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**Lazie** · July 7, 2009, 01:27 PM

Flirting with the IMF

HEART TO HEART
With Betty Ann Blaine
Tuesday, July 07, 2009
Dear Reader, Somebody needs to tell the powers that be that the International Monetary Fund is not the sort of organisation that you flirt with. The double speak, mixed messages, vacillating kind of rhetoric we are hearing is not the kind of environment that augurs well for negotiations with perhaps the world's largest lending institution. And let no one fool you. While we are playing the fool and using the IMF as a political football, the technocrats in Washington are busy crossing the "t's" and dotting the "i's" and preparing thoroughly for their meeting with the government of Jamaica.
Betty Ann Blaine
When we visit the IMF this week you can be certain of one thing - they will be fully prepared - in fact, much better prepared than we are. In their briefcases and on their laptops will be every single piece of information there is on Jamaica - most of it, I suspect, coming from their own research. The team will have statistics that we don't have and those we may have but can't publish. They will be armed with situation analyses of every facet of the economy, the social conditions and yes, they will also have names and bios on all the major players in the society, both public and private.
But their most ominous tools will be their red pens. Regardless of whether the IMF has changed its stripes or not, and if it has, to what degree, the plain fact is that the medicine they are about to dispense is going to taste bad, and we had better be prepared to swallow.
The problem with Jamaica and IMF relations is that most of us still feel the residual bitter taste in our mouths from the last prescription dispensed by that institution. We have not been able to forget because the medicine has had lasting and chronic effects. The truth is that the medicine had a counteracting effect. Instead of curing the disease, it exacerbated the illness, causing serious and lingering damage.
Though the period of the 70s signalled impending economic fatalities, it was the 1980s that drove the nails into the coffin. The structural adjustment medicine prescribed by the IMF not only emasculated the country politically, it effectively re-ordered the socio-economic structures in a way that has ensured its permanency. Although poverty and dispossession were embedded features of the society, there were strong national commitments (especially on the heels of the Michael Manley government), to the plight of the poor, and for the need of social safety nets, however limited.
But the condition of the poor was not the concern of the IMF. Its Structural Adjustment mission dictated that the government constrict itself and deregulate and divest at all levels, including critical social programmes. As government abdicated more and more of its social responsibilities and retreated from its central mandate of governance, the vacuum was quickly filled by parochial strongmen. As the government moved out, the dons moved in, and with networks both inside and outside of Jamaica, they established what are now self-governing enclaves operating largely on criminality. Today, it is crime that is our biggest problem, not the economy.
In a tragically unequal trade-off, the IMF insisted that in order to secure a loan the country would have to undertake large currency devaluations, institute wage freezes and do everything in its power to balance the budget. If anyone thought that the1976 terms were stiff, the 1978 Extended Fund Facility was even more rigid. The government was forced to reunify (from the two-tiered currency) and devalue its currency, agree to place the currency on a crawling-peg system of regular devaluations, imposed new taxes on consumer goods, reduced government expenditures, increased charges for government services, lifted price controls, guaranteed profits for private firms, set a ceiling on wage increases, and limited the activities of several state-owned corporations.
And Jamaica was not the only country that fell under the hatchet of the IMF. Countless other states buckled under the pressure and dictates of austerity and market fundamentalism, leading eventually to a growing chorus of voices critical of the developmental model of both the IMF and the World Bank.
One of those voices was the United Nations Development Programme whose 2003 Human Development Report criticised the IMF and called for a "guerilla assault" on the "Washington Consensus", that sets out the general policies used by the IMF and the World Bank - including an emphasis on careful control of public spending, tax reform, trade liberalisation and privatisation.
UNDP's administrator, Mark Malloch-Brown, was quoted as saying that "The IMF and the World Bank should no longer set these kinds of ceilings" on spending. He continued, "These measures were introduced at a time when finances were leaking red ink all over the place and there was an urgent need to stabilise. The strategy had its time and place. The Washington Consensus did some good things, but people stuck with it too long - and it wasn't enough." One publication stated that the UNDP report recommended that "instead of forcing developing countries to cut back on public spending, the International Monetary Fund and World Bank should be pressing rich countries to provide more help".
Chief author of the report Sakiko Fududa-Parr reiterated that "public interventions are necessary to set the preconditions for market-led economic growth".
But the chorus of voices came much too late, well after the horse had gone through the gate. The record shows that over 50 countries have suffered permanent structural damage from their encounter with the IMF.
The degree to which the IMF has changed is unclear, but like any other lender we know that the loan will come fully loaded with philosophies, intentions and consequences all wrapped up in the package. My warning to our country is that we had better leave the flirting for lesser evils.
With love,
bab2609@yahoo.com

http://www.jamaicaobserver.com/colum...TH_THE_IMF.asp

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