The IMF is today (Wednesday 1 May) set to agree a $1 billion four-year bailout loan for Jamaica.
In addition, the World Bank and Inter-American Development Bank are due to lend $500 million each.
Jamaica is one of the most indebted countries in the world. The government spends $1.2 billion a year – 33 per cent of government revenue – paying foreign debts. This is more than twice the amount the government spends on education and health combined.[1] The IMF, World Bank and Inter-American Development Bank loans of $500 million a year will be used to meet debt payments coming due, effectively bailing out previous reckless lenders to the Caribbean island.
Tim Jones, policy officer at Jubilee Debt Campaign, said:
“The people of Jamaica need debt cancellation, not yet another decade of bailouts, high debt payments and IMF enforced austerity. Jamaica has been in debt crisis since the 1970s. Reckless lenders should not be repaid at the cost of children’s education, people’s health and loss of control over the economy’s future.”
For over 40 years, Jamaica has had consistently high foreign debt payments, repeated bailout loans, austerity and low and no growth.[2] The country is off-track in meeting most of the indicators which make-up the millennium development goals. In 1990, 97% of children completed primary school, but this has gone dramatically backwards, falling to 73% in 2010. Maternal mortality has almost doubled, rising from 59 per 100,000 live births in 1990, to 110 by 2010. Jamaica has been excluded from debt relief schemes because, with a national annual income per person of £3,500, it is ‘too rich’.[3]
The austerity conditions which make-up the IMF programme have not yet been released. However, the Jamaican government has had to reach a deal with unions to freeze public sector pay until 2015, a 20 per cent cut in real terms. The Jamaican government also had to restructure its debt owed to domestic creditors by lowering interest rates, reducing returns for pension funds and weakening the Jamaican financial system, whilst leaving untouched debt owed to foreigners.
For more information and comment, contact Tim Jones, +44 20 7324 4722
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[1] World Bank. Global Development Finance and World Development Indicators database
[2] Government foreign debt payments have been the equivalent of 20 per cent of exports or more since at least 1980. Jamaica has borrowed from the IMF, and implemented its austerity programmes, in 25 of the last 40 years. Between 1980 and 2010, Jamaica’s economy has grown by an average annual growth rate equivalent to just 0.65 per cent. Furthermore, since 1990 the economy has effectively not grown at all (World Bank. Global Development Finance database).
[3] World Bank. World Development Indicators database