Almost certainly Jamaica would have had to make a return to the International Monetary Fund (IMF) even without the benefit of a global recession. We have had our own domestic 'recession' for more than a generation. And it's not the IMF's fault.

A potent little letter to the point appeared in The Gleaner last Wednesday, interestingly, located in the Health section as a response to psychiatrist Wendel Abel's column the week before on the calamity of borrowing from the IMF. The writer, unfortunately just published as Kevin, debunked a number of cherished myths about the IMF and Jamaica's relationship to the fund:

The IMF was supposed to have dictated the devaluation of the currency. Be that as it may, while we had the IMF the Jamaican dollar devalued from 2:1 US dollar to 5.5: 1 US dollar. Post-IMF, the exchange rate moved from 5.5:1 to 88.9:1 in half the time. Since our emancipation from the IMF, the writer pointed out, the spending power of ever-increasing public sector salaries has fallen so badly that "most young teachers either squat or live at someone else's expense (ie in Mommy's house)".

Having said "good-bye, ta-ta, au revoir" to the IMF, the Government in celebration of this euphoric independence then proceeded to borrow money at rates four times and more higher than those offered by the IMF, further digging the debt-addicted economy into a hole. The current minister of finance, accusing the previous administration of fiscal irresponsibility, has publicly claimed that the Hope Road improvement project was undertaken with loan financing at 25 per cent interest rate.

Having anticipated the inevitable for which the Government has been preparing the country for the last several months, seasoned journalist and now senior Gleaner writer, Gary Spaulding, did his homework and delivered an excellent 'IMF deja vu' story in the paper last Wednesday, the day after Minister Shaw's announcement to Parliament and the nation.

economy in shambles

With the economy in shambles, the Government turned to the IMF in early 1977. What should have been a standby arrangement, as this new arrangement most certainly should be, lasted all of 18 years and was abandoned in 1995 not because the country had achieved economic independence from creditors (of which the IMF is the cheapest), but out of nationalistic pride.

By the time we said a boasy ta-ta to the IMF, Jamaica had become one of the most indebted countries in the world with one of the highest debt to GDP ratio which today still stands at 114 per cent. The IMF relationship enriched our vocabulary. There were "conditionalities" [which every creditor has, but the IMF's were supposed to be the worst]. We were forced into "structural adjustment programmes", the destructive SAPS. And quarterly tests became much more that school exams.

In his contribution to the 1977 Budget Debate, Prime Minister Michael Manley told Parliament: "The nature and causes of the economic crisis are deep-rooted. They relate to the imbalance between production and consumption, our tendency to live beyond our means. On January 19 [the day the borrowing agreement with the IMF had been announced], I outlined", he said, "the basic elements for dealing with the economic crisis and for beginning on the road to recovery. This model has as its essential elements, first, the transformation to a socialist economy, since it is clear that the capitalist model of development with its emphasis on private ownership and control of productive capacity and private discretion over the distribution of the benefits of production will, in Jamaica's circumstances, continue to result, as it has in the past, in the very same imbalance of production and consumption which was the root cause of our present crisis" [Delano Franklin, Michael Manley: The Politics of Equality]

The prime minister went on to discuss the "budget deficit", as every government, up to this year's Budget Debate, has had to do. "The size of the budget deficit and its financing", Mr Manley said, "go to the heart of the dilemma facing those who have the democratic mandate and responsibility for managing the nation's affairs". And then he outlined the dilemma: "If we adopt the conservative approach, that of balancing the Budget, then we minimise the risk of unleashing inflationary pressure, but we also face the absolute certainty of a massive increase in unemployment. If we adopt the more aggressive approach - that of operating with a carefully controlled budget deficit — then, while the danger of inflation is increased, nonetheless, we are able to maintain the level of employment provided directly or indirectly by Government spending."

The prime minister concluded: "In view of the circumstances facing Jamaica today, we feel we have no responsible alternative other than to operate a budget deficit." There were bound to be clashes between the ideologically and operationally differentiated Government and IMF, and clashes between the then ideologically polarised political parties in Jamaica. Soon, IMF came to mean 'Is Manley's Fault'.

illiterate

As Spaulding tells us, the current leader of the Opposition, Portia Simpson Miller, and D.K. Duncan are the only two members of the current Parliament who were in the House then. And both were on the side of the then Government.

We have borrowed from everyone who will lend. Where has all the money gone? It sometimes appears that we have used the money to buy shovels - to dig holes for the economy. Perhaps no sector has received more loan and grant financing support than ,education. Much of it from the World Bank. The bank's representative here, Badrul Haque, appeared before the Parliament a couple of weeks ago telling our representatives that up to two-thirds of the labour force are functionally illiterate and constitutes an important factor in the country's dismal growth rate.

More citizens and citizens' groups should take the Haque route and seek to appear before our own Parliament to help with what Michael Manley called "the search for solutions". The Parliament is obliged to hear the people it represents.

cut public sector jobs

The Government, at both the levels of prime minister and minister of finance, has been seeking to assure, as it re-embraces the IMF, that there are no immediate plans to cut public sector jobs. The emphasis has to be on "immediate". With or without the IMF, the public-sector wage bill will have to be adjusted downwards - or the means of paying it from non-debt sources improved - if the goal of the Government to reduce the budget deficit, which the Manley Government of the 1970s was committed to live with, is to be realised. You can be sure the IMF will not be lending us money simply to sustain the budget deficit or as Michael Manley put it so many years ago, "to live beyond our means".

Martin Henry is a communications consultant who may be reached at medhen@gmail.com or columns@gleanerjm.com.