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Jamaica’s debt hurricane
The Greece of the Western Hemisphere

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January 8, 2013

Americans concerned about the impact of public debt on the global recovery have focused — with good reason — on Greece. Closer to home, however, the tourism mecca of Jamaica illustrates the catastrophic effects of borrowing way too much, and the painful choices that follow. This saga, less familiar than Greece’s, is a lesson for lawmakers in the U.S. and elsewhere.

The Caribbean nation actually is in worse financial shape than Greece: Jamaica has more debt in relation to the size of its economy than any other country. It pays more in interest than any other country. It has tried to restructure its loans to stretch them out over more years, at lower interest rates, with no success. Such a move would be risky for its already nervous lenders. So Jamaica is trying to wangle a bailout from a skeptical International Monetary Fund. Another deadline for a potential deal just came and went last week, though negotiations continue.

Jamaica is caught in a debt trap. More than half of its government spending goes to service its loans. The country can spend barely 20 percent of its budget for desperately needed health and education programs. Its infrastructure is faltering. It lacks resources to fight crime. It has little margin to recover from natural disasters such as Hurricane Sandy.

Kingston, Jamaica
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To set itself straight, Jamaica needs a restructuring, and a bailout with significant debt relief. No way can a small economy that has limped along with growth at less than half the global average for two decades pay back the fortune that it owes. But as with Greece, as with America, as with the state of Illinois, government leaders have balked at imposing the inevitable hardships. Saying no to favored constituents is no easier in Kingston than in Springfield.

The potential alternative is worse: Defaulting on its debt would ruin Jamaica’s prospects for many years to come: It would undermine the island’s critically important trade relations with the U.S. It would discourage badly needed foreign investment in its tourism, agriculture and mining sectors. The only thing worse than doing what Jamaica must do to live within its means would be not doing it.

That hard fact is being faced to some degree by debtor nations around the world. Jamaica is an extreme example of the fate that could befall Spain, Italy, Japan or, yes, the U.S., if debt keeps piling up. The analogy only goes so far since those much-larger economies have better resources to manage their finances. Jamaica has few options, apart from beseeching the IMF.

The American “fiscal cliff” deal was good news for Jamaica, which could not afford another U.S. recession. The island’s financial stewards have taken some practical steps to depreciate the local currency and curb inflation. The broader solution, however, is as obvious and necessary in Jamaica as it is in Greece and other countries mired in debt: Reform taxes, curb pension costs, cut public payrolls.

In Jamaica, that austerity-based formula has, unfairly, gotten a bad name. Critics of trade liberalization, privatization and deregulation point to Jamaica as Exhibit A of First World policies gone awry. IMF-imposed fixes more than a decade ago — after public debt had ballooned in the 1990s — made conditions worse, the critics say.

What really happened, however, is that IMF fixes gave Jamaica a temporary lifeline, but government never stopped borrowing and spending. The lesson of Jamaica is not that access to credit is bad. It’s that irresponsible stewardship is bad.

We’re cautiously optimistic that Jamaica’s current leaders will do better: Finance Minister Peter Phillips says his government must do whatever is necessary to reduce its out-of-control debt. Job One: Jamaica must make enough painful progress to win the confidence of the IMF, and of private lenders.

While the rest of us wait to see whether the island nation escapes its debt trap, we’ll see whether other countries learn the lesson of Jamaica: Stop digging such deep, deep holes in the beach.

Copyright © 2013, Chicago Tribune


  • LUNDUN says:

    jah know, bad news day afta day fi jamaica

  • Met says:

    lundun dem tek 60 million buy vehicle whey day…di millions whey give fi 50th celebration all now it nuh show..what are they doing with the money?

  • Cindy Royal says:

    I’m not an economist, but I see some of our core problems being:

    – Borrowing too much money that get’s wasted due to corrupt practices instead of going towards the improvement of our infrastructure, therefore there is no real return on investment – hence no money to pay back loans.

