Lhe senior officials at Bercy would be well advised to visit Jamaica. While public debt is swelling all over the world, sparing no nation, rich or poor, the small Caribbean island is one of the only ones to have reduced its debt by half, in just ten years. In 2013, Jamaica was nicknamed the “Greece of the Caribbean”, as the situation was so critical. The debt reached 146% of gross domestic product (GDP), and its repayment alone absorbed half of public spending. Ten years later, it fell to 73.5% of GDP.
No other country has recorded such a performance during this period, apart from Iceland and Ireland. A trajectory that is all the more exceptional as the weight of debt continues to increase everywhere else, especially after the Covid-19 pandemic. It should reach historical records of 120% of the GDP of developed countries and 80% of the GDP of emerging countries by 2028, according to projections by the International Monetary Fund.
There are two main reasons for this success. First, Jamaica has put in place a clear roadmap, with a tax law, passed in 2010, requiring the Minister of Finance to achieve a balanced budget by 2016, or to cap the salaries of civil servants. at 9% of GDP. Exceptions to these rules are provided in the event of a natural disaster or crisis, as has occurred during the Covid-19 pandemic – “Sustained Debt Reduction: The Jamaica Exception” (“sustainable debt reduction: the Jamaican exception”), by Serkan Arslanalp, Barry Eichengreen and Peter Blair Henry, Brookings Papers on Economic Activity, Brookings Institution, March 2024.
Broad consensus
But it is mainly thanks to the increase in budgetary revenue that the country managed to reduce its debt. He put an end to the numerous tax loopholes and increased income tax, particularly on the upper brackets. But, very often, these tax laws are not respected. To ensure that they are, Jamaica has worked to build a broad consensus: the solution to the debt problem is also political. The government brought together civil society actors, union representatives and opposition parties around the table to arrive at a reduction plan that was as fair as possible.
Without consensus, it would have become hostage to political divisions and would have disappeared in the event of an alternation. An independent committee was formed to monitor, quarter by quarter, the evolution of the debt and the reforms implemented. Their members even visited the four corners of the country, with their reports under their arms, to explain why debt reduction was important.
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