The World Bank In Jamaica

Jamaica has been burdened by a high level of debt for decades. Since 2013, the Government has successfully implemented fiscal consolidation measures, reducing the public debt-to-GDP ratio by more than 60 percentage points to 74.2 percent of GDP in the 2023-24 financial year — the lowest level in 25 years. 

Prudent macroeconomic management, anchored in debt reduction and inflation-targeting monetary policy, enabled the country to weather successive economic shocks. The government sustained efforts in fiscal consolidation while providing temporary assistance to vulnerable households and businesses. 

However, Jamaica has been among the slowest growing economies in the Latin America and Caribbean region with persistently low productivity growth due to a weak business environment, limited innovation, and human capital constraints. 

The economy has limited diversification, with a concentration on low-productivity services, geared towards tourism. High connectivity costs, inadequate digital infrastructure, and pervasive crime hamper private investment, while ongoing fiscal consolidation and relatively high debt service costs constrain public capital investment. Learning disruptions caused by the pandemic could lead to corrosive effects on growth, human capital, and the future earnings potential of students if not addressed adequately. 

Jamaica is also highly vulnerable to external shocks. Agriculture and tourism, which account for more than half of the jobs, are particularly vulnerable to climate-related events. 

The Jamaican economy expanded at a solid 2.6 percent in 2023, driven by mining and a continued rebound in tourism. However, agricultural output declined in 2023 due to an extended drought. Hurricane Beryl, which hit Jamaica in July 2024, induced damages estimated at around $67 million and negatively impacted agriculture, utilities, construction, and tourism sectors. While inflation eased in 2024, it spiked in August 2024 to 6.4 percent yoy, driven by Hurricane Beryl’s temporary impact on food and utility prices. Food insecurity remains an issue, with around one-third of respondents to the Caribbean Food Security and Livelihoods Survey reporting that they went an entire day, out of the last 30 days, without eating in April 2024.

The share of Jamaicans living below the upper-middle income international poverty line of 6.85 USD per day is estimated to have dropped from 13.9 percent in 2021 to 12.3 percent in 2023. This likely reflects continued employment growth, as poverty and unemployment have moved in tandem throughout the last two decades. The unemployment rate stood at 5.4 percent in the first quarter of 2024. Yet job quality remains a concern: around half of non-agricultural jobs are informal.

Last Updated: Nov 19, 2024

The Government of Jamaica and the World Bank developed the new Country Partnership Framework (CPF), which defines the Bank's engagement for the period 2024 to 2027. The CPF was approved in May 2024 and focuses on advancing green, resilient, and inclusive development, while also supporting the government's efforts toward debt reduction and fiscal resilience under three priorities: boosting human capital, creating higher-quality jobs, and strengthening resilience to shocks.

The strategy foresees investments of US $550 million in the next four years, outlining a comprehensive plan of technical and financial assistance, targeting: improving access to quality secondary education, boosting social protection coverage, strengthening the business environment and access to finance, increasing access to agricultural markets, strengthening disaster risk management, and improving Jamaica’s response to economic shocks. 

As of October 2024, the World Bank portfolio for Reconstruction and Development (IBRD) portfolio consists of five (5) operations and amounts to $117 million. The projects support the critical areas of human capital development, finance (focusing on medium and small businesses), competitiveness, innovation; rural development and the environment, urban infrastructure and development/renewal, and social protection.

This program is complemented by Advisory Services and Analytics, focusing on health, social protection, and jobs, as well as regional initiatives, focusing on renewable energy, climate resilience, and connectivity. 

The International Finance Corporation (IFC) is providing support to the government in accelerating the development of infrastructure projects leveraging Public-Private Partnership (PPP) arrangements. A PPP is a collaborative arrangement between the government and private sector to finance, build, and operate infrastructure projects. In a PPP, the government typically partners with private companies to leverage their expertise, efficiency, and funding. This approach can help accelerate the development of public infrastructure—such as roads, hospitals, or schools—while sharing both the costs and risks associated with these projects. 