    – Bloated public sector & government cabinets.

    – Serious lack of focus on what really is important in Jamaica.

    – Too much politics at work.

    – Knowing the right things to do & not doing them for some strange incomprehensible reason. All asian country come tek wi formula an betta dan we now an we still deh yah a struggle.

    Mi still naw lef, but mi sick a di whole ting, an all a wi successive governments arrogant an won’t heed di cry of di people.

  • Cindy Royal says:

    Met, dat $60 mil yuh mention is di reason y di Nationwide reporter (Abka Fitzhenly) ask Lisa Hanna bout priorities a di govt weh day an har ppl dem attack him enuh. An all now shi nuh have dem apologize fi dem behaviour kmt.

  • Met says:

    Cindy when the people dem rise up..changes will be made but everybody jus happy go lucky wid wha a wgaan suh

  • Cindy Royal says:

    Mek mi tell yuh weh a gwan Metty. Di ppl dem weh mek up di majority a di voting public weh actually r the lower class working poor/below the poverty line – they r the rural/garrison/inner city ppl. They alot of the time r looking for a handout from their political reps, so they can’t/won’t rise up.

    Then u have the upper class ppl who sponsor the various political parties with purpose & intent – they do not do it out of the goodness of their hearts. They usually r chummy with these political reps & gets something in return – whether it be waivers/contracts etc. It’s not in their interest to rise up.

    Then u have the ppl in the middle who is jus fed up & will speak out, but quickly get’s drowned out by the other 2 & eventually just give up bcuz they just get tired of the fight.

    Then u have those who just put their blinders on & work with whatever is happening because they see what the middle ppl have gone thru.

    I’m not making a judgement on who’s better or who’s worst – I guess to each his own – but when I see schools with dilapidated buildings, hospitals that r in dire need of repairs it really pisses me off that so much money gets lost in the system due to corruption.

  • Ms.B says:

    Mi shame ! You know the worse ting it is almost impossible to see how the money was usedgo benefit citizens. Borrowing is a bad habit like stealing knowing someone else have something and u can ask and get so u do without thinking abt alternative ways.

  • Met says:

    fi real cindy..but I am wondering if this is another ploy fi get another excuse fi borrow from the not even 4 years since dem borrow di 2billion so mi a wonder wtf is going on

  • Cindy Royal says:

    Some examples:

    -$200 mil fi refurbish 1 office building – not build it, refurbish it (Shaw/Wong/NWA office)

    -Crazy cost over-runs with road building on Boulevard & in St. Thomas due to undue delays intentionally done to cheat the very govt who was making him rich (Danhai Williams)

    -Kern Spencer – need I say more?

    -Spending money making 50 more basic schools for Ja 50 when several are in disrepair.

  • Cindy Royal says:

    But Metty, wi a srape fi IMF loan, how wi aguh pay it back? kmt Tax the already overtaxed? Cuz if nutten more come outta my PAYE a swear mi might haffi guh strip an cuss uppa Heroes Circle – unuh may hear bout mi lol.

  • toni ann says:

    this is kind of shocking to hear, because everytime i go to jamaican it looks like the chinese or japanes, whiteman or striving down there.
    just the other day when i was there i saw the japs or maybe it was chinese building a bridge, and i notice the workers they employ was also japs/chinese with about 3 black people.
    it seems to me anyone could make it in jamaica except for jamaicans.

  • Anonymous says:

    There was a rumour going around that the Gov. of Jamaica sold Dunns River to foreign investors. Guess what? Soon those rumours will be reality, because wah kind a tax reforms dem talking bout etc? Cut pensions, Government payroll etc.. etc… Only restructering that can gwaan is they will be forced to sell loads of the country’s national structures etc, because as it seem, the cow has gone through the gate. Other option is to go on their knees and beg the IMF to forgive a sizable portion of the loans or scrap it all together, which is virtually impossible. Hate to say it but Jamaica reminds me of one of those airlines that got swallowed up by another bigger airline. It may be what the leaders want eventually, as they would be able to swing some sweet deals. Afterall, the whole objective is money! Do anybody think those leaders love country or people?

