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Debt and Internationalism
Transcript of Debt and Internationalism
What is Debt?
Debt is the spending of more money than you have.
An example would be making $3000 a month and spending $4000.
Debt is common in developing countries, countries with high poverty rates, and in countries with economic instability.
Money was heavily borrowed from private banks, the World Bank, and the International Monetary Fund because they suffered from low economic growth, high public debt, serious social challenges and not having enough money as a country.
The government believed they could repay what the loans as the economy grew and tax revenues increased.
The IMF has given Jamaica a one billion dollar loan to help with debt payments, however, the loan is accompanied by four years of austerity: a pay freeze amounting to a 20% cut in the citizens wages.
Because of this wage reduction, the citizens struggle to pay for food, clothing, and transportation.
By: Paige, Chantel, and Catriona
The economy didnt preform as expected, making loan payments difficult.
Half of Jamaica's tax revenue went to pay interest on the loans
The conditions the World Bank set required Jamaica to reduce its spending by cutting the services provided to citizens.
McGraw-Hill Ryerson "Exploring Nationalism" Social Studies Textbook
"Historically the IMF has been good at restoring financial stability (its primary job), but horrible at restoring domestic prosperity (its second job)."
Jamaica has payed more money than has been lent to them.
Jamaica has payed $19.8 billion, even though they were loaned $18.5 billion.
The IMF and World Bank say that Jamaica still owes $7.8 billion.
The governments debt payments are double the amount they spend on education and health.
Jamaica's debt has been an international issue for over 40 years. Some wealthy countries have begun forgiving loans they have made, because they think it might help improve the chances of economic stability.
Probe International is an NGO that monitors Canada's Foreign policy.
They believe that the debt incurred without consent of the Jamaican citizens and that it did not benefit the citizens.
This NGO has described Jamaica's debt as odious debt and made efforts to try and convince the IMF to relieve Jamaica of its debt as it decreases the quality of life for the citizens.
Probe International believes countries should not have to pay odious debt.
Aid From The USA
The US government has given Jamaica an estimated $1 billion in the form of grants to try and assist with Jamaica's loan payments to the World Bank and IMF.
Alexander Sack is the man who defined odious debt, in 1927.
He said that Odious debt is owed by the regime, not the people of the country.
His words gave Probe International the words they need to try and relieve Jamaica of its debt.