Kingston, Jamaica — 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.
One solution that Mr. Seaga may employ is an appeal to the Canadian and United States bauxite companies to prepay a portion of the tax levy due Jan. 1. Moreover, tourism should begin picking up in December -- and this will yield small but important revenues before the end of the year.
Yet, no matter what devices Mr. Seaga works out in the short run, to bridge over the immediate foreign-exchange pinch and other budgetary needs it will take some doing to get Jamaica out of its virtually "insolvent" position.
That word "insolvent" was used repeatedly by a group of businessmen who discussed the Jamaican economy with this reporter at the end of last week.
"Our resources are nearly exhausted," said Ronald Sasso, the head of the Jamaica Bankers Association. Others in the group cited the high cost of energy in the past years, the uncertainties over bauxite, the ups and downs of the tourist industry, and the general climate of "economic confusion" spawned by the last government as reasons for "the sad plight of the Jamaican economy," said Carlton Alexander, president of the Private Sector Organization of Jamaica.
John Issa, head of the Jamaica Hotel and Tourist Association, put it succinctly: "The only reason Jamaica is poor today is the fault of us Jamaicans."
At the same time, there is suddenly a new mood of optimism -- not along on the part of businessmen who feel more comfortable with the Seaga government than they did with the socialist-oriented Manely government, but also on the part of the average Jamaicans themselves.
Mr. Issa spoke of the will of the Jamaican people to get out of the economic morass. "If the will is here, and I think it is, talent is here, and the solution will be forthcoming."
It will, however, take some doing. At least 20 percent of the island's industrial plant closed in the last five years, another 40 percent is working at only partial capacity. Industrial plants five years ago employed 90,000 people. Today the tally is less than 70,000 on this island of 2.1 million. Present plant capacity could easily employ 100,000 on a one-shift basis, up to 150,000 on a two-shift basis.
Of the young people on the island, 50 percent are unemployed -- one reason for the violence that stalks the island. "They need not be unemployed," Mr. Alexander says. "The mass of poverty and unemployment around us will have to receive our highest priority and constant attention. It is not just government, but business, that is involved in solving this."
But like the IMF credit, none of this will come overnight. For the moment, Jamaica is limping along -- and will continue to do so for months ahead.
Ironically, the one area of the economy that is flourishing is an illegal one: the marijuana trade. Without it, Jamaica would be in a worse economic position. The illicit marijuana trade, most of it with canada and the US, brings in an estimated $1 billion annually, nearly as much as all the island's other foreign-exchange earners combined. But it is not reflected in Bank of Jamaica balanced sheets. What it does is serve to employ a sizable number of farmers, middlemen, tradespeople, traffickers, and politicians who get kickbacks -- all of it illegal.
The marijuana trade and its economic impact is an extremely controversial question here -- and one that Mr. Seaga at some point is going to have to confront. There is growing clamor among many Jamaicans to legalize the trade and therefore allow some of the revenue to flow into government hands. Others, however, and many within Mr. Seaga's party, want to abolish the trade altogether.
This moral question is a key one for Mr. Seaga. "It is one we have to pay attention to," he comments, "because we are that kind of a country. The marijuana trade is something that we will really have to investigate and look at deeply."