From the Economist Magazine.
ON THE eve of Lent Jamaica’s prime minister, Portia Simpson Miller, placed holders of the government’s local-currency bonds on an austerity diet, asking them to accept a lower interest rate. H er finance minister followed up with unpopular emergency tax increases. In return, on February 15th the IMF announced a preliminary agreement to a $750m loan. The Lenten diet is set to continue: approval of the credit by the Fund’s board will require prior approval of more tax rises and a public-sector pay freeze.
Ms Simpson Miller has little choice. Jamaica suffers from low growth, declining productivity and a heavy debt burden (see chart). Its firms have lost…(Read more)