As Obama Visits, New Reports Says IMF Program Is Crushing Jamaica’s Economy
Jamaica's economy is getting crushed by an IMF program. It simply can't bring in enough money to service its debts.
Those not paying attention President Barack Obama’s Wednesday visit to Jamaica are missing a chance to see how the International Monetary Fund can crush an economy.
Jamaica’s stagnant economy is a textbook example of how IMF-imposed austerity can backfire. Governments become so focused on paying off their debts that federal spending dries up. Without money flowing out of government coffers, it’s difficult for an economy so reliant on one sector — in Jamaica’s case, tourism — to grow. It’s the argument against cuts in government spending that Greek Prime Minister Alexis Tsipras has been unsuccessfully making across Europe for months.
A new report by the Center for Economic Policy and Research concludes the Jamaican economy is suffocating three years into an IMF austerity program. The Caribbean island nation paid $138 million more to the IMF than it received last year, the report found — even though Jamaica still owes the World Bank and Inter-American Development Bank over $650 million through 2018.
Simply put, Jamaica doesn’t have money to spend because most available funds are spent servicing its enormous debt, and the government can’t bring in enough cash to pay off its loans.
The enormous amount of money being spent paying off loans is exasperating cycles of poverty and low job growth that date back decades. Jamaica’s poverty rate has doubled since 2007, and its unemployment rate — 14.2 percent — is higher than it was at the depths of the Great Recession.
“This has been a problem for decades,” Jake Johnston, who wrote the CEPR report on Jamaica, told Foreign Policy. “If we look at the last couple of years, tourism has picked up, remittances have picked up. It’s been offset by this high level of austerity.”
But the Obama administration continues to back Jamaica’s deal with the IMF.
Ricardo Zuniga, the National Security Council’s senior director for western hemisphere affairs, told reporters as Obama prepared to embark that the White House continues to support Jamaica’s handling of its debt crisis — and what he called a “strong performance over the last two years in working with the IMF, the World Bank, and others to address that.”
Photo Credit: Jim Lo Scalzo/ European Pressphoto Agency