Seaga, the IMF and the way forward

Dr Raulston Nembhard

Saturday, October 13, 2012    

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Last Tuesday, the Jamaican parliament appropriately paid tribute to Edward Seaga for the contributions he has made to the development of modern Jamaica. This was part of the ongoing celebration of our 50th year of Independence. It was good that the honour was paid while he is still alive so that he could bask in the moment.

Posthumous honours do nothing for the honoree, other than lift the spirits of his friends and relatives and perhaps embed the person's name in history. People should be given the opportunity to "smell the roses" while they can. Congratulations to the leadership of the parliament for this fitting gesture.

Mr Seaga could not allow the opportunity to pass without commenting on the IMF. After all, he has had to fight gladiatorial battles with this behemoth in his own time. It is memory of these battles why he warned the government to be very careful about the dictates of the IMF. He well remembered that what the IMF wants for a particular country, and especially for Jamaica, is not necessarily in tandem with what the country needs to achieve growth and health. One remembers the structural adjustment programmes that his administration undertook and the pushback he had to make when the IMF insisted on conditionalities that would generate unnecessary pain for the Jamaican people. If anyone is qualified to give the government advice, then he certainly is.

Today, Jamaica is in a different set of circumstances than Mr Seaga had to face. To begin with, we are in the midst of a prolonged global recession that has seen hitherto strong countries buckling under the weight of debt and slow, anaemic growth. America, for example, was a strong and robust country in the 1980s when Mr Seaga was in power. Today, it is a shadow of its former self, debt and deficit-riddled with high unemployment and a dysfunctional legislature, and heading to an uncertain future. It is true that Mr Seaga inherited the IMF from the Manley administration in the 1980 elections, but we entered the fund at a time when many countries, even our Caribbean counterparts, were experiencing some level of growth and certainly not anything resembling the parlous situation that confronted Jamaica.

We are in a worst bind today, given the global recession and the IMF's recalibration of poor growth in the world economy, going forward. The truth is that we have very little wiggle room, certainly not as much as may have obtained in the 1980s. Mr Seaga's bravado in the 1980s could hardly work with the fund today. The truth is that we need the fund now more than we ever did in the 1980s. It is fair conjecture that Mr Seaga could have ended borrowing relationships with the fund as was done later by Mr Patterson and this might not have done any greater harm to the economy. Today we do not have that leverage, for to do so would result in greater and more horrendous hardships on the Jamaican people.

We are in a hard place with very little room to manoeuvre. We are broke and we know it. A man who is broke, who has not carried out the necessary vigilance and diligence over his finances, and who now finds himself at the mercy of his creditors and those to whom he may be looking for further financing, cannot call the shots. He is at best a supplicant. The IMF negotiators know this even as they sat with representatives of our government and gave the usually well-crafted diplomatic speak regarding the status of our negotiations with the fund. They know we are cornered and all we can hope for is that they do not beat us up too badly, to put it mildly.

We are where we are with the IMF today, solely as a result of our own doing. When the rest of the world was growing in the 1990s we dithered and fought each other like political gladiators in a ring of incompetence. We delayed taking hard decisions that would have put us on a path of sustained growth. While we railed with fiery rhetoric against the wicked imperialists from whose tables we were hoping to get some crumb, other countries were striving valiantly to get their house in order. We fiddled while Rome burned and now we are being forced by an external power to do the things which we should have done in better times.

The unsustainable wage bill which will result in a loss of jobs in the public sector is a can that has been kicked down the road by successive administrations for political reasons. Tax and pension reform are matters that we have approached with our legendary lethargy. Now the IMF is insisting that these things are non-negotiable if we are to get their help. There is no merit in blaming the IMF for insisting that we get our house in order. The sad truth is that, if the IMF did not insist on these things, we would never do them on our own. This three-plank reform that is being insisted on by the fund is the right thing to do to get us back on the path of sustainability and growth. We should praise them, not vilify them.





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