  • Cindy Royal says:

    Oh Toni, it’s the Chinese u saw working, & the reason for that is bcuz they loaned us the money to do the highway they r now building so they can import their workers.

    An speaking bout Chinese, dem tax di living s**t outta wi an look how many Chinese, Syrian, & Lebanese owned businesses downtown Kingston & in many major towns across the island not even registered a company much less paying taxes.

  • Tweet says:

    Right now, Jamaica a gear up fi a Black Friday sale—everything must go!!!!! Di “leaders” dem only concern is to sell, sell, sell like dem carry ackee go a Linstead market. If dem coulda sell we as slave dem woulda do it too. All this IMF and other money just head straight to Cayman, Switzerland etc into di lovely banks dem have over dere,kmt.

  • Belly Bang says:

    Borrow borrow, spend like it ah guh outta hand, the use of poor people as excuse and cronies, ah dat ah mash up the ting. & is both ah JLP & PNP fawlt. The 2 ah dem lack anything called priority for the long term.

    The two ah dem use political influence fi send $$$$ to dem fren & company and they dont want any accountability, thats why the two of dem hate the Contractor General. The JLP did hungry and mek sure raid the trough before dem even settle in. The PNP use the term “love of the poor and vulnerable’ to justify f000ery and anybody who talk up against them is painted as against poor people.




  • toni ann says:

    @cindy royal

    i didnt grew up in jamaican but i always find it weird whenever i am their that i always the white/chinese/japanese can go to jamaican and own homes, business etc. an what even makes it more mind boggling is that its very rare when you hear a chinese/japenes/lebanese etc get hurt in jamaica.
    i notice also that uptown and a lot of the lovely parts of jamaican are filled with these ppl while ppl (of curse mi a talk bout the productive ones not the wutliss ones) of jamaica a scrape ina di getta an a fight hard to make it out.

  • Cindy Royal says:

    Sed ting mi a seh Belly, di whole a dem jus a look fi get sumting fi demself. Dem doe care 1 iota bout Jamaica or Jamaicans. An dis “I love the poor” speech dem need to GTFOH wid it already an guh duh dem damn job weh wi gi dem fi mek di economy betta.

  • Cindy Royal says:

    U know Toni, it’s funny u’r mentioning that, bcuz a man was just saying that on tv recently to 1 of our few black (no mixture) corporate head. He was being interviewed by a journalist named Cliff Hughs who also owns a radio station 7 he said “don’t u see u r 1 of the few black leader of corporate Jamaica Cliff”. When he said it I started doing a mental check & the man was so right.

  • Tweet says:

    Toni and Cindy, I think a big part of that is because most of the “non—Syrian, Lebanese, Chinese etc” people need social links in addition to education to make it in Jamaica. Jamaica is not a meritocracy, it is a society based on nepotism and who know who. I was telling a friend that no matter how many doctorates I earn, if/when I return to Jamaica, if I don’t know the right people, not much will happen for me there. It sad, but it’s the reality.

  • Cindy Royal says:

    Yes Tweet, u r so right, WE R NOT A MERITOCRACY & NEPOTISM & CRONYISM RULE. Me used to work some where owned by 1 of our favourite big man entreprenuers an wen di white girl weh used to work fi dis ooman who was him right hand lef di job, dem wudden consider any body else in di company, an nuff ppl, some of whom were very qualified, did want it cuz to be dat person assistant meant good money & perks. An I will neva forget di day mi si di girl step pass wi widdout even a mawnin inna har push-tow (thong) slippers, tight pants an 1 likkle blouse guh dung deh guh jus pick up har contract widdout even doing an interview. Next week shi was dere kmt.

