IMF Loan's Negative Effect: Jamaica and Grenada in Unfortunate Situations
International Political Economy IMF Agreements: Jamaica and Grenada
Part I: Introduction
The mere mention of a loan from the International Monetary Fund (IMF) brings great distress and concerns to the citizens of many developing countries. In spite of the fact that the IMF is perhaps the easiest international lending agency to borrow from, with significantly low interest rates and long term payment plans, governments and peoples of third world countries, even those in desperate situations, seem to dread the idea of approaching the Fund for a loan agreement. This fear is heavily based on the developing world’s previous experiences with the Fund in terms of the conditionalities that come along with an IMF loan. As stated by Rourke and Boyer (2001), the IMF has been accused of imposing “unfair and unwise conditions” that tend to usually worsen a country’s economic and social problems. Anthony Hill (2009) on the other hand argues that the conditions for loans from the Fund are not as “onerous” as they were before. For this reason countries are more inclined than they might have been before to borrow from the Fund especially in the current economic crisis. Such is the case of Jamaica and Grenada. Both Caribbean countries have experienced a round of unfortunate situations in recent times, which have negatively affected their economies, leading to a decision to engage in loan agreements with the IMF.
Terms of the Jamaican Agreement
Jamaica, as stated in the letter of intent, has been experiencing significantly low levels of economic growth and high levels of public debt. The global economic meltdown has worsened the situation of the country, and according to Prime Minister Bruce Golding, left the government with not much alternative but to return to the IMF. The government had outlined a tax package in December 2009 which Prime Minister Bruce Golding refers to as a necessary source of revenue as without the additional revenue there will be no IMF agreement. He
Part I: Introduction
The mere mention of a loan from the International Monetary Fund (IMF) brings great distress and concerns to the citizens of many developing countries. In spite of the fact that the IMF is perhaps the easiest international lending agency to borrow from, with significantly low interest rates and long term payment plans, governments and peoples of third world countries, even those in desperate situations, seem to dread the idea of approaching the Fund for a loan agreement. This fear is heavily based on the developing world’s previous experiences with the Fund in terms of the conditionalities that come along with an IMF loan. As stated by Rourke and Boyer (2001), the IMF has been accused of imposing “unfair and unwise conditions” that tend to usually worsen a country’s economic and social problems. Anthony Hill (2009) on the other hand argues that the conditions for loans from the Fund are not as “onerous” as they were before. For this reason countries are more inclined than they might have been before to borrow from the Fund especially in the current economic crisis. Such is the case of Jamaica and Grenada. Both Caribbean countries have experienced a round of unfortunate situations in recent times, which have negatively affected their economies, leading to a decision to engage in loan agreements with the IMF.
Terms of the Jamaican Agreement
Jamaica, as stated in the letter of intent, has been experiencing significantly low levels of economic growth and high levels of public debt. The global economic meltdown has worsened the situation of the country, and according to Prime Minister Bruce Golding, left the government with not much alternative but to return to the IMF. The government had outlined a tax package in December 2009 which Prime Minister Bruce Golding refers to as a necessary source of revenue as without the additional revenue there will be no IMF agreement. He
References: Baumol, W., & Blinder, A. (2008). Macroeconomics: Principles and Policy (10th Ed.). Mason, Ohio: Cengage Learning. Central Intelligence Agency. (2009). Inflation Rate (Consumer Prices). Washington, D.C.: The World Fact Book. Grenada: Opposition legislator criticises IMF. (2010). Caribbean Daily News. Retrieved on March 11, 2010 from http://www.caribbeandailynews.com/?p=4830 Helps, H Hill, A. (2009, August 26). IMF Agreement: Decision Time Past [Electronic version]. The Gleaner. Retrieved on March 10, 2010 from http://www.jamaica-gleaner.com/gleaner/20090826/cleisure/cleisure2.html International Monetary Fund International Monetary Fund. (2009). IMF Lending. Washington, D.C.: Author. Maunder, P., Myers, D., Wall, N., & Miller, R. (2000). Economics Explained (3rd Ed.). Hammersmith, London: HarperCollins Publishers. New taxes for Jamaica immediately after IMF deal. (2009). Antillean. Retrieved on March 9, 2010 from http://www.antillean.org/2009/12/17/new-taxes-for-jamaica-immediately-after-imf-deal/ Rourke, J Richards, P. (2009). Caribbean: Returning to the IMF, on Their Own Terms. Global Analyst Online. Retrieved March 10, 2010 from http://www.globalnewsblog.com/wp/2009/08/04/caribbean-returning-to-the-imf-on-their-own-terms/ Jamaica Information Service (JIS)