The International Monetary Fund (IMF) has again become a hot-button issue in Jamaica but, like so many other issues in here, discourse on the matter is characterised by ignorance, gut feelings and anecdote.

The fear of IMF "contamination" is akin to Jamaicans' fear of homosexual "contamination". In Jamaican politics, the IMF is perhaps the 21st century's equivalent to the Russian ships scare of the last century. Only that today the tables have turned on the Jamaica Labour Party (JLP). Our intelligentsia is generally averse to reading and research and so the fact that much has been published which shows that the IMF has undergone significant changes would mean very little, especially in this Twitter Age.

Even before the onset of the global economic crisis, the IMF had been under intense intellectual assault from some of the finest minds in economics. Its Washington Consensus, neo-liberal orthodoxy did not go unchallenged and empirical work showing either the disastrous consequences of its policies on developing countries or gross ineffectiveness called into serious question its hubris.

In time, the IMF itself began to review its operations and found itself wanting in crucial areas. In 2007 the Independent Evaluation Office published a major report on Structural Conditionality in IMF-supported Programmes. This report found that IMF conditionalities were too numerous and sometimes irrelevant to programme effectiveness. The Report found "a significant number of structural conditions very detailed, often felt to be intrusive and undermined domestic ownership of programmes".

The IMF's own board in a meeting on December 12, 2007 (also contained in the report) stated that, "directors commended the shift in the composition of structural conditionality towards Fund core areas, with fewer areas of reform targeted".

The global economic meltdown, which has severely chastened the neo-liberals and exposed the inadequacies of the Washington Consensus model, paved the way for the IMF to institute policies more in line with the developmental needs of developing countries. Keynesianism has been rehabilitated and its credibility enhanced and the dialectical struggle for a more equitable global economic order is gaining traction. The IMF had no choice but to respond to the groundswell of criticisms and the shifting dynamics of the global economy.

In March the executive board of the IMF announced sweeping changes to the fund's lending framework. "More flexibility in our lending along with streamlined conditionality will help us respond effectively to the various needs of members ... to weather the crisis," IMF Managing Director Dominique Strauss-Kahn said at the time. The IMF's new lending framework now focuses on the underlying objectives of a country's structural programme rather than on specific actions to be taken at a set deadline.

In a press release titled 'IMF Overhauls Lending Framework', issued on March 24, the IMF admits that "in the past IMF loans had too many conditions that were insufficiently focused on core objectives".

When Jamaica had a borrowing relationship with the IMF, formal waivers had to be granted if the country failed to meet its tests. The IMF now admits in its IMF Survey (March) that its former waivers "sent a signal to the markets and the public that reforms had gone off track even if there were good reasons for the delays. For these reasons structural performance criteria came to be seen as a stigma attached to borrowing from the IMF".

stigma of being involved

In the April issue of IMF Survey article on 'New Rules of Engagement for IMF Loans', the IMF announced that "as part of a wide-ranging reform of its lending practices ... the IMF's intention is to do away with procedures that have hampered dialogue with some countries, and prevented other countries from seeking financial assistance because of the perceived stigma ... of being involved with the fund".

IMF Deputy Managing Director John Lipsky is quoted as saying that "we arrived at these reforms by listening to our membership, consulting with a variety of stakeholders and reviewing past experiences. These reforms will pave the way for countries to work more effectively with the Fund."

Some in Jamaica certainly believe so and once we can overcome the IMF phobia, perhaps we can reap some benefits from the hard and intense work of progressives who had lobbied long and hard for IMF lending reforms (as separate from the governance issues which are of more concern to developed and big emerging market countries.)

In the June 2009 issue of the IMF's quarterly magazine Finance and Development, Lipsky has an article on "Preparing for a Post Crisis World" in which he concedes what people like Norman Girvan and Richard Bernal - and Michael Manley - had been saying from the 1970s: "At times conditionality was seen as unduly burdensome, laden with conditions that ... were not always crucial for the success of the programme or that was implemented without sufficient flexibility with regard to timing or nature of the policy actions."

