim should specify the counterfactual: what would likely have been spent without the measure.

The Government should also publish a protected expenditure list, identifying the reconstruction, social protection, and essential services that will be ring-fenced. Without a ring-fence, the public has no way of knowing whether savings are coming from low-value administration or from hospitals and schools.

Within six months, it should complete a central accommodation and lease optimisation programme, a procurement planning and contract monitoring review, and programme-level spending reviews in the five largest ministries.

It should publish a public asset register, identify underutilised properties, and conduct transparent lease-versus-buy assessments for major leases. It should also establish a framework for measuring public-sector productivity, so that the next wage negotiation is informed by evidence about what the State is delivering, not only by inflation.

Within 12 months, it should institutionalise routine expenditure reviews, pilot zero-based budgeting in selected ministries where data and capacity permit, and introduce performance-informed budgeting. It should strengthen project appraisal and procurement capacity, publish fiscal risk assessments and contingent liabilities, and set out a transparent disaster recovery financing plan.

The Independent Fiscal Commission has noted that with the fiscal rules suspended through March 2027, the absence of a legislated timeline for returning debt to the 60 per cent ceiling remains a significant policy gap. The forthcoming fiscal policy paper should close that gap with a credible consolidation path.

At the centre of this programme should be a quarterly public savings ledger. For each major measure, the Government should publish the original baseline, the measure introduced, expected gross savings, actual gross savings, cancellation and implementation costs, net cash savings, deferred expenditure, cancelled commitments, service delivery effects, and amounts demonstrably redirected to priority spending. This is not a bureaucratic burden. It is the minimum standard of fiscal accountability. A Government that cannot report its savings cannot claim to be delivering them.

THE STATE THAT CAN DELIVER

The ultimate objective is not to make government cheaper. It is to make every dollar of government expenditure work harder for the economy and the people who finance it. That requires protecting the State’s capacity to deliver the things that make growth possible: reliable water, functioning roads, secure energy, good schools, accessible healthcare, and disaster-resilient infrastructure. A State that cuts its capital budget to balance its recurrent budget is not exercising discipline. It is consuming its future.

Jamaica’s fiscal problem is structural, and it will not be solved by a travel moratorium or a lease pause. It will be solved by a Government that reviews its base expenditure every year, publishes what it finds, protects what works, cuts what does not, and measures what taxpayers receive in return.

The October restrictions are a signal. The question is whether the Government will turn that signal into a system.

If it does, the next crisis will not require a dramatic announcement, because the discipline will already be in place.

If it does not, Jamaica will continue to discover fiscal discipline in the middle of every emergency, and the cost of running the State will keep rising faster than the economy that must sustain it.

- Janiel McEwan is an Economist and Researcher. Email feedback to janielmcewan17@gmail.com and columns@gleanerjm.com. ONLINE ONLY COMMENTARY.