Editorial | Holness wins points

In a political culture given to spin and where the default of government officials is to downplay or sugar-coat bad news, Prime Minister Dr Andrew Holness wins points for warning Jamaicans that the country is facing worsening economic turbulence because of the Middle East war.

“I don’t want to be overpromising but yesterday (September 21), the Cabinet met,” the prime minister said at a function announcing a €5 million grant by the European Union to Jamaica’s post-Hurricane Melissa reconstruction programme.

“(Finance) Minister (Fayval) Williams gave us a report on the economy, how it is doing,” he said. “We see headwinds.”

Dr Holness’ frankness is significant for more than the fact that it was one of those “anyone-could-have-told-you-so” moments. And not just now, but months ago when the United States and Israel rained their first bombs on Iran and Tehran responded with its own attacks on US bases in neighbouring countries.

In the first instance, it is an opportunity for introspection on how the administration communicates with citizens who have low levels of trust in government and, secondly, an opening towards new thinking about the role of the State in economic development.

With respect to the latter, the prime minister’s remarks about implementing counter-cyclical measures to mitigate the ‘headwinds’ suggest that specific perspectives on what role the State ought to have in the economy may be emerging.

On the question of communication, candidness and transparency in national conversations are critical to building the consensus necessary to undertake difficult, and sometimes painful, policy action. In a country where more than half the population doesn’t trust politicians and the legislature, and over 80 per cent of citizens believe corruption is rife, that forthrightness can’t, or ought not to, begin only at the point where there is little or no other choice.

It is important to highlight how Finance Minister Fayval Williams has publicly portrayed the state of Jamaica’s economy, up to days before the prime minister’s intervention.

Context is critical. Eleven months ago, Melissa severely ravaged the western third of the island. The overall cost of the hurricane was estimated at 56.7 per cent of GDP. A year before Hurricane Melissa, Hurricane Beryl also caused substantial damage when it sideswiped the island’s southwestern coast.

The economy contracted by half a per cent in 2024, and 0.1 per cent in 2025. However, in the quarter after Melissa, the slump was 7.1 per cent. In the following two quarters, the year-on-year declines were 4.1 per cent and 2.9 per cent, respectively.

When Ms Williams opened the debate on the government’s 2026/2027 Budget on March 10, the unprecedented scale of the hurricane damage was known. Its economic cost had begun to emerge. Missiles were already flying in the Middle East. Globally, the consequences of the war were increasingly concerning. Iran had placed a stranglehold on the Strait of Hormuz, through which a fifth of the world’s oil from the Gulf region passed. Exports from Qatar Fertiliser Company (QAFCO), which produces 15 per cent of the world’s urea, were also stymied.

In its pre-budget planning, the government had projected Jamaica to import oil this fiscal year at US$60 per barrel, 3.5 per cent lower than in 2025/26. By the time Ms Williams presented her Budget, West Texas crude fluctuated at over US$90 per barrel. Fertiliser prices had rocketed. Supply chains were stressed.

Ms Williams conceded that “the war in the Middle East has layered another risk in terms of rising oil prices on Jamaica”, but downplayed the severity of the threat.

“I want to say to the Jamaican people and businesses, you can continue to have faith in this government. We have built the largest Net International Reserves of any (Jamaican) government.

“Our NIR (US$6.83 billion or 36 weeks of imports) is strong!” she said.

ON THE OFFENSIVE

Less than a week before the prime minister’s recent statement, Ms Williams was on the offensive against people who argued that the economy was in recession, characterising the progressively smaller declines as “proof that the economy is recovering”.

“An economy that is declining produces deepening figures, not improving ones,” she said. There was no mention of the headwinds.

Prime Minister Holness, however, noted the ongoing drought that is battering agriculture; the economic effects of Hurricane Melissa; and the global impact of the Middle East war. Further, tourism, the island’s major industry, hasn’t fully recovered from the hurricane. Separately, jobs have been lost in the offshore business process outsourcing sector. These have combined to push point-to-point inflation in August to 7.5 per cent, above the central bank’s target of 4-6 per cent.

The prime minister expects that rebuilding projects by the National Reconstruction and Resilience Authority (NaRRA) and efforts to fast-track initiatives by the private sector will pull Jamaica out of the slump.

However, there is need for a wider conversation on a credible industrial policy and the reversal of three decades of the hollowing out of the Jamaican state, which is evident in its incapacity to get things done.