Opinion
A Stellar Record of Failure: The IMF and Jamaica
By Kevin Edmonds
As part of her election campaign, Prime Minister Portia Simpson-Miller of Jamaica announced her intention of breaking ties with the British monarchy and becoming an independent republic. While no doubt a long overdue and symbolic act, in the wake of a newly released report on Jamaican debt by the Center for Economic Policy and Research (CEPR), a critical conversation about doing the same to the real neo-colonial power in Jamaica – the International Monetary Fund (IMF) – should be a much higher priority of the government of Jamaica.
While the economic fates and futures of entire nations hinge on arbitrary indicators such as investor confidence and credit ratings, is Jamaica better off with the IMF or without it? Jamaica’s current economic situation is, to be blunt, bleak. Thus controversial questions must be raised over whether or not the IMF is actually providing the kind of help that Jamaica actually needs.
In most other professions, a 30-year track record of failure in the single task assigned to you would not normally result in a renewal of your contract. But with the IMF in Jamaica, this is exactly the case. The CEPR report does not mince words.
“Jamaica offers a stark example of the long-term costs that an excessive debt burden can impose on a developing country, especially when the interests of creditors are prioritized over the needs of the country as a whole,” it reads.
According to the IMF, in 2011, Jamaica’s debt burden was 126 percent of its gross domestic product (GDP), making it one of the world’s most indebted nations. In addition, for 2011, Jamaica had the highest debt interest payments of any country in the world, calculated as a percentage of GDP. The report continues:
This exceedingly large debt burden has effectively displaced most other public expenditure; debt servicing has taken up nearly 50 percent of total budgeted expenditures over the last four fiscal years while health and education combined have only been around 20 percent. This situation is very problematic for a country of Jamaica’s income level, which should be able to invest in infrastructure and human capital, as well as have the financial flexibility to respond to frequent natural disasters and other external shocks.
As it stands, the implementation of the IMF’s current austerity measures in Jamaica have played a key role in intensifying the stagnation of the economy. “Although real GDP growth was positive in 2011, the economy remains below its 2007 level,” states the report. “IMF projections suggest that Jamaica’s GDP will not reach 2007 levels until near the end of 2015. GDP per capita will still be below its 2007 level in 2017.”
