The Economics Show How to cut government debt, with Robin Wigglesworth
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Sep 30, 2024 Robin Wigglesworth, an expert on government debt, discusses Jamaica's remarkable turnaround from a staggering 140% debt-to-GDP ratio to halving its debt in just seven years. He highlights how political cooperation and fiscal discipline were vital in this process, allowing Jamaica to maintain significant primary surpluses. Wigglesworth also explores lessons for larger economies, and the need for growth-oriented solutions that balance debt management with middle-class welfare. The conversation paints a hopeful picture of Jamaica's potential economic future.
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Jamaica's Economic Crisis
- Just over a decade ago, Jamaica faced economic crisis with a debt-to-GDP ratio exceeding 140%.
- They had failed numerous IMF programs, leading international institutions to consider withdrawing support.
IMF Exasperation
- In 2012, Jamaica's new government struggled to even get calls returned from the IMF due to past failures.
- They had to lobby the US government for access to IMF officials, highlighting the severity of the situation.
IMF Skepticism
- The IMF, skeptical of Jamaica's ability to reform, provided a program primarily to recoup its own loans.
- Meetings at the IMF reportedly began with the question, "Has Jamaica crashed yet?"