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US think tank: Jamaica running most austere budget in the world

Published:Tuesday | April 7, 2015 | 2:54 PM

A US think tank is claiming that Jamaica is running the most austere budget in the world due to conditions imposed under the agreement with the International Monetary Fund (IMF).

The publication of the paper titled 'Partners in Austerity: Jamaica, the United States and the IMF' appeared to have been timed to coincide with the visit of US President Barack Obama to Jamaica.

Author of the paper published by the Center for Economic and Policy Research, Jake Johnston, says through its leadership role in the IMF, the US is imposing unnecessary pain on Jamaica through what he calls harsh austerity and a debt trap.

According to him, President Obama will be visiting as someone partly responsible for Jamaica's high unemployment and poverty.

He says multilateral debt relief including, debt cancellation would the alternatives to Jamaica emerging from its debt trap.

Jamaica’s debt currently stands at more than $2 trillion.

Meanwhile, the paper says Jamaica’s primary surplus of 7.5 per cent under the IMF deal, the government’s interest payments on the debt and austerity have brought public investment to a low.

It argues that the primary surplus requirement dwarfs even the budget surpluses being demanded of crisis-hit countries such as Greece, which was expected to run a primary surplus of 3.0 per cent of GDP this year.

It adds that coupled with the IMF-backed austerity, high interest payments have displaced needed capital spending, reducing government capital expenditure to a low of 1.6 per cent for the last financial year which ended last month.

The Center for Economic Policy and Research is an economic think-tank based in Washington, DC.

According to information from its website, the centre says it was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives.