When will we stop blaming the IMF for our state of affairs?

GARFIELD HIGGINS

Saturday, October 03, 2015

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An unconscious people, an indoctrinated people, a people fed only partisan information and opinion that confirm their own bias, a people made morbidly obese in mind and spirit by the junk food of propaganda is less inclined to put up a fight, ask questions, and be sceptical. That kind of orthodoxy can kill a democracy -- or worse. -- Bill Moyers




FOR nearly four years spin doctors of this Portia Simpson Miller Administration, many of them dwarfs of thought, others Moses-like -- the Raven in George Orwell's Animal Farm -- propagandists have been implicitly and explicitly telling us that the albatrosses of chronic joblessness and lack of economic growth plaguing the country are inescapable consequences of the International Monetary Fund (IMF).


The IMF -- apparently not wishing to be used anymore as a fall guy for the rotten state of Jamaica's economy and numerous social ills -- played a veritable Pontius Pilate card on the Government last week. 'IMF says Jamaica's unemployment rate needs to fall and growth increased' screamed the banner headline of The Gleaner on September 24, 2015. The story said among other things:


"The International Monetary Fund has sent a warning to the Jamaican Government that the unemployment rate needs to decrease even as other economic indicators are heading in favourable directions. The IMF issued the warning yesterday in a release advising that the fund's Executive Board approved the ninth review of Jamaica's economic performance under the four-year loan agreement. The approval allows Jamaica to access an additional US$39.7 million as part of the agreement.


"The IMF's deputy managing director, Min Zhu, said the authorities remain firmly committed to the economic programme. He also says the programme is on track and structural reforms have progressed broadly on schedule. However, he stressed that growth remains weak and unemployment needs to decrease further."


Last week, Guardsman security company -- one of a plethora of such companies that has mushroomed in recent years -- evidently in response to the rapidly expanding crime industry in Jamaica had a recruitment drive for 100 workers. In response to the call over 600 turned up. Many, I am told, had tertiary-level qualifications in assorted areas of study; few have worked since certification.


Security firms and funeral homes are arguably the two fastest-growing businesses locally. It is not hard to understand why. Since January, 895 Jamaicans have been slaughtered. Hundreds have lost their breadwinners, wives their husbands, children their mothers and fathers, etc.


A third of Jamaica's youth are jobless, according to the Statistical Institute of Jamaica and the Planning Institute of Jamaica. Yet, some who have their places reserved at the political trough boast that things are improving for the masses.


Others who cannot bring themselves to retailing blatant lies, maybe for fear that their noses will grow too far from their faces like Pinocchio, echo sophistries to suit the agenda of a moribund government. They, as Bob Marley said, are "playing it smart, but not being clever".


Some 500 workers were made redundant at the Golden Grove Sugar Factory in St Thomas only a few weeks ago. That company was the last substantial employer in the parish. Another 500 workers at Moneymusk Sugar Factory were sent home, ostensibly for two weeks, because of happenings in China. Two weeks have turned into six.


What will happen to the hundreds of families who will be impacted by the multiplier effect of their breadwinners being jobless? It is no surprise that thousands are leaving Jamaica for "greener pastures". The Gleaner's September 23, 2015 headline: "2010-2013 migration trends; Almost 100,000 Jamaicans leave for US, Canada and UK".


"Just under 100,000 Jamaicans migrated to the United States, Canada and the United Kingdom from 2010-2013. The latest data on migration trends from the Migration Policy Project Unit at the Planning Institute of Jamaica show that 99,963 persons migrated to the three countries."


Many of our best and brightest are fleeing. A few days ago I heard the president of the Nurses' Association of Jamaica, Janet Farr, say on a radio programme that some 200 nurses left our health system last year. She noted that between December last year and September this year 58 specialist nurses resigned from one of our major hospitals. A nurse who gets just over a million dollars in Jamaica gets the Jamaican equivalent of seven million in Trinidad and Tobago.


