- Incoming PM Holness has pledged to cut taxes on low earners
- Outgoing Simpson Miller had pledged to continue austerity plan
Jamaica’s opposition Labour Party scraped a narrow win in general elections Thursday as voters opted for promises of tax cuts and a higher minimum wage over the government’s austerity program.
Labour leader Andrew Holness, 43, who will head the new government, has pledged to remove income taxes for some low and middle income families and raise the minimum wage 32 percent. Labour has also said Jamaica can become “the Silicon Valley of the Caribbean” with the help of a new Technology Innovation Fund.
With more than 99 percent of votes counted, Labour had won 33 of 63 seats in parliament, the Electoral Commission said on its website. Outgoing Prime Minister Portia Simpson Miller conceded defeat but called for a nationwide recount, which the commission will carry out.
“We know that the cost of victory is accountability,” Holness told a large crowd of supporters clad in green late Thursday. “We will grow the Jamaican economy. We will create jobs. We will give you an accountable and responsive government.”
Years of weak growth and debt crises have left the Caribbean nation with rising poverty and 15 percent unemployment. If the economy can grow 2.1 percent this year, in line with the International Monetary Fund’s forecast, that would be the fastest pace in a decade.
Simpson Miller, 70, had vowed to continue with austerity policies in a bid to reduce the biggest debt burden in the Americas. After restructuring $9 billion in local debt in 2013 and accepting an International Monetary Fund financing package, her government had cut debt to 125 percent of gross domestic product, from 145 percent before the restructuring.
“There’s no doubt that the consequences of the economic reform program were misunderstood and took a toll on the voting,” outgoing Finance Minister Peter Phillips said in a television interview Thursday.
Simpson Miller’s austerity programs helped the country get three credit ratings upgrades over the last 12 months. The Jamaica Stock Exchange main index returned more than 90 percent over the same period, the world’s best performance. The benchmark stock index was down 0.2 percent in trading Friday morning. The yield on the country’s 2025 bonds fell two basis points to 6.37 percent.
Despite the Labour Party’s campaign promises, Charles Seville, a senior director at Fitch Ratings, said he expects continuity of the IMF program.
“Although we do expect growth to improve, prospects for reducing Jamaica’s high government debt will depend on whether the country is prepared to run without large primary surpluses over the medium term,” Seville said in an e-mail. Fitch upgraded Jamaica’s rating this month to B, five steps below investment grade and the same category as Egypt and Mongolia.