IMF POLICY IN JAMAICA...ECONOMIC APARTHEID
The international monetary fund was created in 1944 along with the World Bank as a means to promote monetary co-operation between countries. The chief of the IMF is usually headed by a European while the head of the World Bank is headed by an American, an agreement between the European and the American. The international monetary fund serves the interest of the powerful financial interest in the United States and Europe. This interest is solidify using a quota system wherein the Country with the most financial contribution command the most voting rights, the United States has 18% of the voting rights thus having de-facto control of the organization. This control enables the United States and its European partners to use it as a tool to enforce policies that benefit its economic interest and to maintain imperial control. There are over two hundred members.
The international monetary fund tell Governments that have balance of payment problems that the key to economic growth lies in unrestricted access to imports and foreign investment. In the Jamaica context our successive governments have used the institution to pay debts. At this juncture our debts are around one hundred and fifty percent of our gross domestic product. Another important fact unlike other debtor nations seventy five percent of our debt is owned by our private sector which equal around seven hundred and fifty billion dollars with the other two hundred and fifty billion dollars owed to foreign concerns inclusive of the International Monetary fund. Notice the Government prime focus, The International Monetary Fund not the Private Sector; is this by accident or design?
Jamaica is not the only country that is experiencing this economic dislocation due to the script provided by the IMF. The Asian ,Mexican, Argentinian and presently the crisis in Greece have magnify the problem wherein a high school economic or finance major can deduce that increasing debt does not increase growth if the payment is only to pay the bondholders!! Our successive ministers of finance lauded constantly by the established financial elites and the parasitical intellectual circles for their brilliance only compound their intellectual ignorance and the propagation of our social ills. Our ministers due to their tribal affiliation since independence have tied their political existence to the private sector and not to our national interest. This behavior has resulted in their infantile appraisal of our problems, goals and objective.
The decision by both the government and opposition to embark on this path will no doubt end in failure. If we use the statistic and analysis of the crisis of the Argentina experiment one will see the similar strategies enacted here. The Imf want the government to freeze wages, cut back expenditure to social services, reduce or streamline public bodies, strengthen the revenue collecting agencies, sell off more assets, strengthen the security apparatus, in short, stop being the Government, just concentrate on collecting taxes and security, leave everything to the Private sector. What took place in Argentina was the same prescription which resulted in the devaluation of the peso, the rapid contraction of the economy, caused by increase in unemployment, the concentration of wealth in a few hands, inflation, Capital flight and large bankruptcy of small and medium size companies while simultaneously the IMF was still insisting on the government to continue on this path. The Argentian IMF experiment imploded in 2002.The discussion among the western economic elite during that period was that default was not an option. That decision was not heeded by patriots of Argentina; they defaulted and abandon the IMF recipe. They opted to service the interest of their country and not the needs of the financial markets. Argentina has since recovered and paid off seventy five percent of their debts.
The corrugated financial mindset of both house of our government with recommendation from the Private Sector on occasion try to come up with fragile solution which at all times must preserve the domination by the private sector of the economy; they own seven hundred and fifty billion dollars of our debt. The international monetary fund strategy and planning in any country is to preserve its natural allies, the private sector, not the government or the public sector. The JDX was place on the plate of the disgraced Bruce Golding who saw it as a blessing in disguise; to help finance his promises, a tool use at the time to ensure success at the poll. The private sector agrees to a five percent mark down on interest payment on its bonds. The savings was use to fulfill the government promises. The present government during the recent elections gave the impression of a serious negotiated agreement with the IMF, having our National interest as the nucleus of any agreement, fell short by agreeing to sacrifice our people’s livelihood in return for the loan. The JDX2 was made part of this agreement with the Private Sector endorsement. The JDX2 this time came with a longer maturity so as to allow for the recuperation of bondholders initial write down. The powerful elites that govern this country were adamant in having this deal done with the Private Sector/IMF because they say it will ignite economic activity knowing in advance that the receipts will be going into their coffers.
This economic apartheid recipe cannot work!! The imf/private sector claim of a balance budget with reduction of government spending is in fact the premise of future downturn as evident in the Argentinian experience. This experiment in Jamaica has resulted in us having one of the highest murder rate in the world, the decimation of our social institution, the migration of our trained professional, the commercialization of our culture by turning our young youths into murderers, our girls into prostitution, the building of upscale gambling houses to satisfy the appetite of the rich, high rate of unemployment, high rate of suicides, inflation, devaluation of our dollar, homelessness, alienation and suicide. As for the promise of growth, investment are done primarily into auto showroom, rental and real estate properties, consumer items, stock market and franchising of foreign entities. The foreign banks reap astronomical high rate of profit, bank of Nova Scotia just reported a twelve billion dollar annual profit, four billion less than Peter Phillips taxation bill!! Where does that profit go? What entity is exporting for us to earn money?
Successful economic programs work only when the government plays an active and majority role in the economy, it cannot be left solely to the private sector. The private sector has failed Jamaica!! They see success only through the prism of the United States, not on the improvement of our people standard of living. Our business leaders have yet to set the standard that Usain Bolt and professor Carl stone have erected as standard bearer of excellence and creativity. Having the government laying out the red carpet for you by taxing our people to death, selling off our national assets, mortgaging our children’s future, killing each other during election to pay this large paper debt has outlived its relevance and the partition and separation due to income allocation and distribution will end similar to the one that existed in South Africa, abandon the IMF and renegotiate the bond not the interest on the bond and use the benefit to invest in education, housing, agriculture and manufacturing.
Carlos Daley holds a masters degree in financial management and an executive certificate in strategic management and business evaluation from Harvard University School of business.