Intellectual lightweights continually tell us that it is good when our best human resources migrate, because they send remittances to relatives here and eventually might come back to Jamaica upon retirement. Two seconds of cranial application relegates such thinking -- if you can call it thinking -- myopic, at best, if not suicidal. There must be a correlation with the fact that this flight has been ongoing since the 1930s and that, today, we are the third most indebted country in the world.


Our critical institutions, according to the Global Competitive Index of 2014/15, are some of the weakest in the world. Our social infrastructure is in continual decline. When will it occur to those who are elected to provide leadership at the highest levels that we need to fix Jamaica for all Jamaicans?


The IMF in its release last week all but said they are not the cause of the molasses-type economic growth and severe joblessness. Admittedly, I am no admirer of the IMF, but I agree. Jamaica's relationship with the IMF started -- as country people would say -- 'donkey years' ago.


Jamaica became a member of the IMF on February 21, 1963. Three months after, Jamaica entered into a one-year Stand-By Agreement (SBA) with the fund, which permitted drawings up to a limit of SDR (Special Drawing Rights) US$10 million. The arrangement was unutilised and expired in June 1964.


In 1973, Jamaica engaged in a borrowing relationship with the IMF and this continued until 1996, when borrowing arrangements were suspended under the P J Patterson Government. The country continued being a member of the IMF and, in 2001, signed an Intensified Surveillance Programme (ISP) -- a staff-monitored programme.


Jamaica's borrowing relationships with the fund between 1973 and 1996 were predominantly aimed at correcting balance of payments problems emanating from negative economic and financial trends, including commodity price shocks (in particular oil) and high inflation. A fundamental difference between the IMF and other lending agencies, such as the World Bank, Inter-American Development Bank, etc, is that the IMF does not lend money for project spending or onlending.


P J Patterson said "ta-ta" [goodbye] to the IMF in 1996. Thereafter, Dr Omar Davies -- you know what I think of him -- went on a borrowing spree ['run wid it'] gobbling up monies at 10 and 12 per cent interest rates [junk bond rates] on the international capital market. In 1971, the Jamaican economy grew by almost 12 per cent in that one single year; equivalent to the cumulative growth under Davies' entire 14 years as minister of finance between 1993 and 2007. Did the IMF provide refuge for the failures of Davies? The Jamaica Labour Party re-engaged the IMF in 2010. Kamikaze borrowing ceased. Audley Shaw, then minister of finance, dubbed 'water boy' by the People's National Party, was able to borrow US$100 million at 0.63 per cent from the World Bank.


"Since 1977, seven of the 12 agreements with the IMF were cancelled because Jamaica failed some performance tests. Of the five that were completed, two required special waivers of performance tests by the IMF," said Michael Witter, senior research fellow at Sir Arthur Lewis Institute of Social and Economic Studies, UWI (The Gleaner, 'Lessons from the IMF experiences', July 8, 2013)


Witter said further: "The critics of the IMF among us believe that the conditions of the loans were too harsh for Jamaica to meet. The defenders of the IMF among us believe that governments' mismanagement of the agreements caused us to fail so many, and not to benefit much from those we managed to complete."


The IMF is not Jamaica's number one problem. Former P J Patterson said our politics is "a fight for scarce benefits and spoils carried on by hostile tribes that seem to be perpetually at war". Our politics is a stage four cancer. This is the primary reason Jamaica is the sick man of the Caribbean. We have squandered and misused billions upon billions of dollars, much of it borrowed money that needed to have been spent on developing Jamaica for Jamaicans.


Numerous administrations, instead of focusing on "growing the economy really fast and eliminating corruption", like President Barack Obama admonished a few weeks ago, have focused on the redistribution of State resources to political 'trough-ites'. We live in a land where many consultants give half-measure but they get paid millions. A land where an SUV can be registered as a garbage truck and someone gets paid handsomely. A country where near $700 million of farmers' deposits can be at risk.


"It was revealed that a loan amounting to $170,000 from members' savings was approved for a board member to offset personal expenses and granted a 12-month moratorium. A loan was also approved for a board member and was later rescheduled, and the grace period increased from the approved one month to 12 months moratorium, without proper supporting documentation and/or project approval. In another instance, an approved interest rate on a loan to a board member was reduced three months after first disbursement from 15.5 per cent to 12 per cent, while this was not applicable to other loans with similar higher interest rate." (The Gleaner, September 17, 2015)


We live on an Island where Derrick Kellier, a 'part-time' minister of agriculture, admits that funds were "misused" at the National People's Co-operative Bank as evidenced in a recent audit conducted by the Agricultural Credit Bank, but the fraud squad is not called.


