THE International Monetary Fund (IMF) left Jamaicans in no doubt that further devaluation of the local currency was on the cards, at the end of the three-day visit to the island by its managing director, Christine Lagarde, in June this year.

But 22 years ago, when the ‘Butch Stewart’ Initiative (BSI) galvanised patriotic Jamaicans in an unprecedented Save-the-Dollar campaign that revalued the currency from J$31 to US$1 to J$22 to US$1, the IMF was among those cheering.

Three weeks into the campaign to stop the stubborn slide of the dollar which triggered an unending spiral in the price of even basic foods that hurt the poor, then Governor of the Bank of Jamaica G Arthur Brown reported that the IMF had described the initiative as “novel” and had suggested that Jamaica was “one of the few places in the world in the fund’s experience which has been able to mobilise mass support for an activity of that kind”.

In April 1992, Gordon ‘Butch’ Stewart, the hotel mogul, began depositing US$1 million a week into the market at J$25 — lower than prevailing exchange rates — in the hope that he could force speculators to dump their hard currency into the system and stem the fall of the Jamaican dollar. Dr Leahcim Semaj, popular host of the Radio Jamaica show ‘The Night Doctor’ at the time, joined the initiative which saw thousands of Jamaicans taking small amounts of US dollars to the banks.

Brown quoted the IMF as saying that “the initiative, especially involving depositors of small amounts of foreign exchange, was an imaginative one, mobilising ‘grass-roots’ support, as distinct from the support given by big businesses which was also good”.

“The general feedback from the IMF was that they were very interested in the latest developments,” Brown was quoted at the time by the national news agency, JAMPRESS. The agency also reported Dr Semaj as telling a press conference that he had been invited to lunch by representatives of the IMF.

Lagarde’s tone, despite her effusive praise of Jamaicans for sticking to the current four-year IMF Extended Fund Facility Programme, was far removed from the IMF of 1992. Directing her remarks to the present BOJ Governor Brian Wynter, she said:

“Governor, when you are at the mercy of having to get rid of your reserves in order to defend currency, I am sure it must have occurred to you that Jamaica was bleeding and that it was not good for the country to actually spend so much of its reserves to defend a currency which was clearly not valued at the right level,” she said.

Lagarde blamed the fall of the Jamaican dollar — from $99.33 to US$1 on May 1, 2013, when the IMF pact was signed, to $112.03 to US$1 at the end of trading on the second day of her visit — on over-valuation of the currency.

“I don’t like to use the word devaluation. I prefer to use the word ‘right-valuation’, because it may well be down the road, as the programme progresses, as growth picks up, and as the reserves build up, that it will not be devaluation forever and it might revalue,” she stated.

Stewart, who became a national hero of sorts in 1992, conceded in an interview with the Jamaica Observer of which he is chairman, that “the times are different now”, even though he is still not fond of devaluation.

“I don’t like to see the hardship being experienced, especially by the poorest Jamaicans. But I believe that, unfortunately, we are paying for a lot of sins committed over the years when we borrowed and spent instead of running an economy the tough and hard way.

“It’s like any household. If you are spending more than you are earning the chickens will come home to roost one day. That is the situation in our country today. I think the economic conditions prevailing today are far different from those in 1992 when we had just liberalised the currency. We rolled the dice then, and even now I believe rightly so, to depart from exchange controls.

“Regrettably, the speculators pounced on the opportunity to capitalise on a weak currency. The value of the dollar plunged over a few months and was wildly out of control. The doom and despair was felt far and wide. We could not just sit back and do nothing,” Stewart recalled.

“I was in a unique position at the time as we were trading companies who bought US dollars and sold dollars, so we were very familiar with both sides of the fence. I was able to devise a marketing plan that went to the root of confidence and which, within days, received tremendous support from key members of the public and the business community. Ordinary Jamaicans joined the campaign when Dr Semaj launched his radio effort, with the support of Rex James of NCB.”

“We calculated that we lost US$17 million to the initiative. But I believe it was the best investment we had ever made to our country, when I saw the dollar revalue and ease the pressure on the suffering people,” said Stewart.

Monday: Butch Stewart reflects on the Save-the-dollar Initiative.