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Jamaica Country Brief
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Development Progress | Challenges Ahead | World Bank Assistance | Project Achievements | Contacts | DEVELOPMENT PROGRESS
Jamaica has been a stable democracy since its independence in 1962, with free expression of opinion, a free press and well-established traditions of democratic participation. In spite of modest long-term growth, Jamaica has made substantial progress in poverty reduction since it began monitoring living conditions in 1988. Between 1989 and 2003, Jamaica’s poverty headcount ratio declined from 30.5 percent to 19.1 percent. Many of the social indicators for Jamaica compare well with those for countries with higher income. For instance: - Life expectancy is 71 years;
- Enrollment in primary and junior secondary education is near universal; and
- Access to improved water and sanitation facilities is 93 and 82 percent, respectively.
Largely peaceful general elections held on September 3, 2007, resulted in a change of ruling party after 18 years of People’s National Party (PNP) rule. The Jamaica Labour Party (JLP) led by the Honorable Bruce Golding, won the elections and Mr. Golding was sworn in as Prime Minister on September 11.
The country has made remarkable progress in the areas of financial sector reform and reform of the social sectors including safety nets, HIV/AIDS prevention and control, and education. For example, enrollment of children aged 3-5 from the poorest quintile rose from 80 percent in 1998 to 90 percent in 2000. The Government is working to improve the quality of education.
Jamaica is likely to achieve many of the Millennium Development Goals, including targets on poverty, child malnutrition, universal primary education, and access to safe drinking water, though the country is unlikely to meet targets on infant and maternal mortality.
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| CHALLENGES AHEAD
Despite Jamaica’s impressive achievements, the country is confronted by serious social issues that predominantly affect youth, such as high levels of crime and violence, and high unemployment. While the total unemployment rate has fallen from 15.4 percent of the labor force in 1990 to 11.4 percent in 2004, youth unemployment remained relatively high at 26 percent in 2004 (ages 15 –24). Early school leaving is also a determinant of crime, and a World Bank study on “Youth Development in the Caribbean” shows that it can reduce net discounted lifetime earnings by as much as US$157,000 for males and US$115,000 for females. Among Jamaica’s assets are its skilled labor force and strong social and governance indicators. However, to restore self-sustaining and job-creating growth, Jamaica will have to improve its international competitiveness and productivity, while also tackling urgent short-term economic and social needs. Jamaica’s most pressing challenge is the country’s debt, which is currently estimated at 126 percent of GDP. Tackling this debt burden problem and achieving sustainable fiscal balance is a priority for the Government. | back to top
| WORLD BANK ASSISTANCE TO JAMAICAThe World Bank has worked closely with Jamaica since the country gained its independence in 1962. With its mission to eradicate poverty and promote economic growth and development, the Bank has been actively engaged in extending credit and development assistance to the country through several projects in various sectors. These include agricultural credit, road improvement, airport development, student loans, export development, sewerage and water supply, tax administration reform, private sector development, small scale enterprise development and telecommunications. 
The World Bank’s Country Assistance Strategy (CAS) for Jamaica for 2006-2009 is aligned with the government's Medium Term Socio-Economic Policy Framework and is based on three mutually reinforcing pillars: (i) accelerating inclusive economic growth; (ii) improving human development and opportunity; and (iii) strengthening crime prevention and reduction. The strategy also emphasizes governance and environmental sustainability. The CAS envisaged a highly focused lending program of US$150 million consisting of US$75 million in projects and US$75 million in policy-based lending. Following the devastation caused by Hurricane Dean, the World Bank approved an emergency recovery loan for US$10 million. This loan was processed in record time: 6 weeks from the first mission to loan negotiation between the government and the Bank. The World Bank currently has six ongoing projects in Jamaica: The Reform of Secondary Education II Project or ROSE II (US$12.5 million) is designed to improve the quality and equity of secondary education and expand access to upper secondary education, while strengthening the management and monitoring capacity of the education ministry and regional offices. The Social Safety Net Project (US$40 million) supports the government’s efforts to transform the social safety net into a fiscally sound and efficient system of social assistance for the poor and vulnerable groups. The Inner City Basic Services Project (US$29.3 million) seeks to improve the social, economic and physical conditions of inner city communities by providing access to basic infrastructure (roads, water, sanitation, drainage), crime and violence reduction and prevention programs, as well as access to microfinance and employment opportunities. The Hurricane Dean Emergency Recovery Project (US$10 million) aims to restore access to basic community infrastructure — specifically elementary schools, health centers and critical feeder roads — for selected communities and to strengthen the government’s ability to respond to future adverse natural disasters. The Jamaica Second HIV/AIDS Project(US$10 million) supports services to prevent new HIV infections and provide treatment and care for people infected and affected by HIV/AIDS. The Early Childhood Development Project(US$15 million) co-finances the implementation of Jamaica’s National Strategic Plan for Early Childhood Development by improving services for young children and their parents.