The Memorandum of Understanding, signed recently between the Government and IFC, establishes a strategic framework to scale up PPPs through a programmatic approach. The agreement contemplates five PPP transactions for roads and water projects, including the North Coast Roads Highway and the National Broadband Network. Preparation of another five PPP transactions for projects in healthcare, water and sanitation, and renewable energy is underway.

Last Updated: Nov 19, 2024

Jamaica Disaster Vulnerability Reduction Project helped to enhance Jamaica’s resilience to disaster and climate risks.

The project results include: 

• Improved critical facilities and infrastructure have benefited over 1.6 million individuals throughout Jamaica.

• Over 890 storm drains were either retrofitted or newly constructed. 

• More than 55 bridges and culverts were retrofitted.  

• Risk reduction efforts have safeguarded more than one kilometer of coastline, providing benefits to over 660,000 residents residing alongside it.

Second Rural Economic Development Initiative (REDI II) aims to enhance access to markets and climate-resilient approaches among rural communities. Some of the results: 

• 13 entities and more than 1,600 beneficiaries have been reached through project-supported climate-resilient approaches, such as productivity, risk management, adaptation and mitigation measures, and benefiting by accessing to assets, technologies, training, practices and services provided by the project.

• Over 50 business plans to support revenue-generating agriculture, fisheries or community tourism activities were developed by rural farmers and communities with the project's support. Such activities include: the introduction of new crop varieties adapted to expected higher temperatures and resistant to drought; counter-seasonal production methods and technologies such as greenhouses; the use of integrated pest management; mechanisms for soil management and increasing soil fertility; the introduction of more efficient irrigation and water harvesting methods and alternative (small-scale) sources of energy, such as solar panels; the development of integrated landscape models;  small group marketing infrastructure such as cold storage facilities, sheds, packing facilities, and sanitary facilities, among others.  

• Under the project, 48 jobs have been created, with 62% of these positions filled by women, including posts for technical support, washing, packaging and heavy loading of produce for distribution to markets, construction activities, among others. In addition, 606 jobs are supported by public infrastructure investments under the project, specifically in the National Irrigation Commission Plumwood Pumping Station PV System installation, where 321 males and 285 females were hired, and of which 21% are youth.

• More than 5,300 rural farmers and small agri-business owners received training in climate-resilient agricultural practices and improved market access strategies.

• 334 participants (of which 63% were women) from the public sector, non-governmental organizations and other stakeholders have received training on resilience to climate-related risks, good agricultural practices, risk management and adaptation, integrated pest management, drainage, ground and water pollution mitigation, hazardous solid waste management, and health and safety aimed at mitigating social and environmental risks, among other topics.

The Foundation for Competitiveness and Growth Project assisted the government in enabling private sector-led growth in the Jamaican economy in an inclusive and sustainable way. Key results achieved by the project: 

• Help mobilized $ 520 million of private capital to 9 key infrastructure assets in Jamaica 

• Financed studies and provided technical assistance, targeting both foreign and local investors. 

• Enhanced the capacity of the Development Bank of Jamaica to oversee privatization and public-private partnerships (PPP) programs, emphasizing transparency and fairness.

• Contributed to the digital economy agenda through the development of several digital platforms including the Jamaica Business Gateway (formerly the National Business Portal) and the Jamaica Development Application Portal (JDAP). The Jamaica Business Gateway is expected to considerably improve Business-to-Government online services in line with GoJ’s digital transformation agenda. The project also contributed to the expansion of the Government Broadband Network to support the COVID-19 National Emergency Communication Backbone.

• Streamlined 18 several laws and policies to enhance the business environment in Jamaica. 

• Provided loans to 140 firms in Jamaica. MSMEs supported by the project have seen an increase in their sales as compared to benchmarked comparators. 

• Supported the Jamaica Business Fund, managed by the Development Bank of Jamaica, which enhanced supply chains in several sectors including agriculture (mainly), manufacturing and tourism. A total of 24 supply chains have become have been supported, strengthening their networks and improving supplier performance and access to the market. Over 470 firms received training support and enhanced their business management skills.

Last Updated: Nov 19, 2024