We live in a territory where near $200 million is spent to bail out Lenny Little-White in what became the Outameni scandal; where $350 million is doled out on the most recent preventable fire at the Riverton dump that blanketed the commercial and political capital for days -- billions of dollars in production losses, school closures, and major negative consequences on thousands of citizens' health resulted. Should the IMF be blamed for these self-inflicted injuries?


A front-page story in The Gleaner of Tuesday, February 9, 2002 is testimony to the many scandals that have occurred under the watch of PNP administrations. The root of these scandals is an amalgam of ineptitude and a cruel waste of public resources. The consequences have helped to chronically impoverish Jamaica and damage our credibility abroad. The Gleaner listed the cost of major money scandals:


Shell Waiver (1991) -- $29.5 million


Zinc (1989) -- $500 million


Furniture (1991) -- $10.6 million


Public sector salaries (1998) -- $60 million


NetServ (2001) -- $220 million


Operation Pride/NHDC (1997-present) -- $5.5 billion projected


TOTAL= $6.320 billion


Should the IMF be blamed for these scandals?


Up to last week the Jamaica Association of Radiologists reported that there were no functioning mammography machines in the entire public health system. Must we blame the IMF for this?


For the better part of the last 53 years since political independence we have been trapped in what our present Minister of Education Deacon Ronald Thwaites describes as "the greatest transfer of wealth from the poor to the rich since slavery".


Sixty-eight and eighty-eight years after the construction of the Mona Reservoir and Hermitage Dam, we have a minister of water and climate change who is also life chairman of the governing People's National Party suggesting that the solution to the present drought lies in rainfall. Millions of gallons of potable water on the north and west of the country flow into the sea each day while thousands are forced to "forward bathe" -- meaning scores take a proper shower sometimes three or four days in advance, because if one is lucky that is the interval when there is water in the taps.


There are those who tell us that "no betta nuh deh". Their arguments support a kind of Abrahamic curse.


Then there are some who give tacit support to a broken system of government that is concerned with tinkering, not substantive changes that are prerequisite to enable the Jamaican economy to grow really fast.


"Mahfood says his organisation is pleased with the gains made under the economic programme. He notes that the PSOJ's monthly monitoring has shown improvements in the fiscal balances, current account balance, business confidence, and inflation and interest rates. He says he believes Jamaica is in a position to capitalise on the gains made over the last two years for sustained economic development." (The Gleaner, September 21, 2015)


The Government should know 'reforming' the economy so that life is easier for a cherry-picked sector only is not an economic strategy that has worked anywhere. The IMF, as part of the ninth review, has got the commitment of the Bank of Jamaica to continue the devaluation of the local currency. Devaluation by itself has not proved an effective strategy to stimulate meaningful economic growth anywhere. Since this Administration took office there has been a 40 per cent devaluation. Where is the attendant economic growth? Should the IMF be blamed for this?


The Government is in a hurry to call a general election. The most recent IMF report on Jamaica says "undesirable" policy choices will face the Government of Jamaican next year. Decoded, it means workers will be sent home, taxes will be increased, and spending on critical services like hospitals, schools, water, national security, etc, will likely be cut. Is this reason?


If you are a Doubting Thomas, consider this sentence from a Letter of Intent dated September 4, 2015, signed by Dr Peter D Phillips, minister of finance and planning, and Brian Wynter, governor of the Bank of Jamaica:


"The Government believes that the policies described in the attached Memorandum of Economic and Financial Policies are adequate to achieve the programme's objectives. However, if necessary, the Government stands ready to take any additional measures that may be required."




How we understand history is shaped by when we start the clock. -- Roger Waters




Garfield Higgins in an educator and journalist. Send comments to the Observer or higgins160@yahoo.com.



 

  

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