The IMF: What we want to know

Published: Sunday | July 19, 2009



Robert Buddan, Contributor

There is serious talk that Jamaica is going back to the International Monetary Fund (IMF) and there is hopeful talk that the agency has changed for the better. From past experience, the IMF was not good for Jamaica and no government goes to the IMF unless they see no other way.

Jamaicans need to know more about what is to come and their Government must tell them. Jamaicans must know how best to protect what might be taken away and find alternatives to what they might not like. Yet, there is no contingency plan being talked about.

There are many things we should want to know, whether they are to be done by direct orders of the IMF or by the Government with the IMF's encouragement and tacit approval as conditions for its loans.

AUSTERITY

Will there be an austerity programme with cutbacks in social expenditure? We want to know how this would affect the School Feeding Programme, the Programme for Advancement Through Health and Education and the others that make up our social safety net. The School Feeding Programme is already under great stress. Teachers want to know about the future of the Teacher's Revolving Loan considering that the salary freeze will make them even less able to afford the loans for their higher education in keeping with the Education Transformation Plan's aim of every teacher having a bachelor's degree.

Will subsidies be removed? If so, then the Government's subsidy of education and hospital fees under its 'free education' and 'free health' policies will have to go. We need to know if we will have to go back to user fees. The cost of university education at Mona has risen by 500 per cent in the last 10 years. It would go higher still. There are subsidies of many kinds in the system, such as for transportation that public sector workers enjoy. They want to know if these will go.

Will there be devaluation? Right now, the foreign exchange system operates by a managed float. Will a new agreement require or tacitly encourage rapid or steady devaluation in the hope of making our exports more competitive. The tourism industry might be happy about this, but consumers will pay and remember, many are under a wage and salary freeze. Besides, devaluation hasn't really helped the economy. It was supposed to provide a competitive edge for exports, but we don't have any new export industries after years of creeping devaluation.

NATIONAL PLANS

Will there be more privatisation and where will it end? Are we going to sell off our water for example? Privatisation is not always a bad thing, but private ownership does not guarantee better, much less the best we can get as seen from some bad experiences in sugar, banking, transport and telecommunications.

Will there be faster-paced liberalisation of trade? At least we can negotiate the pace of trade liberalisation with other countries, but what if the IMF imposed rapid liberalisation of services and agriculture that overrides the phased liberalisation negotiated with the Europeans under the Economic Partnership Agreement or what we want to agree with in renegotiating the Caribbean Basin Recovery Act with the United States and the CARIBCAN agreement with Canada? Our farmers, manufacturing and service sectors want to know these things. Will an IMF agreement trump all these other agreements? What becomes of the DOHA Round's trade and development philosophy to reduce poverty?

Will there be downsizing of the state? We are already seeing this. But what agencies and public bodies will be chopped or downsized? Will it be the Jamaica Social Investment Fund, sports, heritage, environmental and disaster management bodies, cultural commission, fire services, or other schools, institutes, commissions, authorities, programmes, and so on? This is important because it affects the role of the state in leading or guiding development.

This is bound to affect how effectively the state and its public service can fulfil the aims and objectives of the Vision 2030 Plan for Development. That plan was just tabled in Parliament in May at the same time that the Government was holding talks with the IMF. This is also bound to affect the Education Transformation Plan, Justice Reform, Constituency Development Fund, Strategic Review of the Jamaica Constabulary Force, Science and Technology Plan, and all major plans developed by the state over the last few years.

The big question, as Portia Simpson Miller would say, is how does one balance people's lives while trying to balance the books? The downsizing, after all, will be justified on the grounds of a balanced budget. This is fine, but do we downsize the productive assets that lie in knowledge, management and administration? How can an economy grow without management and administration of roads, environment, health, safety, utilities, disaster, education and such public services?

The fundamental problem is that the IMF's prescriptions reflect an old and failed orthodoxy and so the strictness or flexibility of the IMF programme is not the only issue. Golding himself said in his Budget presentation that Jamaica's economic crisis is a deep-seated structural one. So, what structures are we changing to produce more and consume less; export more and import less; rely more on trade and less on aid; eat what we grow and grow what we eat; and be more self-reliant and sustainable?

SECRECY

The political management of the prescription is badly flawed too. The GOJ spent the first year in office telling us there was no crisis. Now it is entering into an arrangement that only countries in crisis enter into. The Opposition argued in the April Budget Debate that had the GOJ acted more proactively by anticipating and being realistic the situation might not have been so bad now.

What is even more troubling is the outdated form of the Government's behaviour - secrecy in an age of information and transparency especially in dealing with an organisation that is not accountable to Jamaicans. The Government has not told us what to prepare for. It has not said what is different about the IMF conditions of today. We don't know what social programmes and subsidies are likely to be cut and who is to bear the costs.

EVERYTHING ON THE TABLE

We don't know what government is fighting for in these secret negotiations. Negotiations do not mean that everything is on the table. There must be some non-negotiables. Is the government fighting for say health and educational programmes; and is it fighting for a productive economy with the right kinds of land reform, tax incentives, ownership structures, transparency and accountability of enterprises, protection of local industry, job creation, exports, internal linkages, economic diversification, all to give the economy more breadth and depth for greater sustainability? In other words, for all the guesswork about the IMF programme we haven't been asking, what is the government's programme?

In this era of community and parish development planning, and of consultation and partnership, we need the government to tell us and involve us in debating and working out plans for production. Otherwise, we are going to have the kinds of suspicions that people have when things are done in secret, suspicions that the whole thing is influenced by and designed to serve special interests in western countries, the IMF, and the national government in league with special friends.

Robert Buddan lectures in the Department of Government, UWI, Mona campus. Email: Robert.Buddan@uwimona.edu.jm or columns@gleanerjm.com.