Jamaica Gleaner
Published: Wednesday | July 22, 2009
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Dreading IMF's return

Dear Dr Abel,

It was Dr Paul Joseph Goebbels who said: "A lie, repeated often enough, will end up as truth." When this happens, virtually everyone, from a humble pump attendant to a first-rate medical doctor, starts to believe it. This does not, however, mean that it is actually true. Let me take on three of the major 'IMF-imposed horrors' most Jamaicans believe as gospel, two of which you mentioned in your column and show you what I mean:

1. Devaluation. We were told that the IMF forces us to devalue our currency; repeatedly and by both sides of the political fence. What's the reality?

From the 1970s to the early 1990s, Jamaica borrowed from and was under the supervision of the IMF, our currency devalued from 2 to 1 at the beginning of this relationship to 5.5 to 1 at the end. After it ended, we went from 5.5 to 1 to 88.9 to 1 in half that time.

2. Public-sector salaries. Only since our 'freedom from the IMF' has the standard of living possible on a public-sector salary deteriorated so badly that most young teachers either squat or live at someone else's expense (i.e. in mommy's house).

3. High interest rates. When we left the IMF in the early 1990s, its top rate was a little under five per cent and the capital market offered us a little over five per cent because at the time our economy and Budget had been vetted and approved by the IMF. Once we were fully on our own, those rates began to climb, so that our government was borrowing US dollars at 12 per cent when the IMF was lending at between three and 0.75 per cent.

I do not blame you. You, like the rest of us have been fed a steady diet of 'IMF = EVIL' for decades. This phenomenon is not even unique to the IMF. It has also led to our national phobia of guns. A self-imposed fear that costs over a thousand lives per year. I won't go into the details of this except to say that if guns were sold at Bashco and Courts, we could leave our doors open on hot nights. The opposite of what most Jamaicans believe.

I am glad to see that our government has done enough independent research to see the error in this whole thing. What then is the real problem with the IMF? Why did our government spend decades demonising them and then put everything on the line to escape?

Notice when we started having massive overruns and blatant nepotism? This is the real reason behind the line we have been fed re: the IMF and also our exit from that body. Not to say the IMF didn't have harsh conditionalities. Just that the measures imposed after leaving them were worse and the cost to our nation greater.

As if that wasn't enough, we left the IMF at the same time they realised that sharp reductions in social spending hurt economic performance. These days, the IMF demands that countries invest more in security, education and health.


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