The Road to Sustained Growth
The Bank report, Jamaica: The Road to Sustained Growth, argues that to restore selfsustaining and job-creating growth, Jamaica needs to improve its international competitiveness and productivity, while also tackling urgent short-term economic and social needs.
Among the most pressing challenges is the country’s debt, which reached 150 percent of GDP, and has meant that interest payments are as high as 16 percent of GDP. In addition, rampant crime is also taking a toll on the country’s economy, which according
to the report is costing Jamaica at least 4 percent of its GDP, including lost production, health expenses, and public and private spending on security. Poor employment prospects, and a high crime rate, have also encouraged high rates of migration, with the equivalent of some 80 percent of tertiary graduates in the 1990s estimated to have migrated.
The report suggests that even when the country was experiencing modest growth in the 1990s, it was unable to create enough jobs because of a decline in the country’s competitiveness. Jamaica’s lack of competitiveness hurt its tradable goods production and, as a result, employment rose less than 0.3 percent per year from 1991-2001.
To improve Jamaica’s prospects for sustained growth, the report suggests policy actions on several fronts, such as addressing the country’s debt burden, enhancing competitiveness, generating employment, and tackling crime.
For more information about the report, please visit: Jamaica: The Road to Sustained Growth. |
Along with these projects, the Bank continues to contribute to research and improve the policy knowledge-base through periodic analyses, reviews, studies and assessments of both Jamaica and the wider Caribbean region. Some recent examples are: The Road to Sustained Growth; A Time to Choose: Caribbean Development in the 21st Century; HIV/AIDS in the Caribbean; Caribbean Youth Development; and Crime, Violence and Development: Trends, Costs and Policy Options in the Caribbean. Upcoming World Bank projects for Jamaica include: Rural Development, Education Transformation, and a Development Policy Loan. Jamaica also participates in a regional HIV/AIDS and is a partner of the Caribbean Catastrophe Risk Insurance Facility (CCRIF). Crime, Violence, and Development: Trends, Costs,
and Policy Options in the Caribbean High rates of crime and violence in the Caribbean are undermining growth, threatening human welfare, and impeding social development, according to a World Bank and the United Nations Office on Drugs and Crime (UNODC) joint report.
Crime impacts business and is a major obstacle to investment. In many countries, as crime increases, access to financing declines; spending on formal and informal security measures increases; and worker productivity declines. Estimates suggest that reducing the homicide rate in the Caribbean by one third from its current level could more than double the region’s rate of per capita economic growth.
According to the report “ Crime, Violence and Development : Trends, costs and Policy Options in the Caribbean,” murder rates in the Caribbean are higher than in any other region of the world, and assault rates are significantly above the world average. Narcotics trafficking is at the core of these high rates. Narcotics trafficking diverts criminal justice resources from other important activities, increases and embeds violence, undermines social cohesion and contributes to the widespread availability of firearms in the region.
