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Caribbean Islands Table of Contents

Caribbean Islands

Foreign Assistance

Jamaica received unprecedented levels of foreign assistance in the 1980s; the primary lenders were the IMF, the World Bank, and AID. Most analysts perceived the generous aid as support for the Seaga government's more orthodox economic policies favoring market forces, trade liberalization, foreign investment, and the structural adjustment of the economy. The island's relations with the IMF provided badly needed balance-of-payments support, and stimulated renewed investor confidence in the island. With the signing of a US$650-million loan in April 1981, Jamaica became the number-one per capita recipient of IMF lending in the world. The government signed three more agreements with the Fund through 1987 on relatively favorable terms. IMF lending, however, entailed economic policy conditionalities and austerity measures. Jamaica also received generous funding from the World Bank, ranking as the number-one per capita recipient in 1982. As in the case of IMF funding, the structural adjustment loans of the World Bank included economic policy reform conditions that Jamaica to meet prior to obtaining further disbursements.

United States bilateral assistance to Jamaica after 1981 was also unprecedented. From 1981 to 1985, Jamaica ranked as the second or third per capita recipient of AID funding, or around the tenth in absolute terms. In 1981 and 1982 alone, Jamaica received more assistance from the United States than it did during the entire previous postwar period. It was estimated that the United States would provide Jamaica with US$1 billion during the 1980s. Most funding went to balance-of-payments support. By the mid-1980s, funds were typically transferred in the form of grants rather than concessional loans. AID's assistance to Jamaica generally went to strengthen the policies of the IMF and the World Bank; these three organizations often operated together.

Finally, Jamaica also received generous funding from traditional multilateral donors such as the IDB and the United Nations Development Program. Canada, West European countries, and Japan provided bilateral assistance at the government level. In addition, numerous nonprofit development organizations, particularly from the United States, operated throughout Jamaica.

The abundant outside assistance that Jamaica received from international donors in the 1980s was directly related to the major economic policy reforms that the government pursued. Foreign assistance not only framed the country's economic reforms but also served to insulate the island from international recession and the regional debt crisis, at least temporarily. As these adjustment policies neared completion in 1987, the government's stance toward reform softened, and economic policies became increasingly sensitive to the political consequences of years of austerity.

Data as of November 1987