Dear Editor,
In a letter dated July 14, 2015, five US Congressional members wrote to President Barack Obama asking that he urge the International Monetary Fund (IMF) "to provide the [Jamaican] Government the fiscal space it desperately needs to boost growth and address continued high unemployment and poverty".
This follows Obama's visit in June when he stressed that economic growth is the best way forward in reducing Jamaica's debt burden. The letter states that, "Jamaica now has the world's most austere national budget; with a 7.5 per cent primary surplus last year and for at least the next three years as part of the current IMF programme. Its interest burden is among the world's highest (8 per cent of GDP) and interest payments to multilateral financial institutions surpassed multilateral loan disbursements in 2012 and 2013. Last year, Jamaica paid US$136 million more to the IMF than it received from it... We believe the IMF should lower Jamaica's budget surplus [since] the extreme fiscal austerity imposed has proven counterproductive."
This follows Obama's visit in June when he stressed that economic growth is the best way forward in reducing Jamaica's debt burden. The letter states that, "Jamaica now has the world's most austere national budget; with a 7.5 per cent primary surplus last year and for at least the next three years as part of the current IMF programme. Its interest burden is among the world's highest (8 per cent of GDP) and interest payments to multilateral financial institutions surpassed multilateral loan disbursements in 2012 and 2013. Last year, Jamaica paid US$136 million more to the IMF than it received from it... We believe the IMF should lower Jamaica's budget surplus [since] the extreme fiscal austerity imposed has proven counterproductive."
A similar letter was sent by US Congressional members to the IMF on July 2, 2015 concerning both Jamaica and Greece. That letter noted that: "Greece has already reduced its national public sector work force by 19 per cent and carried out many of the reforms demanded by the IMF and its creditors. It has gone through an enormous fiscal adjustment... At the same time, as even the IMF has acknowledged in its own research, the austerity imposed by Greece's creditors over the past five years turned out to be far more devastating to the economy than they had predicted."
Thus the debate about the possible outcomes of the current IMF programme must remain alive, and open. It is a pity that Ralston Hyman, once respected for his independence, has now become a seeming mouthpiece for the Government in trying to rubbish a suggestion, in line with the above, to reduce (not eliminate) Jamaica's primary surplus from 7.5 per cent to 5.5 per cent.
Greg Christie and Kavan Gayle are not necessarily incorrect in their assessment that there is too much emphasis on satisfying creditors. The creditors may suffer in the end when the squeeze cannot become any stronger. Greece's story is far from over, and Jamaica's too.
Paul Ward
Campaign for Social & Economic Justice
Kingston 7
Ja's IMF squeeze
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In a letter dated July 14, 2015, five US Congressional members wrote to President Barack Obama asking that he urge the International Monetary Fund (IMF) "to provide the [Jamaican] Government the fiscal space it desperately needs to boost growth and address continued high unemployment and poverty".
This follows Obama's visit in June when he stressed that economic growth is the best way forward in reducing Jamaica's debt burden. The letter states that, "Jamaica now has the world's most austere national budget; with a 7.5 per cent primary surplus last year and for at least the next three years as part of the current IMF programme. Its interest burden is among the world's highest (8 per cent of GDP) and interest payments to multilateral financial institutions surpassed multilateral loan disbursements in 2012 and 2013. Last year, Jamaica paid US$136 million more to the IMF than it received from it... We believe the IMF should lower Jamaica's budget surplus [since] the extreme fiscal austerity imposed has proven counterproductive."
This follows Obama's visit in June when he stressed that economic growth is the best way forward in reducing Jamaica's debt burden. The letter states that, "Jamaica now has the world's most austere national budget; with a 7.5 per cent primary surplus last year and for at least the next three years as part of the current IMF programme. Its interest burden is among the world's highest (8 per cent of GDP) and interest payments to multilateral financial institutions surpassed multilateral loan disbursements in 2012 and 2013. Last year, Jamaica paid US$136 million more to the IMF than it received from it... We believe the IMF should lower Jamaica's budget surplus [since] the extreme fiscal austerity imposed has proven counterproductive."
A similar letter was sent by US Congressional members to the IMF on July 2, 2015 concerning both Jamaica and Greece. That letter noted that: "Greece has already reduced its national public sector work force by 19 per cent and carried out many of the reforms demanded by the IMF and its creditors. It has gone through an enormous fiscal adjustment... At the same time, as even the IMF has acknowledged in its own research, the austerity imposed by Greece's creditors over the past five years turned out to be far more devastating to the economy than they had predicted."
Thus the debate about the possible outcomes of the current IMF programme must remain alive, and open. It is a pity that Ralston Hyman, once respected for his independence, has now become a seeming mouthpiece for the Government in trying to rubbish a suggestion, in line with the above, to reduce (not eliminate) Jamaica's primary surplus from 7.5 per cent to 5.5 per cent.
Greg Christie and Kavan Gayle are not necessarily incorrect in their assessment that there is too much emphasis on satisfying creditors. The creditors may suffer in the end when the squeeze cannot become any stronger. Greece's story is far from over, and Jamaica's too.
Paul Ward
Campaign for Social & Economic Justice
Kingston 7
Ja's IMF squeeze
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