CRUCIAL ARTICLE: President Obama Visits Jamaica, but What Is His Government Doing to Jamaica's Economy? The Caribbean island nation, probably best known for dominating the sport of sprinting, has had declining living standards for the past 20 years. Per capita GDP has fallen by an average of 0.3 percent annually over the past two decades, making Jamaica the worst-performing economy in the hemisphere over this long haul....Does Jamaica need debt cancellation assistance or better fiscal managment? What do you think?

Posted: 04/08/2015 1:54 pm EDT Mark Weisbrot Huffington Post

The international media isn't paying much attention to President Obama's trip to Jamaica this week, but maybe they should. The country has become a terrible example of what can happen when creditors, led by the International Monetary Fund (IMF), are able to impose harsh austerity on a trapped nation in an attempt to collect on an uncollectable debt. Since the U.S. Treasury Department decides what the IMF does in the Western Hemisphere, President Obama himself can claim responsibility for this crushing economic failure.

Barack Obama-Jamaica I Cry For You

The Caribbean island nation, probably best known for dominating the sport of sprinting, has had declining living standards for the past 20 years. Per capita GDP has fallen by an average of 0.3 percent annually over the past two decades, making Jamaica the worst-performing economy in the hemisphere over this long haul. And this measures only average living standards; it is much worse at the bottom, where poverty has more than doubled since 2007, and where unemployment is currently over 14 percent, higher than it stood during the world recession. (More detail can be found here.)

But the worst part, and the part where Washington bears the most responsibility, is the country's future prospects. It is currently under an IMF agreement that requires the government to run annual primary budget surpluses -- revenue minus spending, excluding interest payments -- of 7.5 percent. This is the worst such burden in the world. For comparison, Greece was projected to run a primary budget surplus of 3 percent this year, and about 4.5 percent thereafter -- and this is so unsustainable that it is causing a political crisis as well as a widespread belief that it can't possibly happen.

How can something so much worse be done to Jamaica? Besides the obvious fact that Jamaica is much poorer and also over 90-percent Black, it mostly boils down to the creditors' cartel, headed by the IMF, which is calling the shots. This used to be the situation faced by most of the Western Hemisphere south of the U.S., but in the past 15 years the vast majority of the region has gotten loose from the IMF and Washington's grip, winning Latin America's "second independence." Jamaica is an extreme example of what happens to those who were not fortunate enough to get away.

The fiscal austerity that this cartel has imposed would be enough to throw even the U.S. economy into recession, with budget tightening of 5 percent of GDP between 2012 and 2015. Even at the IMF executive board, which must approve the four-year agreement that the country is operating under, about 25 percent of the directors were worried that excessive austerity could threaten Jamaica's "fragile recovery and social cohesion." more