My esteemed fellow Sunday Gleaner writer Professor Don Robotham has fuelled an even more intense debate on the International Monetary Fund (IMF) locally, since his Public Affairs article of last Sunday. But, unfortunately, he is way off mark this time and must wheel and come again.

In what I am forced to describe reluctantly as a hysterical and alarmist piece ("reluctantly" because I have so much respect for Don's intellect), he writes, "Make no mistake about it, the coming IMF measures are going to make the 1970s and the 1980s look like a picnic." Don is clearly suffering from IMF phobia - which, thankfully, is treatable.

We first start with a dose of facts. It is not just a G-20 initiative which has resulted in "the IMF's mouthing reforms", as some would see it. The IMF has come under significant intellectual assault over the last few years particularly as neo-liberalism and Washington Consensus have been assailed by progressive scholars and intellectuals.

Besides, there has been considerable pressure from Third-World governments, civil society groups and political organisations for the IMF to reform its dreaded and infamous conditionalities. In addition, even conservative economists have questioned the effectiveness of IMF programmes, on pure macroeconomic terms. All of this has led to much introspection within the IMF itself. The worst economic crisis since the Great Depression - which has laid bare the weaknesses of laissez faire capitalism and market fundamentalism - has only served to complete the perfect storm against the IMF house of sand.

In 2007, the Independent Evaluation Office published its major report on Structural Conditionality in IMF-Supported Programmes which confirmed that IMF conditionalities were too numerous and sometimes irrelevant to programme effectiveness.

Importantly, too, another Bretton Woods Institution which has also wreaked havoc in the developing world, the World Bank, had itself undergone a significant paradigm shift even before its sister

institution, the IMF. In 1997, the World Bank's major annual publication, the World Development Report, was a bombshell. Titled The State in a Changing World, this report rejected the minimalist state premise on which so much World Bank programming had been based, pushing the view of a developmentalist state. This was a watershed.

The World Bank followed up in 2006 with another stunning World Development Report titled 'Equity and Development' which completed the revolution. No progressive scholar could be more forceful in making the case for equitable economic development, a development that did not leave out the poor. (Incidentally, Don confuses the World Bank's new Vulnerability Fund with the new IMF programmes to help low-income countries.)

no overnight changes

It was just a matter of time before the other significant member of the Washington family came around. So the changes in the IMF are not overnight reforms or just a gimmick. These reforms have come as a result of dialectical struggle and changed global dynamics. Capitalism is enormously adaptive and flexible, and the managing committees of international capitalism no less so.

So Don's general scepticism as to whether the IMF has really changed ignores certain historical and contemporary dynamics. But it is when we get to Don's treatment of the Latvia case that we see how terribly wrong he has got it this time. In playing Chicken Little and crying that the sky is falling, Don adduces the example of the small European state of Latvia where the government collapsed in February because of IMF-imposed conditionalities, in Don's view. Now if that is not enough to scare Jamaicans!

Latvia, indeed, has carried out some really tough austerity measures. What Don failed to mention was that it was the Latvian Government which chose the path of heavy austerity and budget cutbacks and which resisted - successfully - the path that the IMF was pushing for, which was a devaluation of the lat. (So the IMF can be successfully resisted!)

The Latvian authorities chose to cut public sector wages and pensions because, since 2005, they have pegged their currency to the euro and are hell-bent on being a part of the European Monetary Union by 2012. To do so, they will have to meet the stringent three per cent fiscal deficit target as outlined in the Maastricht Treaty. In fact, it was the IMF, ironically, which pushed the Latvian authorities to remember the poor and vulnerable and had them increase social spending from 21 to 25 per cent of the budget (see the May 28 issue of the IMF Survey Magazine)

There is no way that Jamaica, despite its real economic challenges, can be compared to Latvia. Latvia had a serious banking crisis. We don't have one. We have a sound and strong system, thanks to reforms undertaken by Omar Davies following our financial crisis.

In Latvia bank credit to the private sector reached an astounding 95 per cent of GDP in 2008, while the current account deficit stood at 25 per cent of GDP in 2007. Private external debt hit 130 per cent of GDP last year. Output has already plunged by 18 per cent for the first quarter of the year and it is estimated that the economy will decline by that figure for 2009.

