Drivers of public debt reduction in the Caribbean: a case study of Jamaica, Saint Kitts and Nevis and Suriname

The Caribbean’s long-running public debt challenge has been worsened by COVID-19. Recent international interest rate increases and the looming threat of climate change impacts place even more burden on Caribbean governments' budgets. While the Caribbean's average debt burden has risen in the past 13 years, some countries have been able to lower their debt ratios. This study closely examines the performance of two Caribbean countries which over the past 13 years, have seen a sustained downward trend in their debt ratios, Jamaica and Saint Kitts and Nevis, and one country that has seen a sustained upward trend in its debt ratio, Suriname. Based on these case studies, a number of recommendations are made for Caribbean countries to help in their debt reduction. The study finds that a commitment to fiscal rules and having deep haircuts when restructuring debt contribute to lowering debt, while inconsistent commitment to fiscal consolidation and macroeconomic imbalances can contribute to increasing debt.