The whole debate about whether we should go back into a borrowing arrangement with the International Monetary Fund (IMF) is being approached from the wrong angle. The issue is not about avoiding the IMF as a way of avoiding pain and cutbacks. The fact is, Jamaica has no alternative except pain and cutbacks in our present circumstances.

And this will be so even if we were to elect the People's National Party any time soon. In fact, the persistence of our economic problems and crisis of production should disabuse our minds of the notion that merely changing political parties will provide a solution to our economic woes. That's what we did in September 2007, and here we are discussing essentially the same issues we were disscussing just prior to that election.

And keep in mind that Jamaica's economy was in crisis long before the global economic crisis. The global economic crisis has merely exacerbated what were severe and deep structural problems of our own economy.

These problems will not be solved by loans from the IMF, nor will they be solved by our simply wishing them away. The country must start focusing its attention on the hard, tough decisions which must be taken, with or without the IMF.

The days of scapegoating should be over. There is no way the country can sustain the loss of US$1.2 billion-US$1.5 billion in foreign exchange earnings and remittances and go on with business as usual, with or without the IMF.

Idle chatter

Arguing back and forth about the cutbacks to the national budget and the belt-tightening which would accompany an agreement with "an IMF which has not really changed" is idle chatter. Talking about whether the IMF has made substantial changes or whether the institution is hypocritical in laying out one set of rules for developed countries and another for developing counties is a side issue. When you are running a trade deficit of US$5.9 billion and a fiscal deficit of $2.3 billion with double-digit inflation, it's idle jesting to be cussing the IMF for demanding that tough choices be made by our economic managers.

Why should the IMF lend us money in our severe situation unless the institution is convinced that we are serious about doing something about the factors which led us to the predicament in the first pace? That's common sense. No need to demonise the IMF. What we must ensure is that the IMF does not prescribe medicine which kills the patient and/or which creates such deleterious side effects as to render taking the medicine unwise.

And an objective analysis of IMF programmes over the years has confirmed that conditionalites imposed in the past on developing countries have been counter-productive, socially destructive and disruptive of production. What we welcome is that the IMF itself has seen the errors of its past ways and has made some amends. This puts us in a better position to negotiate because the institution is showing greater sensitivity to social issues and is cognisant of the fact that human beings are not just the means but the end of development.

Those who are frightened by the prospects of a return to the IMF should seriously examine their fears (if those fears are not phobias and, as such, are immune to rational response). The bitter medicine which the IMF is likely to recommend would probably be the same medicine that our technocrats would recommend, if they don't make politics trump economics. If we grant that some reform has taken place in IMF thinking and that the gloss on neo-liberalism has worn, then there should not be that wide a divergence - if any at all - between our smart technocrats and the IMF's.

Bauxite fallout

I know for a fact that the IMF fellows have been impressed with some of our own technocrats in the past. But it doesn't take an economic genius to figure out that with the bauxite fallout, the decline in remittances, expected decline in tourism as well as decline in non-traditional exports, that we need to borrow to close the gap. Some people are talking foolishness about "increasing production", "working our way out of our problems rather than borrowing", but tell me, where are the buoyant markets for our products in a global recession?

Yes, our small size favours us and there are niche markets, etc. But we still have to realise the external environment we have to deal with.

And if we think that we can tell the IMF to go to hell with their harsh conditionalities, well, the international credit markets are not as favourable as they used to be, to make the understatement of the year. Just a few weeks ago the World Bank issued its Global Development Finance 2009 report. In the chapter on 'Private Capital Flows In a Time of Global Financial Turmoil', the World Bank says net private inflows dropped to US$707 billion by the end of last year, "reversing the upward trend that had begun in 2003 and that peaked at US$1.2 trillion in 2007".

And the World Bank noted, too, that as inflows sagged, net capital outflows increased, reaching US$244 billion, up from US$190 billion in 2007. In developing countries, "net portfolio equity flows plunged by almost 90 per cent from US$139 billion to a mere US$16 billion in 2008. Similarly, private debt flows declined substantially to $108 billion, from US$499 billion, driven by the sharp fall in short-term debt flows which moved from $202 billion in 2007 into negative territory (-US$16.3 billion). In-bond financing came to just US$11 billion in 2008 compared to US$85 billion in 2007."

These are the things happening in the real global economy, while some fantasise about an IMF-free Jamaica and wish to eat their cake and have it. The flows of foreign direct investment, which burgeoned over the last few years as shown by UNCTAD's World Investment Report every year, have plunged. FDI inflows to developing countries this year are expected to decline by as much as 30 per cent. So all levels of capital flows to countries like Jamaica are declining. This is why multilateral financial support such as those from the Inter-American Development Bank and the IMF are crucial.

Big hole

But these loans cannot be seen as a panacea. We should be happy that we can access them, for we have a big hole in our budget and even our work and creativity cannot fill that hole this year. But we have to make the hard structural decisions to realign our economy and to get rid of the distortions.

Adjustments will affect the poor. Politicians will try to exploit people's ignorance but there is no painless path our of our economic dilemmas. We have put ourselves in a hole over decades and we will not be lifted out by the IMF, the Word Bank or by any magic wand.

Nor is it simply a matter of just producing more. The immediate and perplexing problem we face is that with our low levels of social capital-low levels of trust, respect, harmony and cooperation, we won't have the basis to carry out the really critical work that is needed.

The sacrifices have to be shared by all the social classes. The poor and marginalised are not going to want to share the burdens disproportionately while the upper classes continue to flaunt their wealth and get away with what the masses consider murder. With our high levels of inequity come much resentment and class bitterness.

Discuss real issues

We need a national dialogue on the serious economic issues which face Jamaica, with or without the IMF, and with or without the PNP or JLP in office. There are certain problems which would still face Jamaica; certain dilemmas which would still haunt us whether it is Bruce Golding, Audley Shaw, Andrew Holness, Portia Simpson Miller, Peter Phillips or Peter Bunting leading Jamaica. We need to understand that. So all the messiahs-in-waiting need to be put on hold while we discuss some real issues.

The Government and the PNP have been holding separate town hall meetings. I would love to see them combine those town hall meetings where the people can put some tough questions to both of them at the same time and place and hear what they have to say. This is not about who can out-talk whom, or who is brighter than whom, or who can sway the crowd more than whom. It is about who really has the ideas and programmes which can address our problems.

And it might just show - if we throw in a panel of non-partisan journalists to ask sensible questions - that the two parties are not as far apart in their prescriptions - or lack of them - as their rhetoric suggests.