In such a crisis situation, the Latvian government had to adopt crisis measures. These things can't be wished away. My friend Garnet Roper also seems trapped in the past, as evidenced by the following statement in his column in The Sunday Herald last week: "One has only to examine the IMF conditionalities in Latvia and Ghana which are two current programmes to see that the IMF only knows one way to act". This is blatantly untrue.

high fiscal deficit

The IMF's current programme with Iceland allows for a high fiscal deficit in 2009. The IMF modified its programme with Hungary, in response to worsening global conditions, and included in that modification was a targeted increase in budget deficit. In Hungary, low-income pensioners were exempted from benefit reductions. But lest anyone succumb to Don's view that that only shows the IMF's hypocrisy in allowing deficit financing and stimulus in developed countries while oppressing poor (black) developing countries, let me provide another dose of facts. In Costa Rica (a current programme) the IMF-implemented programme has used expansionary fiscal policy to mitigate the drop in private demand this year - including increases in the wage bill.

In Guatemala, the IMF is supporting a fiscal surplus to support domestic demand and has refocused public expenditures towards social spending and labour-intensive pubic works. So the argument that the IMF always supports wage and public sector cuts and tight fiscal and monetary policies in developing countries is simple not true. It is not true that it is just "IMF rhetoric" which has changed. There are a number of IMF programmes in place which demonstrate the change - if the IMF phobia is not so overwhelming as to preclude those afflicted from any exposure to it.

But phobia experts always advise that the best way to get over them is exposure to the things feared.

In Pakistan, expenditure is being increased to protect the poor through cash transfers and targeted electricity subsidies. Senegal and Zambia have seen their conditionalities reduced over their programme cycle. In fact, the IMF has generally factored in higher deficits and spending in 2008 and 2009 and has made its financial programmes more flexible. Fiscal deficits have been loosened in no less than 80 per cent of the African countries (18 out of 23) which have IMF programmes. The view that deficits are necessarily bad in IMF accounting is no longer true and those who hold that view need to update themselves.

The IMF has now mainstreamed social spending and social safety net protection. In its paper prepared for the United Nations Conference on the economic and financial crisis and its impact on development (June 24-26), the IMF made this significant statement: "Across all programmes, the IMF is committed to supporting the protection of the poorest and most vulnerable. The IMF tries to ensure that economic adjustments taken to combat the impact of the crisis also take account of the needs of the most vulnerable by developing or enhancing social safety nets. The more recent progranmmes ... explicitly provide for higher spending, strengthened social safety nets ...".

Years ago, governments would have to fight with the IMF to get them to understand those points. The IMF is now making statements about the need to protect the poor and vulnerable that even right-wing governments previously had to be drumming into its head, as it were.

fortunate position

In a sense, the Jamaican Government is fortunate. Our negotiators today are having a far easier time than the Michael Manley and Edward Seaga teams had. They had to battle both IMF conditionalities and the World Bank's equally treacherous structural adjustment prgrammes - a double whammy. It can't be worse this time, Don.

It is for our negotiating team to be sharp and up on the facts and know how to throw the IMF's own words back at them. Don is right on one overarching point, though: civil society groups, the media and ordinary citizens must become active in the debate about the terms of any IMF agreement. The Government must be open with us and come clean. The Government must continue the dialogue with social groups.

Progressive voices must be heard on behalf of the marginalised and oppressed classes. We can't leave the discussion to financial analysts and spokespersons for the propertied classes. We must push for the protection of social spending. Something like the retention of the present policy on user fees in hospitals which benefit the poor must be lobbied for. Unfortunately, a party like PNP, which prides itself on being progressive has not, because of our blindly partisan political culture, seen it fit to fight for this programme, just because it is a Jamaica Labour Party programme.

This is the kind of backwardness we must get away from. Don't just blame IMF if we lose subsidies on health and education. Our own people who are supposed to be progressive have said we can't afford these programmes which benefit the poor.

The IMF is no saviour. Our salvation has to come from us.

Ian Boyne is a veteran journalist who may be reached at ianboyne1@yahoo.com or columns@gleanerjm.com.