Government Prepares for 2026 Budget as Growth Holds Steady

The Cabinet was this week briefed by the Financial Secretary and her team on the country’s fiscal outlook, following the recent visit of an International Monetary Fund (IMF) staff mission and ahead of the 2026 National Budget presentation set for December 4.

According to revised estimates, the economy is expected to expand by 3.7 percent in 2024, before easing to 2.5 percent growth in 2025 and 2026. The Economic Commission for Latin America and the Caribbean (ECLAC) has meanwhile reported a 2.5 percent outturn for 2024. Tax revenues next year are projected to remain in the range of 18.5 to 19 percent of GDP.

The financial sector also continues to show resilience, with commercial bank non-performing loans dipping below five percent by the end of 2024, while credit union NPLs stood at 6.7 percent in the second quarter of this year. An IMF Article IV consultation has been scheduled for January 2026.

Inflationary pressures remain subdued. The Consumer Price Index was down 1.2 percent year-on-year to April 2025, reflecting significant declines in transport (-16.2 percent), furnishings (-5.5 percent) and recreation (-5.1 percent). The steep fall in transport costs was largely driven by a 41.8 percent drop in UK airfares. Core inflation, which excludes food and energy, was down 1.9 percent.

Sectoral performance in 2024 was strongest in accommodation and food services (+14.2 percent), transport and storage (+10.1 percent), public administration and defence (+12.4 percent), and manufacturing (+6.5 percent). However, construction and mining contracted by 7.3 percent, while wholesale and retail trade slipped by 2.3 percent.

On fiscal matters, Cabinet noted that the monthly EC$5 million cap on discretionary tax and duty waivers remains in place. It also received an update on teachers’ reclassification payments, with EC$5.86 million disbursed to date—EC$3.74 million in FY2024 to 1,236 teachers, and EC$2.11 million in FY2025 to 1,359 teachers.

Looking ahead, the government’s 2025 financing plan calls for EC$55.8 million in new borrowing. Indicative market rates are projected at three percent for Treasury bills, six percent for five-year instruments, and seven percent for seven-year bonds.

Cabinet commended the Financial Secretary and her team for their work in maintaining fiscal discipline while advancing preparations for the upcoming budget.