Martin Henry became a young adult during the tumultuous 1970s when Jamaica signed its first deal with the International Monetary Fund.

Greatly impacted by the events of that decade, Henry remembers that the political rhetoric was sharp and loud.

“It was the worst decade for political conflict in this country,” the university lecturer and social commentator vividly recalled.

He also recounted how Michael Manley’s socialist theories caused the rich to flee and investors to scorn doing business with a newly independent Jamaica.

“The Government of the day embarked on a pathway of democratic socialism which had implications for people’s confidence — especially those who held capital. There was a mass exodus of the monied class which pushed the economy into a tailspin. The Manley Administration put in foreign exchange controls. You could only catch a plane with more than a few dollars in your pocket. It was a crime to travel with hard currency.

“So flight of capital, the unwillingness of people to invest in that type of climate — pretty much like now except it wasn’t so in-your-face — would have led to substantial economical decline, and that was what led to the need for the IMF. It wasn’t the other way around, we need to be clear on that. It wasn’t the IMF austerity which hurt Jamaica, it was the Jamaican politics which led to the need to go to the IMF for the first time in 1979.

Violence

“The social climate at the time was filled with political divisions and political violence. That was the time when garrisonisation was rising to its peak. The 1976 elections had its daily body counts, which people were comparing to the counts of dead soldiers in the Vietnam War a decade before. It was a shocking parallel.”

Prices soaring

“I distinctly recall the almost weekly movements of prices as inflation led to price adjustments. One of my favourite cartoons at the time was by the Gleaner cartoonist Leandro, where men were at a bar buying white rum and one of the characters wanted to pay for his round before he started drinking because by the time he finished a drink the price would go up.

“I distinctly remember the ‘marrying’ of goods; rice, flour, saltfish, those staple basics you could only obtain if you were willing to buy syrup and shoe polish, which were far more expensive than the basics of food and drink.”

He said this was marked by the unavailability of consumer goods.

Jamaica was in the middle of wrestling with an energy crisis, brought about by the Arab oil embargo and the international oil shocks, and drastic escalation in prices that followed.

“There were the same sort of discussions about getting Jamaica off petroleum. In fact, the Petroleum Corporation of Jamaica was formally established in 1979 as a response to the escalation of oil prices over the previous three to four years to search for oil in Jamaica and to seek alternative energy sources to take us off foreign oil.”

“It was a long-range relationship in which Jamaica never reconstructed its fortunes and was never able to do without the international lending agency. There would be some who would argue that Prime Minister PJ Patterson’s termination (of a borrowing relationship with IMF) was premature.”

However, he notes that while some of the economic conditions that accompanied the early IMF deal some 25 years ago have replicated themselves in this century, Jamaica is far more socially and politically stable than back then, contrary to media reports of a fiscal cliff that the country plunge over tomorrow.

“I agree that some things are much worse, and the debt burden is significantly higher, and that is a real danger, but a large number of other measures are in better shape. Inflation is under better control, the slide of the dollar is less precipitous than it was in 1977. Unemployment levels are just about over half of what they were then… and media is bawling blue murder about moving from 13 to 14 per cent last year.

“If you look at those macro-economic measures, except for the size of the debt, the Jamaican economy is in better shape than it was back then. We have a big NIR (net international reserves) which is falling, but in 1977 there was no NIR,” Henry said.