ON THE eve of Lent Jamaica’s prime minister, Portia Simpson Miller, placed holders of the government’s local-currency bonds on an austerity diet, asking them to accept a lower interest rate. Her finance minister followed up with unpopular emergency tax increases. In return, on February 15th the IMF announced a preliminary agreement to a $750m loan. The Lenten diet is set to continue: approval of the credit by the Fund’s board will require prior approval of more tax rises and a public-sector pay freeze.
Bruce Golding, Ms Simpson Miller’s predecessor, similarly agreed to reform taxes, the financial system and the public sector. After a resolute start, the programme went off track. Public-sector pay rose by more than the target.With the economy stagnant and fierce political disputes over gang crime, Mr Golding stepped down and his party then lost office in a December 2011 election.
http://www.economist.com/news/americas/21572223-imf-again-lenten-diet
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Warren's Blog 
An important part of that release from The Economist (yuck) that assume was strategically left out from your post Jay was “Ms Simpson Miller has little choice. Jamaica suffers from low growth, declining productivity and a heavy debt burden (see chart). Its firms have lost competitiveness. But the island has a fraught history with the IMF, stretching back to the 1970s.”.
The point: The heavy austerity program being implemented by the government is going to stunt growth. But with the unfortunate combination of circumstances which are crippling Jamaican development right now the government has very little choice. Knowing The Economist, it’ll be calling for laissez-faire (yuck) policies to be taken up. Dr. Phillips said that there is no stronger supporter of Keynesian economic strategy than him, and I strongly adhere to Keynesian strategy too. We both agree that stimulus would be the best way to tackle the recession and return to growth. But that simply is not an option.
General Statement: The Education Ministry announced today that it is looking to extent the school year. I won’t say that’s a bad thing, although I’m sure if it were to affect me I would be rebelling. But good God man, there can be absolutely no extending of the school year until the teachers get the pay increases they deserve. In other words, there can be no extending to the school year, at least not within the next five year.
I am not sure how a point that is included in the link was “strategically” left out ???
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I agree with your sentiment regarding the Economist. Except for a select few articles, that magazine is generally only good for wrapping flowers, fish and meat.
I quite agree that austerity measures stunt growth. Jamaica, however, does not have the capacity to provide a stimulus at this time. The high debt burden does not allow us any room to maneuver.
Regarding the teachers, I think it is a good idea to extend the school year. Last October some time was lost due to hurricane Sandy, there may be some catching up to do. Yes teachers deserve the break, teaching is hard work, but there will be enough time in the summer for R&R.
Jamaica had the fastest growing economy in the developing world in the 60s. Today, Jamaica has the worst tax system in the Caribbean and the highest level of deforestation per capita. Jamaica is an international disgrace. Furthermore, the economy needs serious structural reform and Keynesian economics won’t help us. I think the policymakers are missing the point. The tax package is not tax reform, there is a strong correlation between low taxes and economic growth. For example Denmark ‘s corporate tax rate is 22% lower than the US. In addition Jamaica needs an effective National Identification System, we cannot have comprehensive tax reform without regulating the informal economy. Jamaica’s politicians have little respect for the free market, government is the facilitator of growth not the driver. Over the years billions of dollars have been wasted because of exuberant politicians who do not understand their roles as facilitators of development. For example Montego Bay Convention Centre, Sandals Whitehouse Project, NetServe, Highway 2000 etc. It can be concluded that members of this blog like msupdate and acar are part of the problem; because like the politicians you guys do not understand the system of capitalism. Free market economics is always the answer, don’t be fooled China will not be a superpower.