May 08
“The paper notes that Jamaica remains one of the most highly indebted countries in the world, and that its interest payments as a percent of GDP were higher than anywhere else in the world in 2011, including even crisis-stricken countries in the eurozone. Jamaica’s large debt burden has displaced most other public expenditures, taking up almost 50 percent of total budgeted spending over the last four fiscal years while health and education have been only around 20 percent combined.”
Over 20 years ago, Professor Kari Polanyi Levitt analysed the devastating social and economic effects of Jamaica’s debt burden in a seminal paper entitled “The Origins and Consequences of Jamaica’s Debt Crisis; 1970-1990″* In 1999, the present writer presented a paper which argued that Jamaica was caught in an ‘internal debt trap’ which effectively blocked economic growth and social development. The CEPR paper provides updated and convincing evidence that progress for Jamaica will continue to be virtually impossible with the current debt burden. It proposes “concerted multilateral debt relief or a far more ambitious debt restructuring” than that carried out under the Jamaica Debt Exchange of 2010. As in the countries Eurozone like France, Greece, Spain, Portugal and Ireland, the issue in Jamaica is whether, and for how long, the interests of creditors will contunue to be put ahead of the interests of the population. We should be paying close attention to developemnts in these countries, especially Greece.
Norman
* Reprinted in Levitt’s book Reclaiming Development, published by IRP, 2005
I really think we need to re-engage the Freedom from Debt campaign,which civil society organisations in Jamaica, the Caribbean, North America & Europe mounted to considerable effect in the 1980s. The campaign helped to make debt write offs (previously described by a WB official (in my hearing) as impossible) and other measures part of the policy package for other countries.
People have become so caught up with corruption & accountability issues (and these are very important) that we are not paying attention to one of the other fundamentals. I don’t know what Peter Phillips’ position is, but when Omar Davis was Finance Minister, he made debt repayment a non-negotiable plank of the then government’s policy.
What is the point of making proposals about tax reform and expanding the social safety net if the country is carrying a burden that is not only burying us, but will blight the prospects of generations to come? Do you think we are really going to be able to provide adequate support for early childhood education, community renewal, small & micro enterprise development and all those other things we say we are concerned about if something radical is not done about our debt?
If we want Jamaica’s 50th anniversary to signify something it needs to become a Year of Jubilee.
Peta-Ann–may be a start should be made by calling for a forensic audit of the debt. Lloyd D’Aguilar wrote a paper about this at http://www.normangirvan.info/daguilar-forensic-audit-jamaica%e2%80%99s-debt/
He thinks that as much as 70 percent of Jamaica”™s public debt may be illegitimate, and listed twenty-one questionable projects and dealings which need investigation.
I’m still not sure what a forensic audit would achieve. Is it that we think that 70% of the debt wasn’t acquired with full government approval (even retroactive in the case of projects initiated in the time when the government didn’t have a legitimate majority in the House between 2007 and I think 2009?) or that 70% of the debt was acquired because of ineptitude? If the former then there could be a case for repudiating the debt, but if the debt was acquired because the governments of the day (PNP or JLP) were just plain stupid and not thinking carefully about our debt burden then I fail to see how it could be considered illegitimate. It could be called inappropriate and unnecessary. Even in the case of bribery scandals I’m not sure if it would make the debt illegitimate as the act of bribery is illegal and the persons offering and accepting the bribe are supposed to face the full sanction of the law and depending on the case the bribe money itself should be returned. But does anyone know of any cases where past contracts that have already been fulfilled in any country due to bribery have been invalidated and the money paid back as a result of the bribery? Because in the case of the Mabey and Johnson case it could mean we have infrastructure already in existence for which there is a material and labour cost that would in theory have to be torn down, otherwise one is essentially punishing the innocent parties involved (the persons who built the bridge and played no part in the bribery, the persons who sold material to Mabey and Johnson and who may be awaiting payment for the materials etc). Basically you cannot “unbuild” a bridge can you? You can’t take the material down and return it the persons who sold it and you can’t give the labourers who built it their time and energy back in return for the money they were paid as a result. Unless in this case the idea is that the ones who offered the bribe and the ones who accepted the bribe should bear the direct cost of any resulting debt from the contract (not a bad idea actually…if written into law it might make our politicians more careful about acquiring debt since they might personally be held responsible for every cent of it if turns out it was acquired in an underhanded manner).