Flexible Credit Line

The IMF has now doubled access limits for non-concessional funds, introduced a new Flexible Credit Line, simplified cost and maturity structures as well as modernised conditionality requirements. It is also significantly increasing its assistance to poor counties, particularly in Africa. Its loans to Africa were just US$200 million in 2007. In 2008 it jumped to $1.1 billion and in the first five months of this year alone, assistance to Africa has surged to $1.6 billion.

The IMF projects to increase assistance to Africa by 100 per cent over the 2008 figure. And the IMF has been talking some things which would be rank heresy - indeed, sacrilege - just a short while ago. Even the progressive Harvard economist and leading critic of neo-liberalism, Dani Rodrik, expressed surprise recently that the IMF is now saying deficits can be okay. The IMF said that openly at a press conference it held on Africa last month. One speaker noted that one of the main things that the IMF is doing differently is that "they are allowing the deficits to widen as the crisis goes on so that these countries can continue to spend". Another speaker said, "Where there is room, the IMF has supported allowing fiscal deficits to widen and by our count that has been the case or will be the case with 80 per cent of our programmes in Africa." Are we reading right? Yes, we are. It's not the same old IMF, and even some on the left continue to spout nonsense and ignorance about the IMF, having not updated their reading since Cheryl Payer's Debt Trap book of the 1970s.

The IMF itself is advocating social spending and social safety nets, not cuts in those expenditures. In their paper issued on May 14, 'Fiscal Policy in Sub-Saharan Africa In Response to the Impact of the Global Crisis', the IMF says "countries will need to expand safety nets and pro-poor spending to address rising poverty levels. In all cases priority should be given to expanding targeted social safety net programmes as needed. Protecting or increasing social programmes helps cushion the impact of the crisis on the poor and buttresses domestic demand given the high propensity of the poor to consume". Clearly this is not the same old IMF!

And a prime minister with no less leftist credentials than Ralph Gonsalves of St Vincent and the Grenadines has now signed up with the IMF for assistance. In the document outlining the IMF programme which has been approved for St Vincent (published June 8) the IMF says of the Gonsalves administration that "meeting the needs of vulnerable groups more efficiently will help the Government continue its solid efforts at pursuing social and poverty reduction goals".

Pro-poor priorities

There was a time when people like Gonsalves would have to fight with the IMF to maintain his social spending and pro-poor priorities. Not today. I am not giving credit simply to the IMF, for the truth is the fund is responding to substantial pressure and changed circumstances.

In that IMF consultation document on St Vincent, the Fund warms to Gonsalves' social programmes, including 'the children against poverty, the rural development facility, the home-help for-the-elderly and the school-feeding programmes".

In another IMF document, The Implications of the global Financial Crisis for Low-Income Countries, we read: "There may be scope to scale-up existing spending programmes in targeted ways. Additional resources can be channelled to targeted school meal programmes ... Expanding conditional cash transfer programmes that link cash transfers to receipt of heath care and education can be effective."

The window of opportunity opened to Jamaica at this time of global economic crisis should be utilised. Besides, it must be borne in mind that a number of the conservative measures that the IMF would recommend are already being followed by the Government and were being followed by the previous PNP government. We have achieved commendable bi-partisan agreement on key aspects of fiscal prudence, despite the self-serving propaganda between the two parties.

Some of the things the IMF has recommended are things which are necessary for economic growth and which should be embraced without IMF imposition. Irresponsible and wasteful spending is not on. So this idea that we should resist the IMF because we should be free to do as we like is foolishness. Sub-Saharan Africa, which has adopted many IMF-type policies has seen GDP move from US $130 billion in the 1980s to $300 billion in 2008. The country had seven per cent annual growth for this decade, compared with two per cent in the 1990s

Prudent economic policies

Take formerly Marxist Angola where inflation soared to 300 per cent and debt to the Paris Club stood at $2.3 billion. Inflation is now 10 per cent and cash reserves put at $20 billion with GDP growth at 21 per cent and 15 per cent respectively over the last two years. Because of the rejection of failed Marxist policies and the adoption of prudent economic policies. It's time for a sensible, research-based dialogue on the IMF and economic policy.

Ian Boyne is a veteran journalist who may be reached at ianboyne1@yahoo.com or columns@gleanerjm.com.