Jamaica’s Economic Turnaround

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KINGSTON, Jamaica — Jamaica was once heavily in debt. Yet, in the past 10 years, it has completely transformed its economy. In 2012, the country’s debt rose to its peak at 145 percent of GDP. However, by 2018, the country’s debt had decreased to 94 percent of its GDP. Jamaica’s economic turnaround was partially due to the International Monetary Fund (IMF) and its efforts to bring economic stability to Jamaica. During the IMF’s program in Jamaica, which ended in 2019, unemployment was in half and Jamaica’s stock market saw its best year ever in 2018.

The IMF’s Jamaica Success Story

Jamaica had been one of the most indebted countries in the world since the early 2000s. The 2008 global recession worsened its fragile economy, causing its GDP growth to reach 4 percent in 2009. In 2012, the country sought help to stabilize its economy. In 2013, the IMF, the World Bank and the Inter-American Development Bank gave  Jamaica about $2 billion to assist in restructuring its economy and reduce its massive debt.

Many investors assumed the small island country’s economy would crash, yet the results were far better than expected. Unemployment fell by half since the start of the program to 7.8 percent in 2019. Additionally, despite the assumption that Jamaica’s economy would crash, its GDP growth only reduced by 2 percent in 2018 from the 4 percent GDP growth it saw in 2009. Also, Jamaica’s stock exchange was the world’s best-performing stock index in 2018.

On the Right Track

If Jamaica continues at this rate, its debt will decrease to 60 percent of GDP in 2025. The success of the IMF in Jamaica was not acting alone though. The government and the IMF made sure that unions and private and public sectors were in favor of the objectives. According to Uma Ramakrishnan, former head of the IMF team for Jamaica, the “Economic Programme Oversight Committee (EPOC) was a critical force” in dealing with structural issues.

In 2019, the World Bank ranked Jamaica in the top 20 for countries with credit reporting systems, and it also ranked its economy as one of the best in the world for starting new businesses. Jamaica’s economic turnaround proved a success thanks to the IMF’s help in revitalizing the island economy.

Plans to Reduce Poverty

As part of its Poverty Reduction Program IV, the Jamaican government plans to spend more than $339 million to help it achieve its Vision 2030 National Development Plan. The European Union and the Government of Jamaica fund the program. The purpose of this initiative is to achieve goals one and two detailed in Vision 2030 which involve increasing the standard of living by reducing poverty and minimizing violence. The country is known for its high crime rate. Consequently, the government is taking the issue seriously to help locals and tourists feel safer. Poverty was 19 percent in 2017, yet that is a drop from 37.5 percent in 1993. The government plans to continually reduce poverty through this program.

Another focus in the Poverty Reduction Program IV is infrastructure development, which is already underway with the construction of 17 sub-projects. These projects include “seven health centers, eight police stations and two road sections.” It has already completed the Barrett Town All-age School and the Tawes Meadows Community Centre in December 2019.

Development is ongoing in Jamaica’s economic turnaround with its Vision 2030 National Goals. The country made substantial progress to reduce its debt and poverty. Thanks to the IMF, the World Bank and the European Union, Jamaica continues to make progress in development.

Lucas Schmidt
Photo: Flickr

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