In an earlier blog "7 numbers every Jamaican should be concerned about" I highlighted some data and information points about the state of the Jamaican economy. Today I review those figures with
some updated information. The situation has not budged favorably, in fact it has gotten worse and
as a result I feel the need to further highlight the facts and figures in an effort
and hope to bring further attention to the matter. Hopefully maybe just maybe
more Jamaicans will become more aware and sensitive to the present challenges
we face and the critical implications for the future of Jamaicans between age
groups 25 - 50.
Jamaica's
Gross Domestic Product - JM$1,226.15 Billion
- Jamaica's GDP growth rate for
2011 - 2.2%
- Jamaica's rank on IMF's data
of the worlds slowest growing economies - 7 th.
Total National Debt
at end of 2011 - $1.63 trillion
Total
Government Gross Debt as of September 2012 - JM$1,713.29
Billion
Growth of Debt:
- Growth rate of Jamaica's
Total Internal Debt for 2011 - 8.55%
- Growth rate of Total
Government Guaranteed External Debt between Mar 2010 - Feb 2011 - 18.75%
- 2012 debt growth rate - 5-6%
- Close to $300 million per day
Jamaica
is ranked as the 2nd most indebted country in the world.
Rank
Country
2010 Gross Government Debt ($B)
% of GDP
1
Japan
12,009
220
2
Jamaica
19
143
3
Greece
436
143
4
Lebanon
53
134
5
Iraq
97
120
6
Italy
2,445
119
7
Belgium
452
97
8
Sinapore
214
96
9
Ireland
196
95
10
USA
13,707
94
11
Portugal
213
93
12
Icaeland
12
92
13
Germany
2,759
84
14
Canada
1,324
84
15
France
2,110
82
16
Hungary
105
80
17
Isreal
168
77
18
UK
1,699
76
19
Egypt
161
74
20
Austria
272
72
21
Sudan
47
72
22
Brazil
1,397
67
23
Jordan
18
67
24
Cote
dIvoire
15
67
25
India
1,046
64
26
Netherlands
497
64
27
Cyprus
14
61
28
Spain
848
60
29
Uruguay
23
57
30
Pakistan
100
57
Source:
International Monetary Fund (IMF)
National GDP growth
rate 2.2% relative to the national debt
growth rate 8.55% is to slow to curb
unsustainable imbalance between government income and expenditures. The debt to GDP ratio (143% in 2010 - Possibly 160% by
the end of 2012) will detrimentally continue to climb over the coming
three to five year to an unbearable level.
A few
things that will be a continuing economic trend in 2013 given the current
national economic situation:
- More Taxes: Debts must
be repaid and the primary means for the government to pay these debts is
through taxes. Jamaicans should brace for more and significant tax
increases in 2013 should national debt growth rates continue to out pace
GDP growth rate and government tax inflows growth rates. This is
happening.
- Lack of national financial resources to spend on
public sector wages and national infrastructure:
- If there is no funds to finance
public sector wages then one of or two things could happen. Public sector
workforce will be cut or a salary freeze will be imposed for a meaningful
period (the next 3-5 years). This will happen.
- The
quality of government services and facilities is diminishing. An over
burdened public health sector is becoming the norm as a result of lack of
resources. Poor quality roads will be the standard as there will soon be
no funds to have them fixed. Roads outside of the corporate area have
been deteriorating and continue to do so without abatement. Poor national
security as the ability to provide resources to the security forces will
be significantly constrained.
- Devaluation of the Jamaican dollar: The more debt Jamaica has the less attractive the
currency looks especially if NIR is being used to pay debt. The more the
dollar devalues the more expensive everything will become and
technically leading to increased poverty. December 2011 - US$1:JM$86.75
-> November 2012 - US$1:JM$91.46. Devalued by 5.43% in the last yoy
period.
- Higher interest rates: If
Jamaica is viewed as being less capable of repaying its debts by
international rating firms, Jamaica could be down graded. If this happens
higher interest rates could follow and as a result to cost of money will
go up. if this happen and history repeats itself Jamaicans may
brace for further economic contraction.
- Jamaica's rank on IMF's data of the worlds slowest growing economies - 7 th.
- Growth rate of Total Government Guaranteed External Debt between Mar 2010 - Feb 2011 - 18.75%
Rank
|
Country
|
2010 Gross Government Debt ($B)
|
% of GDP
|
1
|
Japan
|
12,009
|
220
|
2
|
Jamaica
|
19
|
143
|
3
|
Greece
|
436
|
143
|
4
|
Lebanon
|
53
|
134
|
5
|
Iraq
|
97
|
120
|
6
|
Italy
|
2,445
|
119
|
7
|
Belgium
|
452
|
97
|
8
|
Sinapore
|
214
|
96
|
9
|
Ireland
|
196
|
95
|
10
|
USA
|
13,707
|
94
|
11
|
Portugal
|
213
|
93
|
12
|
Icaeland
|
12
|
92
|
13
|
Germany
|
2,759
|
84
|
14
|
Canada
|
1,324
|
84
|
15
|
France
|
2,110
|
82
|
16
|
Hungary
|
105
|
80
|
17
|
Isreal
|
168
|
77
|
18
|
UK
|
1,699
|
76
|
19
|
Egypt
|
161
|
74
|
20
|
Austria
|
272
|
72
|
21
|
Sudan
|
47
|
72
|
22
|
Brazil
|
1,397
|
67
|
23
|
Jordan
|
18
|
67
|
24
|
Cote
dIvoire
|
15
|
67
|
25
|
India
|
1,046
|
64
|
26
|
Netherlands
|
497
|
64
|
27
|
Cyprus
|
14
|
61
|
28
|
Spain
|
848
|
60
|
29
|
Uruguay
|
23
|
57
|
30
|
Pakistan
|
100
|
57
|
- If there is no funds to finance public sector wages then one of or two things could happen. Public sector workforce will be cut or a salary freeze will be imposed for a meaningful period (the next 3-5 years). This will happen.
- The quality of government services and facilities is diminishing. An over burdened public health sector is becoming the norm as a result of lack of resources. Poor quality roads will be the standard as there will soon be no funds to have them fixed. Roads outside of the corporate area have been deteriorating and continue to do so without abatement. Poor national security as the ability to provide resources to the security forces will be significantly constrained.
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