Last year, then Minister of Finance Audley Shaw came under intense pressure from the People’s National Party (PNP) and its supporters to conclude arrangements with the International Monetary Fund (IMF). When this did not seem to be happening, the PNP said it could do what Mr Shaw seemed unable to do. Now the ball is in their court and we are not much further ahead than where Mr Shaw was.
The suggestion by detractors is that this is – in Mr Shaw’s, as well as Dr Phillips’ case – the result of incompetence. I doubt that. Both men have the capacity to deal with this matter and they were supported by some of the best minds anywhere. Could it be that the conditions that the IMF want to visit on our country are considered by them to be too severe and it is taking time for them to communicate this to the IMF?
I am tempted to take this position because for as far back as I can remember, the IMF has a long track record of imposing unnecessary and often harmful conditions on borrowing countries. Latvia is one of many countries that come to mind.
In March 2009, Latvia missed a €200-million
disbursement from the IMF for not cutting its budget enough. The government wanted to run a budget deficit of seven per cent of GDP for that year, but the IMF wanted five per cent. This against the background that Latvia had already cut its budget by 40 per cent. It was planning to close hospitals and schools to satisfy IMF demands when the people took to the streets.
Latvia’s GDP crashed by 18 per cent in the first quarter of that year after a 10.3 per cent drop the
previous quarter. At the time, these were among the worst declines in the world. Would I be exaggerating
if I described these IMF demands as overkill?
imf like a plague
Over the past 20 years, there have been mass protests from Latin America to Africa against IMF policies. But since the IMF is not accountable to developing countries, protesters have been ignored. And these people have good reason. Latin America has experienced stagnant growth, and the African countries have seen their incomes shrink. The only developing countries that have done well during the same period are the Asian countries, because they have resolved to put as much daylight between themselves and the IMF.
We know what led to this problem: the people like ‘freeness’ and reward the most lavish politicians by voting for them. To finance this largesse, the politicians borrowed heavily until the country owed more than it could ever repay.
The IMF did not get us into this mess. We did it all by ourselves. Has it come to rescue us, or are we just being punished for our profligacy? What the IMF is proposing is not going to help us; it will only help those who have lent us money. These IMF loans, together with the cutting of government spending, will only assist the country to stay afloat sufficiently to pay debts.
There are those who argue, convincingly, that the IMF and World Bank are just tools of Western imperialism.
It does not require glasses to see that there is no earthly way Jamaica can take care of its housekeeping expenses, correct its dysfunctionalities and lay the foundation for growth and development on 40 per cent of our meagre earnings. We could ‘structurally adjust’ till we drop; it will never happen. And it pains me to see the creative energy of so many of our brightest being wasted on this masturbatory excursion.
imf holding out on poor
The IMF has hundreds of billions of dollars on hand and well over US$100 billion in gold. If we add up all of the IMF’s commitments since the crisis intensified in 2008, the total is far less than US$100 billion. The poorest countries will never be allowed to borrow anything near that amount. What the poorest countries need is ‘sweetie money’ compared to what the IMF has.
The IMF can start a bright new day for developing countries by cancelling debts as a start to moving responsibly into the future. Jamaica needs at least a 20-year moratorium on all debt, allowing it to invest heavily in its human capital, health, infrastructure and manageable agricultural financing.
Given our history of corruption and cronyism, the nation would happily agree to the strict monitoring of government activity. This is the only way I can see any worthwhile future for this country. And if Dr Phillips is bold enough to propose this to the Fund, Mr Shaw and the rest of us should give him our full support.
In almost all its standby arrangements negotiated in recent times, the IMF has included conditions that will reduce output and employment where economies are already shrinking. This cannot help us! A growing number of critics accuse the IMF of pushing poorer nations deeper into debt and poverty through its conditional loans.
The IMF and World Bank have sufficient funds and assets to undertake debt cancellation for poor countries without any significant impact on their resources. Of course, this alone will not transform our economy. There has to be a fundamental shift in the way we think and do business.
n Glenn Tucker is an educator and sociologist. Email feedback to columns@gleanerjm.com and glenntucker2011@gmail.com.