Social and economic impact of the COVID-19 and policy options in Jamaica
May 21, 2020
As the rest of the world, Jamaica is confronting the problems derived from the Covid-19 pandemic. Economically and socially, Jamaica will face a very difficult year. The sudden stop in tourism and the fall in alumina prices, the two main exports, are generating an increase in unemployment and a fall in the projected GDP. Unlike previous crises, Jamaica is in a robust fiscal and macroeconomic position to develop a strong emergency response. The Government has established two sets of stimulus policies, but these responses are showing limitations that should be addressed fast. On the one hand, the fiscal stimulus is based mainly on a 1.5 percent consumption tax reduction and it’s not targeted to those most affected. On the other hand, the targeted cash grants have already exhausted the budget allocation and the wide range of new emergency programs will generate administrative inefficiencies. The Government should redirect the fiscal effort to sustain businesses and jobs and increase cash transfers through existing social programs for unemployed formal and informal workers.