10 May 2013

IMF loan to Jamaica

10:22 am on 10 May 2013

The International Monetary Fund has granted Jamaica a loan of $US950 million. In return, the island - which is one of the most indebted countries in the world - needs to get a grip on its rampant public spending.

The goal of the loan and the measures taken by the government is to move the debt to 95% of GDP by 2020.

Jamaica owes $US18 billion. Deutsche Welle reports it has undertaken a debt swap by local lenders and has promised to tackle tax reform and public spending.

Deutsche Welle says 17.5% of the population live in poverty and unemployment is over 14%.

Over half of the money that the country earns goes to repaying what it owes and only 20% is left to spend on security, health and education.

In 1962 when Independence was declared, the Jamaican dollar was pegged to $US1.20. It's now worth less than 1% of that. Since the start of the year the currency has lost over 8% of its value.