Leading financial scholars attached to the Brookings Institute say Jamaica’s fiscal miracle would be difficult, if not impossible, to replicate in larger economies such as the United States and Germany.

The authors include Advisor to the International Monetary Fund, IMF, Serkan Arslanalp, Berkeley University Professor Barry Eichengreen, and Stanford University Professor Peter Blair Henry.

Professor Blair-Henry is himself a Jamaican-born Economist.

The three conclude that Jamaica’s unique social and political circumstances contributed heavily to its fiscal stability and success.

Ricardo Brooks tells us more.

The Brookings Institute, based in Washington, DC, is one of the world’s leading research groups dedicated to improving governance and policy on a global scale.

According to their article dubbed “Sustained debt reduction: The Jamaica exception,” at a time when many countries, large and small, are confronting heavy and growing public debt burdens, Jamaica offers a rare example of a country that succeeded in substantially reducing its debt.

The matter became a topic at the Brooking’s Papers on Economic Activity, BPEA, conference on Sunday, March 28.

Jamaica cut its debt as a percentage of its gross domestic product, GDP, in half—from 144% in 2012 to just 72% in 2023.

This is further projected to fall to 60% by 2028.

According to the authors, fiscal responsibility began in Jamaica with the Fiscal Responsibility Framework introduced in 2010.

This required all Finance Ministers to reduce budget deficits to zero and the debt-to-GDP ratio to one-hundred-percent by 2016.

The framework was further augmented in 2014.

The article suggests Jamaica’s success in reducing political polarisation since the end of the 1970s created an environment that allowed all stakeholders to come together to tackle the common burden of debt reduction.

This led to the creation of the Partnership for Jamaica Agreement and ensured broad national acceptance of the Economic Programme Oversight Committee, EPOC.

The authors conclude that meaningful debt reduction was accomplished only when Jamaica put in place a set of rules anchoring fiscal policy and a series of partnership agreements.

The analysis of Jamaica left the authors pessimistic regarding the ability to repeat the country’s success in economies such as Germany and the United States.

This is due to the lack of fiscal flexibility caused by the complex nature of their economies and the high levels of political polarisation that currently exist, reducing the possibility of wide buy-in among stakeholders.