The World Bank and the United Nations Office on Drugs and Crime (UNODC), report draws on input from governments, civil society organizations, and Caribbean experts, and presents detailed analyses of crime and violence impacts at the national and regional levels. The report also provides information on good practice approaches from global experiences; and offers concrete actions and recommendations on crime prevention and crime reduction strategies. |
International Finance Corporation Since the last CAS, there has been an improvement in the business environment in Jamaica resulting in increased opportunities for International Finance Corporation (IFC) support to the private sector. From 2005 to present, for example, the IFC invested US$45 million for the development of the Montego Bay Airport, and another US$40 million for the second phase of the airport’s rebuild that included US$20 million in syndications. The IFC also invested US$73 million in Jamaica Energy Partners (JEP). This was the second phase of an investment that included US$45 million in syndication and US$28 million of IFC’s own funds. The first phase in JEP was an interest swap of US$50 million. Multilateral Investment Guarantee Agency Guarantees
The Multilateral Investment Guarantee Agency (MIGA) continues to provide demand-driven guarantees to projects in Jamaica, especially in the tourism, financial services, and power sectors. MIGA’s portfolio consists of five projects in support of the country’s financial and infrastructure sectors. The projects, sponsored by investors from Canada, the U.S. and the Cayman Islands, have an outstanding gross exposure of US$216.2 million.
In 2007, MIGA issued guarantees for US$37.4 million to The Bank of Nova Scotia of Canada covering a US$39.4 million on-lending loan to its subsidiary, The Bank of Nova Scotia Jamaica Limited. The coverage is for a period of up to 15 years against the risks of transfer restriction, expropriation of funds, and breach of contract.
The project is supporting the Kingston Port Container Terminal in Jamaica. The loan to The Bank of Nova Scotia Jamaica Limited is earmarked to support the Port Authority of Jamaica in the fifth phase of its main container terminal expansion. MIGA issued a guarantee in fiscal year 2006 to support the fourth phase of the expansion. The fifth phase is designed to bring a capacity increase of 1.58 million additional 20-foot containers (equivalent units) per year. This expansion, expected to be completed in 2008-09, would more than double the capacity of the Kingston Container Terminal.
The project fits into the government’s overall strategy of fostering and maintaining economic growth, which has suffered from infrastructure constraints. The fifth phase of the expansion is anticipated to generate average incremental earnings of foreign exchange of US$28 million per year for the next 15 years.
External Outreach
MIGA’s online investment promotion services (http://www.fdi.net) feature 100 documents on investment opportunities and the related business, legal and regulatory environment in Jamaica. | back to top
| PROJECT ACHIEVEMENTSEducation
The Reform of Secondary Education Project(US$32 million) abolished the automatic promotion from primary through secondary school, introduced a common core curriculum for secondary education, provided free textbooks for grades 7-9 in all public secondary schools, and provided teacher training for disadvantaged schools. The success of this project lent itself to the development of the Reform of Secondary Education II Project (US$39.8 million), which is currently under implementation, and seeks to implement education finance reforms, improve cost sharing at the secondary level, as well as increase the placement of students in grade 10 to near 100 percent. Progress to date shows that the percentage of grade 9 students who have a place in grade 10 increased from 77 percent in 2000 to 80 percent in 2001. Finance
The Bank Restructuring Debt Management Program Adjustment Loan (US$75 million), which closed on December 31, 2002, sought to resolve the financial sector crisis, contribute to placing the economy on a growth path, and take steps to reduce the vulnerability of the financial system to future crises. The government sold its majority stake in the two remaining large intervened financial institutions to foreign private investors, enacted new legislation, strengthened existing regulatory and supervisory agencies in the banking sector, and established a new regulatory entity for the non-bank sector (FSC). Public Administration
The Public Sector Modernization Project (US$28.4 million) successfully met its objective of supporting the Government of Jamaica’s efforts to modernize selected public agencies by introducing an Executive Agency model that has had a significant impact on improving the quality and quantity of services delivered. Through the introduction of the first four Executive Agencies in 1999 – Office of the Registrar of Companies, Registrar General’s Department, Administrators General Department, and the Management Institute for National Development - customer satisfaction increased from 83 percent in the 1999/2000 financial year to 95.1 percent in the 2002/2003 financial year. In addition, earnings from these entities increased from US$247.4 million in 1999/2000 to over US$479 million in 2002/2003.
For more information on World Bank assistance to Jamaica, including lending breakdown and project reports, see: All Projects Updated November 2008 | back to top
| CONTACTSTo obtain further information on the World Bank activities and programs in Jamaica, please contact the World Bank Office in Kingston (Dr. Badrul Haque, Special Representative), tel.: (876) 960-0459 through 62. You can also contact Alejandro Cedeño, Senior Communications Officer for the Caribbean (acedeno@worldbank.org), at the World Bank Headquarters in Washington DC. |
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