Jamaica Swamped By Interest On Debt
Debt-shackled Jamaica's interest payments as a percentage of gross domestic product were the highest in the world last year even after a domestic debt restructuring two years ago, according to a Washington-based think tank, Bloomberg Businessweek reported. A new report on Jamaica's economy by the Center for Economic and Policy Research says the heavily-indebted Caribbean country's total interest payments were about $1.4 billion in 2011, or about 10 percent of GDP. That's about two-and-a-half times what was spent on capital programs. On Wednesday, economist and center co-director Mark Weisbrot said that it was the highest percentage anywhere in the world, even in crisis-staggered countries in the 17-nation Eurozone. For years, roughly half of the Jamaican government's budget has been dedicated to paying the debt, and that has forced the middle-income country to scrimp on schools, hospitals and infrastructure. "The burden of excessively high interest payments will continue to displace public investments, which are needed to restore normal growth and bring down the persistently high levels of poverty and unemployment," the group said in its report. Jamaica's economy has sputtered for decades. The island's economy grew by 1.5 percent last year after three years of negative growth rates, but the economy still remains below its 2008 level of GDP, the group said. Overall, Jamaica's debt was about 130 percent of gross domestic product last year. Jamaican analysts say that much of the island's public debt was derived from bad bank loans that the government absorbed to resolve a mid-1990s crisis when dozens of banks failed amid a spree of lending. Read more.