  • Cindy Royal says:

    A jus weh day in a moment of frustration an fedupness mi a mek di same complaint to Metty lol.

  • Cc says:

    Di gangsta bankstas(IMF) got dem right where dem want dem…in debt foreverrrrr

  • toni ann says:

    @cindy royal
    very true, i notice awhile back when i was old enough to go to jamaica an visit. i was watching t.v and i notice that all the politicians or all the leaders and socialites, even following a freind of mines to her doctors i notice they were either sirian, chinese, japenese or so on, and i said to myself whats wrong with this picture??

    it seems as though anyone, even a damn foot can go to jamaica or black countries and take over, the only requirement is that they be a different race.

    i went to ghettoes in jamaica with my friend an family an i went downtown and other places in jamaica an so far is jamaicans i see suffering.

  • Tweet says:

    Cindy, trust me, mi know exactly what yuh a talk bout. Dem tek up dese unqualified people because dem looks fit di bill–not to say you don’t have qualified people whose look also fit di bill, but den is we same “Black, dutty foot, tiefing ole nayga” (as I heard one employer class up him employees one day) haffi pick up di slack and actually run di business,kmt.

  • toni ann says:

    even so, but still, you telling me that not many jamaicans own doctorate or know people why you dont see a lot of them in high positions? because fi a country that is black, (wether light skin or darkin skin or mix) it doesnt seems like the ones with the higher power are 100% jamaicans but are of parents from other countries weh guh jamaica an hit the jackpot

    not to mention the segregation mi notice in jamaica, people coming to your country an showing you racism

  • Tweet says:

    Cindy, I think many highly educated Black Jamaicans tend not to return to Jamaica because of reasons like this. In addition, the condition in Jamaica make it feasible for people from other countries to come in and take over: they have the money to invest, they have the “looks” deemed desirable so they can make the contacts and get the foothold in society to gain power.

  • PhantomPhoenix says:

    Jamaica is in debt because the monies borrowed and spent is for the purpose of the elites of Jamaica. Every year the uptown/downtown gap spread wide.

    Mogglaz de bout an nah pay taxes, people wan road but nu wan pay taxes/fines…an we keep accepting these nasty ole politicians and dem family whey a nham off de beggings. Instead of production inside the country dem SLAVE out people pon programs and import simple things. Uptown is de cause of Jamaica’s woos Island wide.

  • toni ann says:

    well there goes my house in jamaica, i change my mind because i dont think i could deal with these problems.

  • DFDR says:

    The system have been engineered for most countries to become slaves of the IMF, the IMF will soon financially own many countries. The governments are only interested in safe guarding themselves freinds and families. Still JA’s farming, cattle and some other resources have deliberately been destroyed by certain other foreign agencies…
    The complete system is a fraud…

  • good girl gone bad says:

    I never get why these government officials Rob up all this money they borrow and dont put it back into the country. I know its their greed that motivates them but dont they realize what is done in the dark must come to light. Dem fi stop back di ppl dem inna di cawna because that is when ppl become unpredictable and revolt. This is a crying shame.

    I remember a few years ago when they started building the palmyra in mobay and all u see is workers from another country working on the building and hardly any Jamaican workers. And as a young lady i would think, why dont the Jamaican government make a deal with these ppl that in order to build on the island they have to employ a certain amount of workers. Mi all hear seh one ah di resorts weh did ah build even tief sand from the beach in one a di parish dem (i think it was trelawny). And these ppl are allowed to get away with bullshit like this. smh

  • Tweet says:

    3GB, di only use we have to dem is to provide slave labor fi dem hotels and businesses. Di Jamaican government (regardless of party in power) always fraid fi play hardball and seriously negotiate with these foreign entities cause dem fraid dem change dem mind and go somewhere else wid dem money.

  • Cindy Royal says:

    And u know Tweet & Toni, with all these troubles, with the crime, with everything bad, good, indifferent & great about Jamaica I just love being in Jamaica. A columnist wrote the other day that “Jamaica is so exciting it could kill you” lol & I’m telling u, is true, but I love my country world without end.

