The IMF austerity programme must continue

Raulston Nembhard

Tuesday, July 19, 2016

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The Government, through its Minister of Finance Audley Shaw, has announced its intention to maintain a less strict International Monetary Fund (IMF) agreement when the present programme ends in March 2017. Speaking at a Private Sector Organisation of Jamaica and Jamaica Money Market Brokers-led forum, Shaw indicated that this successor programme "will be instrumental in building on the achievements already made and tackling the challenge of achieving sustainable economic growth with fiscal consolidation and debt reduction."

This new programme would be a staff-monitoring programme, which would see less belt-tightening measures than the strict budgetary controls insisted on under the present arrangement.


Members of the private sector are understandably concerned that the Government would wish to have the IMF strictures relaxed. Since the inception of the present programme, Jamaica has done well in applying the conditionalities in the economy. As a result, the country has been placed in a good position as fiscal prudence has been achieved, the macroeconomic situation has improved considerably, the country’s debt has been reduced as a percentage of gross domestic product, and the country has been set on a path to achieving economic growth.


Again, the previous Government, especially its Minister of Finance Peter Phillips, must be congratulated for doing the embarrassing and strenuous heavy lifting that was required. It had no wiggle room as the IMF provided none.


It is almost beyond refutation that any of this would have been achieved without strict oversight from the IMF. The truth is that Jamaica never had the fiscal discipline to execute what the IMF insisted on. For the past 50 years we lived beyond our means; borrowing from the blood and sweat of other people to indulge a kind of profligacy that was denied many of the citizens in the countries from which we borrowed. We profiled on the international scene as mendicants; there was no shame as we used borrowed money to promote partisan political causes and elevate corruption to the level of a social principle.


One is not saying that this is the path to which the Jamaica Labour Party wants to return the country. What it wants is to maintain the imprimatur of the IMF without having that institution breathing down its back. But we have to be concerned that this watchful oversight by the IMF should end. We are not yet out of the economic woods. Neither have we developed the culture of fiscal discipline that is required to really put Jamaica on a sound, sustainable fiscal path.


Over the past four years we have made some headway, but we are still a far way off. There is still a lot of corruption in the system and we cannot yet depend on the good intentions or the beneficence of any politician to do the things that are right with our fiscal space. Our politicians need to be watched.


Politicians never like to have anyone or any system breathing down their necks. This is part of the reason oversight bodies such as the Office of The Contractor General are not given the resources that they need to do a good job. Contractor General Dirk Harrison’s frustration is well understood. Others before him have felt that frustration, and others after him will, unless the citizens demand of their elected leaders that these agencies be properly staffed. Talk to the auditor general and you will hear similar complaints. The Independent Commission of Investigations is not far down the road. It is in the context of this vigilance that one also believes that the work of the Economic Programme Oversight Committee must continue, even if we should tell the IMF "ta ta". Another two years of the present IMF oversight would do us a world of good.


There is another reason we need to have oversight of the kind provided by the IMF. Apart from the confidence that the international investment community will continue to repose in the country, the fragile state of the global economy would dictate that Jamaica cannot afford to take its eyes off the proverbial ball. There is no convincing reason to tinker with something that is working. Common sense and prudence would dictate that you have more of that which works, not less.


Shaw’s statement was made at a private sector function. He must now come to Parliament and outline more precisely the Government’s intention behind its suggestion. What precisely does the Government hope to achieve under a revamped programme that is not being achieved under the present one? What will be the benefits to Jamaica and what are the particular vulnerabilities to which the country may be exposed by a mere staff-monitoring programme? This explanation would allow for robust debate which could only redound to good. Just saying it will be good for Jamaica will not cut it. We need specifics.



Dr Raulston Nembhard is a priest and social commentator. Send comments to the Observer or
stead6655@aol.com.



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