Caribbean Islands Facing Economic Challenges Due to Massive Debt, Organized Crime. (Photo credit: Wikipedia)

(HinterlandGazeette) — The Caribbean islands are teetering on the verge of financial collapse over stringent rules from the International Monetary Fund. This comes as the U.S. and Europe are paying less and less attention to this region. This will come at a cost, as China is stepping in to fill a void offering vital aid and investments. We all know that will come at a cost…

The debt mountain is one of the clearest indications of the Caribbean’s woes. Excluding the larger countries such as Haiti, the Dominican Republic and Cuba – relatively populous nations with very different challenges – the region’s overall government debts amount to more than 70 per cent of gross domestic product, according to the IMF. For small, open economies, that is dangerously high, says Stuart Culverhouse, chief economist at Exotix. Jamaica’s debt was even higher at the end of last year, reaching 143 per cent of GDP. This is forcing the country into a painful fiscal retrenchment as it has to abide by the terms of an IMF bailout.

The strain is already becoming too much for some countries. St Kitts and Nevis, Belize and Jamaica have had to restructure. Sebastian Espinosa of White Oak, a advisory firm helping Grenada with its restructuring, warns that others could follow if growth does not recover soon. Even wealthier states such as the Bahamas are considered vulnerable. “The Caribbean is ground zero for sovereign debt restructurings,” says Carl Ross of Oppenheimer, a US investment bank.

Yet debts are a symptom not a cause of the region’s underlying malaise. Restructurings will offer only a temporary respite. Hurricanes are only partly to blame. Although ferocious storms cause periodic devastation, the fundamental challenges are political and economic. Irresponsible government spending has compounded the problem facing uncompetitive Caribbean states. Simply because of their small size, the economies have to import most of their basic goods and are always vulnerable to any shocks. Source

I was born in Jamaica and I can tell you that a lot has changed since then and in some regards, not for the good. I often wonder if the British government would put the country in receivorship, as they did in the Turks & Caicos, if the economic woes the island faces would improve. While Jamaica isn’t the only island experiencing economic hardships, it is one of the most prominent, and when it’s impacted, so goes the rest of the Caribbean.