December 16, 2013 6:12 pm

Jamaica teeters on an economic precipice after years of stagnation

Three years ago Dwight Lindsay walked out of Kingston’s General Penitentiary after serving a decade in the sprawling concrete block in Jamaica’s capital for stabbing a man to death. Keen to stay out of trouble, Mr Lindsay said he was a changed man – but so were the country’s fortunes.

A long-torpid economy nosedived while he was in jail, and unemployment became rampant. So Mr Lindsay – a gaunt man of 39, scarred from prison fights – has to “hustle” for a living. That means washing cars parked along Kingston’s palm-lined waterfront and hoping the owners will return to hand him some Jamaican dollars.

The downturn is squeezing everyone, though, and people have become noticeably less generous. Mr Lindsay struggles to make ends meet and sleeps rough on the waterfront. The temptation to return to crime can be overwhelming. “Sometimes I want to steal something,” he admits. “The heart and the mind argue.”

On an island famed for reggae and athletic prowess but notorious for its high crime rate, Mr Lindsay’s battle to earn an honest living tells much about the complicated economic and social problems that Jamaica faces.

While many previously buoyant island states across the Caribbean are now struggling, Jamaica’s crisis is the deepest. Virtually every Jamaican is feeling the impact of a protracted economic stagnation, now exacerbated by the austerity mandated by an International Monetary Fund bailout signed earlier this year.

Despite the $2bn rescue, Jamaica is teetering on the brink of financial collapse. After two restructurings in three years, government debts still amount to 143 per cent of the economy’s annual output.

Even a tropical storm could cause enough damage to push the country’s strict bailout programme off course, admits Peter Phillips, Jamaica’s finance minister. “We are extremely vulnerable to any unanticipated shocks.”

Jamaica is not alone. Caribbean countries are lobbying furiously for an extensive international debt relief and investment programme, as local politicians become increasingly anxious over the social impact of the region’s economic crisis and the resulting government austerity.

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Most of the dozen anglophone countries in the tropical archipelago off the coast of the US are struggling with large government debts and lacklustre economies after the global financial crisis hurt tourism, the dominant industry of the Caribbean.

Jamaica is already a serial IMF programme failure. Among the international organisations that jointly bankrolled the recent rescue – the IMF, World Bank and the Inter-American Development Bank – there is some private scepticism that Jamaica will succeed this time.

To ensure Jamaica’s compliance the IMF has required that most of the austerity measures and economic reforms be implemented almost immediately; still, Moody’s, the rating agency, earlier this year said there was a “high probability” that Jamaica would be forced to default on its debts again.

“Given the scale of the problem and the history of programmes that went off-track establishing credibility is paramount, and for this reason the programme is very front-loaded,” said Gian Maria Milesi-Ferretti, a senior IMF official.

Around Jamaica there is recognition of the depths of the country’s troubles, and grudging acceptance that the next few years will be difficult. But there is also widespread bitterness towards the country’s political elite for its management of the crisis.

The anglophone islands in particular are becoming increasingly worried about the social effects of the crisis.

The fear is most palpable in Jamaica and brutally raw in the neighbourhood of Tivoli Gardens, a crime-ridden jumble of decaying concrete blocs and wood shacks in west Kingston. On one side of the neighbourhood lies Coronation Market, where locals find occasional work. On the other is May Pen Cemetery, where gangs occasionally dump the bodies of their victims.

The neighbourhood was long ruled by Christopher “Dudus” Coke, a drug lord with close political ties. After intense US pressure, the Jamaican government arrested and extradited Mr Coke in 2010. But the fierce crackdown needed to flush the kingpin out of Tivoli – coupled with the insecurity of the resulting power vacuum – has fed intense resentment.

“Things were better with Dudus,” complains Keisha Sames, a Tivoli resident. “We have no money, we have no jobs and we’re hungry. It’s worse, worse.” Horace Gordon, a drama teacher who runs a literacy programme in Tivoli, chimes in: “If you don’t have food, you will rob people.”

We have no money, we have no jobs and we’re hungry.

- Keisha Sames, Tivoli resident

The number of murders has tumbled since the arrest of Dudus and the tough countrywide security operation that followed. But the homicide rate remains among the highest in the world, and as gangs have regrouped there are signs that crime is on the rise again.

One of the biggest challenges has been a police force that activists say is riddled with corruption and prone to extra-judicial killings. Owen Ellington took over the Jamaica Constabulary Force and has sacked more than 400 policemen since then. But he admits that graft remains a problem. “The work is not complete, and even after I have left the job there will probably be more to do for the future commissioner,” he says.

Tackling Jamaica’s security problem would be easier if economic growth returned and created more jobs. But the outlook remains murky. The IMF forecasts that GDP will expand by only 0.4 per cent this year, and 1.3 per cent in 2014. Even these cautious predictions are vulnerable given the uncertain economic impact of government austerity.

In addition to a fiscal belt-tightening, the central bank is letting the Jamaican dollar slowly depreciate. Brian Wynter, the governor, hopes this will boost exports and make local resorts more competitive. But in the short run it is fuelling inflation, squeezing ordinary Jamaicans further and feeding anger against the government. Some officials fear that the populace’s patience with austerity is wearing thin.

Interactive

Islands in an economic storm

caribbean

This interactive guide shows the global recession has had markedly different impacts on different countries in the Caribbean

Mr Phillips compares his situation to that faced by Christopher Columbus when he discovered America. His sailors were petrified that they would tip over the edge of the world at any moment, until they spied a bird with a leaf in its beak – a sign that dry land was near. “Growth is my bird with a leaf,” he says.

In the streets of Kingston, Mr Lindsay also tries to remain optimistic. Unlike many of the people he met in prison he is literate, and is applying for a job as a porter at the main hospital in town. In the meantime, he said he would keep trying to stay on the straight and narrow but, as he says in his heavy but lyrical Jamaican accent: “It’s tough tough tough, rough rough rough”.

The Financial Times spent two weeks reporting across the Caribbean, travel funded in part by the Pulitzer Center on Crisis Reporting, to explore the impact of the region’s economic downturn.

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Letter in response to this report:

Small countries also face debt cliff / From Mr Kamalesh Sharma

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