Newly appointed Minister of Finance Fayval Williams has hit back at Opposition spokesman on finance Julian Robinson’s claim about Jamaica’s debt-to-GDP (gross domestic product) ratio when the Jamaica Labour Party (JLP) administration came into office in 2016.
Robinson, in a statement to the media on Wednesday, had challenged a claim by Prime Minister Andrew Holness in Parliament the day before that the country’s debt-to-GDP ratio was 145 per cent when the JLP administration took office. He said, in fact, the debt-to-GDP ratio stood at 115 per cent when his People’s National Party (PNP) left office in 2016, “after a period of careful fiscal management”.
Accusing the prime minister of making a “false statement”, Robinson added: “In 2012, the PNP inherited a challenging economic situation with the debt-to-GDP ratio at 145 per cent. By 2016, through determined efforts, we had reduced this to 115 per cent, achieving a substantial improvement that averaged an annual reduction of 7.5 per cent.”
However, the newly minted finance minister, Williams sought to remind the Opposition spokesperson and the public of what she said were pertinent dates and figures.
“On December 29, 2011, the PNP won the General Election and by the time the second fiscal year ended on March 31, 2013, Jamaica’s Debt-to-GDP ratio had risen to 145.3 per cent from 138.8 per cent at end of March 31, 2012.”
In addition, Williams made reference to the International Monetary Fund’s Country Report No 16/181 dated June 2016, following the conclusion of the IMF’s Article IV consultations, that she said shows that the debt-to-GDP ratio at the end of March 2016, when the PNP left office, was 128.7 per cent and not 115 per cent as the spokesman indicated.
She said it was “regrettable” that the issue has been politicized, noting that the prime minister in referencing the debt-to-GDP, said “no single administration has done it.”
Recently, in its reviews under the Precautionary and Liquidity Line and the Resilience and Sustainability Facility, the IMF reported a debt-to-GDP ratio of 71.8 per cent for the recent fiscal year which ended March 31, 2024.
She argued that the debt-to-GDP reduction between 2016 and 2024 under the Holness Administration “has been far more significant”, moving from 128.7 per cent to 71.8 per cent as at the end of the fiscal year ended March 31, 2024.
“This amounts to a reduction of 56.9 percentage points over the period or 7.1 percentage points reduction per year (on average) in the face of extreme global health and natural disaster shocks,” Williams continued. “Contrast this with only a 16.6 percentage point reduction achieved by the PNP government during 2013-2016 despite there being no significant external shocks to the economy.”
She also noted that during 2016-2024, some of the significant gains achieved were reversed by the impact of COVID-19, the worst global health crisis in a century, as well as the overlapping global crises associated with the war in Ukraine and major global supply chain disruptions.
“Collectively, the impact of these resulted in the largest external shock that the Jamaican economy has experienced since the country’s independence,” said Williams, who on Wednesday replaced IMF-bound Dr Nigel Clarke as finance minister.
She added that it is worth noting that during 2013-2016, Jamaicans were burdened with two significant tax increases.
“The 2012/2013 tax package announced was budgeted to raise $19.38 billion and this was followed by another raft of tax measures in 2013/14 totalling $15.9 billion. This period saw the most massive tax packages in our independent history,” Williams said.
“For contrast, the debt-to-GDP reductions during 2016-2024 have been achieved alongside nine consecutive budgets with no net new taxes. In fact, several taxes have been reduced over that period,” Williams said, outlining among them the income tax threshold being increased from $592,800 to J$1,700,088 and GCT being reduced from 16.5 per cent to 15 per cent.
Williams added that, “The spokesman is entitled to his own opinions but not to his own facts. The data and the facts on the country’s debt-to-GDP reductions are clear and unequivocal. I welcome the opportunity to really set the record straight and to inform the public accordingly.”
