This study was designed to investigate the Government of Jamaica''s budgetary allocation to Education, the extent of external assistance in the capital development of the country''s education system and its possible impact on educational policy over the period 1975 to 1995. The study was historical in nature. It explored the financing of education, the process of policy formulation and the government''s response to the mass demand for education in post independent Jamaica. In arriving at a conclusion about the possible impact of external agencies on education policy, emphasis was placed on the responses of the ten (10) interviewees. The study revealed that there was a heavy reliance on external funding for capital developments in education particularly during the period of structural adjustment of the economy and that the external agencies did influence Jamaica''s education policies by virtue of the conditionalities applied to the assistance given. The study is important to policy makers and educational planners since it contributes to an enhanced understanding and interpretation of education policies during the period of study.