Prime Minister Portia Simpson-Miller and Finance and Planning Minister Peter Phillips took to Jamaican airwaves Monday night to tell the nation of 2.6 million people what they already know–that the island globally known for Usain Bolt, Bob Marley and some of the best all-inclusive resorts in the world is drowning in domestic and external debt.
So urgent is the situation that the island’s first woman prime minister (and one of only two in the Caribbean trade bloc at the moment) said authorities are launching a national debt exchange offer in a last-ditch effort to meet mandates from the International Monetary Fund, with which it has one of the world’s longest austerity economic relationships.
She hopes some of the regular bondholders and buyers who have helped to bail out various governments in the past will lead the way in this round, as the prognosis is extremely bleak.
“If the debt is not reduced, Jamaica faces a dismal future,” Simpson-Miller said. “With this debt, we will not be able to achieve the levels of productivity that will make our economy more competitive. With this debt, no administration will be able to provide the level of education and training required for Jamaica’s labor force to meet the needs of the job markets.”
As it stands now, the national debt is at 140 percent of the gross domestic product, but the administration remains under severe pressure from the IMF and other international lending institutions to reduce this to about 95 percent by 2020.
Speaking directly to potential buyers, Phillips assured them that “there will be no haircut on their principal investment. This offer, which we urge bondholders to accept, will make possible the reduction of our debt-to-gross domestic product (GDP) ratio by 8.5 percent or around.”
Just last week, the Barbados-based Caribbean Development Bank pointed to several regional economies that will record little or no growth this year, Jamaica among them.
A bad economy and the fallout from a series of mismanaged crises–including the effort to extradite to the U.S. one of the island’s most wanted fugitives–helped the then-incumbent Jamaica Labor Party to lose the late 2011 general elections to Simpson-Miller’s People’s National Movement (PNP).
Back in 2010, the JLP had itself successfully floated the debt exchange offer to much criticism from the PNP, but now the shoe is on the other foot, as was demonstrated in the PNP’s emergency appeal to citizens on Monday night.