  • Tweet says:

    Cindy, trust me I love Jamaica like nowhere else…I really want to move back, but at the rate things are going I don’t know what will be left to move back to. It’s just depressing sometimes and I think that’s why more people don’t speak out—dem oerwhelmed by the circumstances and feel paralyzed.

  • Jules says:

    Signing with the IMF is signign with the devil. They own you, and they will own you for eternity. Jamaica has to stop putitng so much dependence into tourism. Science and technology, eginneering, pharmaceutical and agriculture are areas we should be expanding into. Some countires don’t have any natural resources and doing way beyond us.

  • Jules says:

    Tweet, mi nah watch nutten. Mi a move back miself and all mi need is a place wid nuff land suh mi can grow mi own food, mi plan fi also be off di grid and guh solar fimmi energy. If u hab a mind fi self-reliance and sustain uself none a dese happenings woan shift u. If u in doubt doh, nuh do nutten..nobody should meck nuh move like dat widdout a clear resolve and certainty inna dem choice. All mi a wait pon is fiddi spirit tell mi fi go now.

    Sad ting doh, a nuff Jcans mi know a guh inna retirement to other countries. Some juss can’t afford fi live inna JA when chepa places out deh wid di sed wedda. It sad dat folks haffi a guh stranga land fi survive instead a being in dem own, munx dem own.

  • Belly Bang says:

    Yuh see wah happen wid the X6 Bank Mix up wah day. Their only mistake was to defraud ah private company, cause if dem did tek di usual route & nyam ah food offa one Government Agency, it wouldnt reach suh far until one next party investigate.

    Ah dat ah di ting everybody want nyam ah food quick and without sweat – dem nuh want to be accountable, pay taxes etc etc. Taxes naw pay & the vast majority of those who owe are successful businessmen and uptowners. For a country where homes are regularly sold for US500g & up, & dem ah sell, & which part the latest and best cars can be seen in the uptown areas, how comes wi in this????

    Dem seh wi nuh fi chat certain tings, but when man who own big big company, with big big political connections cause him ah campaign manager when him ready, can sit down in meeting about taxes where him owe millions and say that him nuh have it to pay, but man ah drive the latest car + Hummer etc etc, dats why wi naw get nuh better.

  • Belly Bang says:

    Everyday people get up & cuss bus man and taxi man. But ah wonda if dem know seh yuh haffi hav a tax compliance certificate fi have a road licence& the majority ah dem ah file dem little income tax. & the big big smady dem up top, who can do better, ah use lawyer and accountant and gymnastics fi avoid paying theirs or fi cut down pon wah dem owe.

  • PhantomPhoenix says:

    DFDR…the system is still the same massa and servants. The only ones a benefit a de decendants (black/white) a plantation owners. All symbols and system left over should be eradicated. Then we see some actors featured right yahso (Pon JMG) whey a fling money inna crowd an people a flock to them…that is a f000ing insult. We have the ones who scam loans and get held in high regards because of the material things they own and the last name dem have…an other factor to nonprogress.

    The people need to start shout loud and use the power of no confidence votes fi get rid of nonprogressives. While me at it….time fi also eradicate these wholesale places whey people a line up opposite chicken wire and steel bars fi buy them goods like prison shop dem de inna. PROGRESS and ACCOUNTABILITY rest on the shoulders of the citizens of Jamaica. We have accepted this plantation life fi over 50 years.

  • Tweet says:

    Jules, yuh know mi friend dem always a laugh after me cause mi always say di same ting—mi say mi want piece a land wid a river a run tru it so mi can have mi own water supply and mi solar power and mi do my farming and rear mi animals dem…

  • Jules says:

    Tweet, meck dem galang laff..but a u gwine have di lass laff. JA mindset demand one of self-reliance and self-sufficiency. U even betta dan mi, u did a tink bout riva..mi may need a riva miself now to…lol

  • Tweet says:

    DWL, Jules when mi a plan i tink bout every single detail…mi nah tek up dem time. If people can do it in countries where dem nuh have half a what we have in Jamaica (in terms of natural resources), why mi caan do it too?

