Jamaica's new leader faces bare-cupboard economy
On the day before parliamentary elections last week, the Bank of Jamaica completely ran out of foreign exchange. There was no money in the till, with all past credits used up.
"In other words," as a Bank of Jamaica official put it, "we were broke, the country bankrupt."
At the last minute, around 3 in the afternoon, a previously discussed iraqi loan for $10 million arrived -- and Jamaica muddled through election day and the weekend, but the money from Iraq would only last through Nov. 6.
This scenario tells something of the staggering economic problem facing Jamaica's new prime minister, Edward Seaga, whose Jamaica Labour Party won a lopsided parliamentary majority of 51 seats in the 60-seat legislature last week.
Mr. Seaga himself is frank about the problem. "Between now and the end of the year, we face [an international payments] gap of $155 million, and on the surface there is no way to meet the gap."
But even before the landslide electoral victory Oct. 30, he had begun informal efforts to find solutions to the country's economic problems.
It is certain that the new government will seek credits from the International Monetary Fund, and talks are understood to have begun already. During the campaign, Mr. Seaga made clear he would definitely go to the IMF to help ease Jamaica's credit crunch.
One of the reasons Jamaica is in such an economic tailspin, he says, is the decision of ousted prime Minister Michael Manley to sever negotiations with the IMF last spring after failing at the end of 1979 to meet IMF criteria under then existing agreements.
But even if the talks between the new government and the IMF lead to an early agreement, IMF assistance will not begin to flow until mid-December at the earliest -- and in the meantime, Jamaica faces a real credit crunch.