“Comprehensive debt relief for Caribbean Small Island Developing States (SIDS) that would gradually write-off 100 per cent of their multilateral debt stock is timely. In our view, this proposal is worthy of serious consideration and support from the international community,” Simpson Miller told the United Nations Security Council Debate on the Peace and Security Challenges of SIDS in New York yesterday.
The debt relief proposal was put forward by ECLAC at the 36th meeting of the Heads of Government of the Caribbean Community (Caricom), held recently in Barbados. The regional trade machinery is considering the plan, which would see member states pursuing a gradual write-off of their multilateral debt.
SIDS, although classified as middle-income, continue to buckle under the weight of large debts, while access to development funding is limited because of the United Nations designation.
Yesterday, Simpson Miller also argued that the middle-income designation foisted on Jamaica and other Caricom countries limits their ability to access critical development financing. “This places in jeopardy our ability to finance our sustainable development objectives from domestic public resources,” she stated.
The prime minister pointed out that “unsustainable public debt levels” for the Caribbean averages 70.5 per cent, and that this is aggravated by large current account and fiscal deficits.
The clamour for debt relief for Jamaica and other middle-income countries has been growing louder in recent months, and coming increasingly from various quarters, including United States economists and politicians.
Jamaica’s foreign minister, Senator A J Nicholson, in a statement to the Upper House on July 10, acknowledged that debt relief would create more fiscal space and help Caribbean governments to adapt to social, economic and climate change issues.
Following US President Barack Obama’s historic visit to Jamaica in April, Nicholson said he strongly believed that “we are in a better position to be listened to, and for it to be acted upon, because of the way we have conducted ourselves over these past few years”.
However, Nicholson said Obama had not directly put the prospect of debt relief for Jamaica on the table.
The country’s stock of debt is hovering at $2 trillion, or 130 times its gross domestic product (GDP). This is an increase of some $125 billion, or 6.5 per cent, over 2013/14 despite the Government’s efforts to bring down the debt, and having entered into a four-year agreement with the International Monetary Fund (IMF), which is accompanied by severe conditionalities.
According to the Medium-Term Debt Strategy for 2015/16 to 2017/18, which was tabled by Finance Minister Dr Peter Phillips in the House in February, increases from loan inflows from multilateral creditors, such as the IMF and Caribbean Development Bank, as well as the continued plummeting of the Jamaican dollar, are among the factors that have added to the debt stock.