  • Jules says:

    And goodly di riva deh gi u some crayfish and mountain u can meck some nice soup or pepper dem up if u want. Baxscova, guh si di sed fren dem pack up every munt a come look good lviing awfa u…lol

  • toni ann says:

    @tweet and jules

    you guys are giving me idears lol

  • Foxy Lady says:

    This was in the works for a long time and goes back to Michael Manley’s deal with the devil the IMF.
    Jamaicans need to stop buying imported goods, yes it’s cheaper but it’s also strategic. We have killed our own local economy, where it’s now cheaper to import ground provisions than to buy homegrown. Madness.
    Back in the 80’s the dollar was 2-1, Jamaica was basically self sufficient. We had a lot of natural resources but the devil’s gifts are cursed.
    But don’t think it’s just Jamaica, the is global and the great USA is no better off, we’re just in the dark but when the shit hits the fan everyone will realize that we’ve all been fooled.
    This shit has very little to do with Jamaica itself and more to do with the economic hitmen that were sent in to keep Jamaica beholden to the USA.

  • Tweet says:

    DWL, yuh see it

  • there is a man dat I know who was a Financial controller for a sugar company in Jamaica but he now lives in the US. he explain to me how the big companies including the company he was working at rip off goes like this.
    when certain taxes are deducted from an employee’s pay check,eg NIS.NHT ,they companies do not pay over these taxes to the goverment.what they do is put the money in their bank accounts and get the interest that the money if an employee is fired or leaves and then decide later to go to the NHT or NIS office for their money no money will show up but what the people at the those places will do is call their big friends in the big companies and tell them that “there is a person here who say him work fi yuh fi so many years and him come fi claim back some money but wi dont see nutten.wah happen” big company say “yeah man .him work here yes.jus tell him fi come back tomorrow(or whenever)” he then writes and check and sends it to his contact at NHT or NIS to give the worker when he turns up next time..the NIS or NHT contact then meets Mr Big company somewhere and collects a liitle thing.
    now this scheme works because a lot of people migrate or people die so in many cases people dont return for the money that was deducted.people contribute to NHT ,leave and never return for their deductions or any loans to buy houses..the companies know this so rather than turn it over to the Government they keep the money until you turn up.if you dont turn up its theirs.

  • King says:

    Jamaica’s debt is 123% of GDP vs Greece’s debt of 166% of GDP, meaning Jamaica’s debt is lower than Greece’s. However, Jamaica’s interest burden is 13% vs Greece’s interest burden of 6.7%. As such, Jamaica is in a worst debt problem than Greece. Just imagine 50 cents of every dollar earned in JA goes to service the country’s debt, the other 50 cents is spent on what??? Corruption, cronyism, etc.

    Leadership is definitely vacant.

  • King says:

    Jules you are so right. The IMF loans in JA has reduced its local production of agricultural goods to only 10% of GDP, while allowing the US to subsidize their agricultural industries. The government of JA continued to spend frivolously and become more of a slave to the IMF. So for sure, based on its prescribed austerity measures (increase imports and reduce exports, increase local taxes, etc.) the IMF owns Jamaica. What a shame!!!

  • one2tree says:

    Dat no surprise me …NON A TALL

    Point to Note: Jamaca has been borrowing from 1972..


    JAMACA -imf- welcomes SILLY GOVERNMENT like these

  • “Life and Debt” the documentary–if they had listened and followed M. Manley…

  • Quentin says:

    If you stop and think for a moment, the same things happen/are happing in many, many other countries. It’s just the method used. There are enough folks in Jamaica striving to solve/find solutions to issues that affect not only Jamaica but the world.

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