The International Monetary Fund has granted Jamaica a much-needed economic lifeline. In return, the island – one of the most indebted countries in the world – needs to get a grip on its rampant public spending.
Inside a Cambio (currency exchange ), as the customers wait in line, the talk quickly turns to the exchange rate. In a country where many depend on remittances sent by family members in the U.S., Canada and the U.K., the country’s sliding dollar is a worry.
“It’ll soon be $100 (Jamaican) to $1 (U.S.), watch my words,” says an old man. A woman interrupts to add that it won’t stop there, as everyone looks at the board displaying the exchange rate.
It’s a sentiment that’s been echoed across the island for months. Since the start of the year the local currency has lost over 8 percent of its value and investor confidence has also fallen. But many hope that will change with Jamaica finally signing a deal with the IMF.
The executive board has agreed to a loan of $950 million that’s an economic lifeline to the country. The island, which owes some $18 billion, has undertaken a debt swap by local lenders and has promised to tackle tax reform and public spending.
This should unlock millions more in aid and loans from other multi-lateral agencies; but many are wary after a similar loan and debt exchange in 2010 didn’t help to improve the economy after key goals weren’t meet.
In an upscale neighborhood, members of what’s known locally as “Corporate Jamaica” aka the middle class, sit inside a coffee shop. They see the deal as the best of a bad situation. One office worker said, “without it, we’d be lost,” another continues, “we seem to constantly be in this position.”
Many Jamaicans have made light of comparisons to Greece and other nations facing austerity measures. “We’ve been in that situation for the past 30 years,” was a comment made by one. But the situation for the country is bleak.
In the past 30 years Jamaica’s economy has been one of the worst, performing globally at about 1 percent growth per year. The other figures don’t look pretty either.
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