WASHINGTON, CMC – An influential think tank says that Jamaica’s economic and social progress has suffered considerably from the burden of an unsustainable debt and that even after the debt restructuring with the International Monetary Fund (IMF) this burden remains “unsustainable and very damaging.”
The Center for Economic and Policy Research in a paper released here said that pro-cyclical macroeconomic policies, implemented under the auspices of the IMF, “have also damaged Jamaica’s recent and current economic prospects.
“Jamaica is a clear case where the IMF and other international actors have put the economy in a strait-jacket,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research.
“Jamaica needs debt cancellation and economic stimulus to get out of its long slump, and it has not gotten either of these,” he added.
The paper, “Jamaica Marcoeconomic Policy, Debt and the IMF” notes that the IMF programme focuses on containing the wage bill,” even though this can have negative consequences for a developing country that needs to increase spending on health and education.
“Curbs on the wage bill have put pressure on Jamaica’s struggling healthcare sector, creating uncertainty surrounding the treatment and payment of healthcare workers,” it said.
The Center for Economic and Policy Research said despite the pro-cyclical measures that the IMF has been recommending, last week the Jamaican government announced it would seek a two-year extension of the current IMF agreement.
The center said Jamaica is one of the most highly indebted countries in the world, with a total public debt of 129.3 percent of Gross Domestic Product (GDP) at the end of fiscal year 2009/10, and interest payments on the debt over the last five years averaging 13 per cent of GDP.
“This debt burden has crowded out most other public investment, especially in education and infrastructure, which have stagnated over the last 18 years,” it said.
The paper said Jamaica’s debt has also held back progress towards the Millennium Development Goals, “with declines in detection and treatment of tuberculosis, and in primary school enrollment rates”
It said that the recent Jamaica Debt Exchange (JDX) has “done little to solve Jamaica’s debt burden.
“Although the JDX was able to lower average interest rates on domestic debt, there was no reduction of principal and maturities remained virtually unchanged.”