Riots in Jamaica prompted by deepening debt crisis

 

Six people died in several days of rioting against proposals to increase fuel taxes by the Jamaican Government. The government has indicated that it will reconsider its proposals. However, the deaths prompted new calls for the cancellation of the devastating burden of debt which cripples the small tropical island economy.

The Jamaican High Commissioner in Britain, Derick Heaven, said that debt payments were taking up over 60 per cent of the government's budget, leaving resources for health, education and infrastructure investment massively depleted. The government had been forced to raise taxes on fuel and vehicle licences in order to balance the books in its budget, presented last week.

In August 1998, the Financial Times reported on a row between Jamaica and the International Monetary Fund due to the IMF's governors urging higher taxes and depreciation of currency, which the finance minister Omar Davies called `not feasible'.

The British Foreign Office is advising against non-essential travel to the island, which combined with the news coverage will have a hugely damaging effect on the tourist industry. Tourism is Jamaica's largest earner of foreign currency, which then goes back to the rich western countries in debt servicing.

Ann Pettifor, Director of Jubilee 2000, said: “Debt is proving to be a terrible destabilising factor in Jamaica. Many British and American holidaymakers put money into Jamaica, but what they don't see is the creditors pumping it straight out again. We are seeing the same story repeated throughout the developing world. For too long creditors have failed to act decisively, due to their self-interest and lack of vision. The need for an end to the global debt crisis is more urgent than ever.”

Facts on Jamaica's debt Jamaica's total foreign debt is $4.1 billion (£2.4 bn), which is 100% of GDP. Two thirds of the debt is owed to governments and multilateral institutions such as the IMF and World Bank. The High Commissioner has stated that debt repayments take up 66% of government expenditure which dwarfs spending on education which was 7.7% in 1995*. In 1996 Jamaica paid out £17.05 in debt service for every £1 received in aid grants. Jamaica owes the British government £68.5 million. * Human Development Report 1993 – 1995.