OTHER things being equal, the International Monetary Fund is expected to adjudicate on Jamaica’s request for a Stand-by Agreement on Thursday, February 4, 2010. But as we know, things are never equal when it comes to our government’s dealings with the Fund. And if recent clumsiness and delays are anything to go by, you should not hold your breath in anticipation of a February 4 approval. But make no mistake,

like the Jamaica Debt Exchange programme, the IMF Stand-by Agreement is fundamental to the stability of our economy and society.

However, of particular concern are potential fallouts from recent loans to the Ministry of Finance from the Bank of Jamaica which could very well invalidate the underlying assumptions on which the loan application to the IMF were predicated. And while the rationale for these loans — the value of which BOJ Governor Brian Wynter seems reluctant to divulge — is understandable, they also create additional challenges for the government. Lest we forget, these loans will have to be repaid in short order and in the absence of steady revenue inflows it makes government’s commitments and pronouncements to the IMF, other multilaterals and to private investors who just bought “hook, line and sinker” into the Jamaica Debt Exchange (JDX) programme more ineffable.

It could well be that the Fund already knows of the latest transactions between the BOJ and the government and is not too concerned. However, as the prime minister himself pointed out in a recent national broadcast, “there is no room for error” and the government needs this support. Therefore, it has to be very careful in its management of the country’s resources, particularly when so much rests on the loan. The fact is, for whatever reason, and there is a host of them sufficient to touch the sky, Jamaica has been having a “warm time” meeting its domestic and international payment obligations.

The situation worsened last year when tourism, bauxite and alumina earnings and remittance inflows tanked, because of high unemployment and disruptions in key international markets that depressed demands for our export products. Jamaica was not well served either by our government’s feeble handling of the crisis. And although the Jamaican dollar has remained relatively stable because of the heavy and constant intervention of the central bank in the foreign-exchange market, the possibility existed for an unprecedented economic tsunami. Hence the return to the Fund. Absent an IMF Stand-by Agreement, robust expansions in export earnings, and to a lesser extent, the debt exchange programme, the local currency would have come under such severe pressure that it would pave the way for massive devaluations, high inflation, rationing of oil and basic food and civil unrest.

So it is an open secret that the government is seeking US$1.3 billion in balance-of-payment support. It is also important to note that not one “red cent” of the IMF loan can or will go towards budgetary support. It is essential to make this declaration, because too many Jamaicans are of the mistaken view that “one whole heap a money a come fi share up, build factories, repair roads, with enough change to buy a few rounds”. Those who are of this notion, whether through ignorance, or defiant stupidity, had better wake up and smell the raw “onions”, for nothing could be further from the truth. Jamaica will not be getting budgetary support from the IMF; the standby agreement will, however, open the gateway to other multilaterals to provide this support. Budgetary support generally goes to the Ministry of Finance and into the budget for public spending. It is imperative that we understand too that the anticipated loans are not gratis and will have to be repaid.

While the IMF loan will help in limited ways, and while the JDX is projected to shave close to $34 billion (net) from lower debt-servicing charges, because of the systemic and structural deficiencies in the economy, coupled with the huge national debt, except for the respite in interest payments, there will not be any seismic or sustainable positive changes in the fundamentals of the Jamaican economy. Government’s own figures point to this reality as outlined in the Letter of Intent to the IMF. Government’s forecast indicates GDP growth could be 2 per cent in 2011-2012 (below 2007); the debt to GDP ratio could be 120 per cent or 13 per cent higher than it was in 2007; inflation could be 7 per cent, and remarkably, the national debt could be in the region of $1.7 trillion or approximately $800 billion more than what it was in 2007.

These are not statistics at which to scoff. They are frightening and when viewed within the context of the tremendous social deficit that currently exists in the country, it is fathomable that these conditions could push the country closer to the periphery of anarchy. Despite reports of overwhelming support for the JDX initiative by banks and investment houses, there are serious concerns with the programme that have not been adequately ventilated by the principals, and this leads me to wonder if their participation, coerced or not, is driven by pure altruism or hidden profit motives. And while I support the programme in principle, its effects could be so far-reaching that I am prepared to warn of increased inflation and a possible huge devaluation of the Jamaican dollar as investors shift to hard currency holdings. The shift has already begun as is obvious with the actions of the central bank in the foreign exchange market.

There are alternatives to what currently obtains, but they will require time and time is not on our side. Jamaica could benefit significantly, however, from long-term economic development planning. In this regard, I was somewhat heartened by the parliamentary presentations from the Opposition People’s National Party, particularly those from MPs Lisa Hanna and Dr Peter Phillips. Ms Hanna offered solutions that should be given serious thought and analysis, because they could revolutionise the economic structure of Jamaica in ways unimaginable. Dr Phillips spoke liberally of closing the social deficit and of building national consensus. It’s such a pity that the political faint-of-heart on the government side chose to lift their “partisan skirts” way above their heads, instead of listening and supporting the fine points in his presentation.

Part of carving out a salient alternative requires us to think “outside the box”, engage critical thinking and apply rigorous analysis to what we contemplate and do. Lisa Hanna smartly spoke to the development of health and sport tourism as well as to forging alliances with Cuba to leverage our potential as an education Mecca. Thinking outside the box should also impel us to give active consideration to the legalisation, decriminalisation and production of marijuana for medical, religious and limited recreational use. After all, several states in America have already taken the lead and are poised to cash in on this lucrative multi-billion dollar industry. We should seize the moment by grasping the opportunity to grow our economy out of the “miry clay” and set it on the path toward prosperity.

Burnscg@aol.com