Cauterizing Jamaica’s Debt Wound

There’s been a bit of an uproar in Jamaica ever since the Chicago Tribune published an editorial on Jan 8, 2013, comparing Jamaica’s parlous financial state to that of Greece, considered the biggest loser of 2012. Provocatively titled Jamaica’s Debt Hurricane the editorial drew attention to Jamaica as another Greek tragedy waiting to happen:

Americans concerned about the impact of public debt on the global recovery have focused — with good reason — on Greece. Closer to home, however, the tourism mecca of Jamaica illustrates the catastrophic effects of borrowing way too much, and the painful choices that follow. This saga, less familiar than Greece’s, is a lesson for lawmakers in the U.S. and elsewhere.

The Caribbean nation actually is in worse financial shape than Greece: Jamaica has more debt in relation to the size of its economy than any other country. It pays more in interest than any other country. It has tried to restructure its loans to stretch them out over more years, at lower interest rates, with no success. Such a move would be risky for its already nervous lenders. So Jamaica is trying to wangle a bailout from a skeptical International Monetary Fund. Another deadline for a potential deal just came and went last week, though negotiations continue.

Jamaica is caught in a debt trap. More than half of its government spending goes to service its loans. The country can spend barely 20 percent of its budget for desperately needed health and education programs. Its infrastructure is faltering. It lacks resources to fight crime. It has little margin to recover from natural disasters such as Hurricane Sandy.

To set itself straight, Jamaica needs a restructuring, and a bailout with significant debt relief. No way can a small economy that has limped along with growth at less than half the global average for two decades pay back the fortune that it owes. But as with Greece, as with America, as with the state of Illinois, government leaders have balked at imposing the inevitable hardships. Saying no to favored constituents is no easier in Kingston than in Springfield.

This bald statement of Jamaica’s stark reality has deeply shaken this nation whose citizens have never had a liking for plain talk. Being a former sugar plantation, the product is abundantly available, and sugar-coating the truth is routine. In the excited chatter that followed, this response by a young friend on Facebook stood out. His name is Samuel Morgan:
Ok – so Jamaica has a serious and critical debt problem. This is therefore the challenge of our time, for our generation to fix and I believe wholeheartedly that we can – why are we educated if not to find solutions? if we don’t, then our children will have to fix it, and if they don’t then theirs will. Could I find just 20 humble and willing people who aren’t motivated by greed and personal welfare, who aren’t caught up with always going to party at maiden cay and getting drunk on Friday nights – who are not so egotistic as to think that they are better than their ordinary countrymen , who are patient and ingenious , who are prepared to sacrifice for the good of those who will come after, whose names will be deserving of marking the halls dedicated to them and their work, and whose names children of the future prosperous Jamaican nation will proudly bear? Could I just find 20 people who understand that things will never get better unless I can find these 20 people? And could those 20 people inbox me with the subject – Revolution!
Its the young who will have to find ways to cauterize our debt wound. If there are enough like Samuel Morgan around there is hope.