Jamaica Fiscal Adjustment

Jamaica’s fiscal adjustment, the sustained effort to cut deficits, run primary surpluses and reduce public debt, has reshaped government spending and the economy over the past decade and more. Jamaica Homes News examines the policies, trade-offs and results of fiscal consolidation, and their effects on interest rates, public investment and housing.

Analysis

The Budget That Had to Work: Jamaica’s First IMF-Disciplined Spending Plan and the Politics of Adjustment

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The 2010/11 budget, presented to Parliament on April 8, 2010, was not a document about ambition. It was a document about arithmetic. Every number in it had been negotiated with the IMF, checked against primary surplus targets, and reviewed for compliance with a Stand-By Arrangement that Jamaica’s creditors and multilateral partners were watching with unusual attention. The government had secured its programme. Now it had to deliver one.

Analysis

When Jamaica’s Creditors Said Yes: The Debt Exchange That Changed the Country’s Fiscal Trajectory

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When the Jamaica Debt Exchange closed at the end of January 2010, the government had expected broad participation. What it got was something closer to a national act of faith. Ninety-nine point two percent of eligible domestic bondholders had voluntarily surrendered their existing securities for new bonds with lower interest rates and longer maturities — a participation rate that would be cited internationally as one of the most successful debt exchanges in the developing world. The IMF Board’s formal approval followed twelve days later. Jamaica had, against considerable odds, bought itself a chance.

Analysis

Three Point Four Per Cent: The Year Jamaica’s Economy Hit Rock Bottom and Struck a Deal

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In the fourth quarter of 2009, Jamaica needed three things simultaneously: a new Bank of Jamaica governor, a deal with the IMF, and some evidence that the economy might eventually stop contracting. It got all three. The governor arrived in December, the IMF agreement was initialled days later, and the GDP figures, when finally tabulated, confirmed that 2009 had produced a 3.4 percent contraction — the worst in a generation. Whether the deal would deliver recovery was another question entirely.

Analysis

Two and a Half Billion Short: The Quarter Jamaica Decided It Needed the IMF

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By July 2009, Audley Shaw’s monthly revenue figures had become impossible to explain away. The bauxite refineries were dark. Remittances were declining for their thirteenth consecutive month. And the government that had tabled Vision 2030 just weeks earlier — a twenty-one-year plan for national transformation — was running a monthly deficit of J$2.5 billion. By the end of that summer, there was one decision left to make.

Analysis

The Winter of All Winters: Jamaica’s Fourth Quarter of 2008 Brought Barack Obama’s Election, the Deepest Tourism Contraction in Five Years, and a Government Walking Reluctantly Toward the IMF as the Global Financial Crisis Made the Island’s Debt an Emergency It Could No Longer Manage Alone

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The fourth quarter of 2008 was Jamaica’s reckoning: tourism arrivals declined for the first time since 9/11, remittances fell, and the Golding government began formal conversations with the IMF. Barack Obama was elected President on November 4, carrying with him the hopes of a diaspora that Jamaica depended upon to survive the coming year.

Analysis

Nine Point Six Nine: Jamaica’s Summer of 2008 Brought Usain Bolt Three Gold Medals and Three World Records in Beijing, and Lehman Brothers’ Collapse to Wall Street, and the Two Events Together Defined an Island Caught Between Its Greatest Sporting Triumph and Its Most Dangerous Economic Moment

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Usain Bolt ran 9.69 in Beijing on August 16. Lehman Brothers filed for bankruptcy on September 15. Jamaica lived both events in the same quarter — its greatest sporting triumph and its most dangerous economic moment arriving within twenty-nine days of each other.