25 Dollars – Jamaica

By 1985, Jamaica's currency situation was defined by a protracted and severe economic crisis, rooted in the oil shocks of the 1970s, high external debt, and the structural adjustment policies of the preceding decade. The country operated under a tightly controlled foreign exchange regime, with the Jamaican dollar (J$) pegged to the U.S. dollar but subject to significant government management. A critical dual-exchange rate system was in place: an official rate (around J$5.50 to US$1) for essential imports like food, medicine, and oil, and a vastly depreciated parallel "bank" or non-official rate (exceeding J$7 to US$1) for other transactions. This system created severe distortions, chronic foreign exchange shortages, and a thriving black market where the currency traded at a steep premium, reflecting its true scarcity and undermining official economic policy.

The economic landscape was dominated by the aftermath of the 1980-84 Stand-By Arrangements with the International Monetary Fund (IMF), which demanded austerity, devaluation, and liberalization. While these measures aimed to correct balance-of-payments deficits, they contributed to soaring inflation, which peaked at over 30% in 1984, and a steep decline in living standards. The government of Prime Minister Edward Seaga, despite its pro-Washington and market-oriented stance, faced immense pressure. By 1985, the economy was stagnating under the weight of debt servicing, which consumed a large portion of export earnings, and the rigid exchange controls were stifling business activity and investment, creating an environment of uncertainty and scarcity.

Consequently, 1985 represented a pivotal moment of transition. Under a new Structural Adjustment Loan from the World Bank, the Seaga government began a cautious and phased liberalization of the foreign exchange market. This involved moving towards a unified, market-driven exchange rate, a process that would fully culminate in 1990 with the establishment of a full float. The immediate situation in 1985 was therefore one of controlled crisis management, characterized by the gradual dismantling of a dysfunctional multi-rate system in a last-ditch effort to attract foreign investment, boost exports, and align the official value of the Jamaican dollar with its stark economic realities.