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The effects of Jamaica’s debt burden

Jamaica has one of the worst debt burdens in the world and this is having a direct impact on the country’s development.

For the fiscal year 2009-2010, 45 per cent of the government’s budget went into servicing the country’s public debt. With so much money directed towards debt repayments, spending on public services is inevitably squeezed out. Jamaica’s progress towards achieving its Millennium development goals is therefore suffering.

The Guardian highlights the decline in the country’s development progress by giving certain indicators as examples. One is the rate for detection and treatment of tuberculosis, which has dropped from 79 per cent in 1997 to 43 per cent in 2006, the worst decline of all 77 countries where data is available. This reflects an overall decrease in spending on healthcare; according to the World Health Organisation, Jamaica spent 5.5 per cent of its gross domestic product (GDP) on health in 2000, but this had decreased to 4.8 per cent in 2008. Other public sectors have also been hit and in education, the net enrolment ratio in primary schools has also dropped from 97 per cent in 1991 to 80 per cent in 2008.

This does not bode well for the employment chances of young people, especially when Jamaica has been badly affected by the global recession. The country is particularly struggling with the loss of export revenue and remittances sent home from its nationals working abroad. And over the twenty years from 1988 to 2008, the real income of people in Jamaica has grown by just 14 per cent, a very poor increase for a middle-income country.

The International Monetary Fund has helped Jamaica restructure its debt in order to lower its interest burden. But as the Guardian’s reporter points out, this has only brought a reduction of around 3 per cent of GDP each year for the next three years. And it still leaves the principal debt owed by the country. Jamaica will have to refinance 46 per cent of its debt over the coming five years and if market conditions prove unfavourable, this could have disastrous consequences.

Like the Greeks, Jamaicans might well be asking why the nation should keep sacrificing in order to pay its creditors. Because it is looking increasingly unlikely that the welfare and living standards of ordinary Jamaicans will ever improve while the country continues to dole out huge amounts of money to financial institutions.

Laurinda Luffman signature