EDITORIAL - Misdirected IMF debate

Published: Tuesday | January 1, 2013 Comments 0

IT IS the considered position of this newspaper that much of the public discussion about Jamaica's negotiations with the International Monetary Fund (IMF) is misdirected, of limited value, and does little to advance an understanding of the issues facing the island's economy and how to make things better.

Essentially, what we have engaged in is keeping time on when, or when not, the agreement may be signed, without a deep exploration of the consequences, if any, of failure to meet the deadline.

So, there is an a priori assumption that the proposed agreement is good. But the sound bites and intense certitude of the declarations offer little clarity of why this is so and how Jamaica should proceed.

This newspaper, of course, knows that an agreement with the fund is good. The IMF's imprimatur will unlock resources from multilateral institutions such as the Inter-American Development Bank , the World Bank and the European Union, who have, by and large, frozen financing to Jamaica over the past year. Further, if financial markets know that there is external oversight to ensure economic prudence by our government, they might let us back in.

economic problems

However, while financial inflows from such an agreement may, in the short term, temper the fallout of the adjustment that Jamaica will have to undertake, there is an inevitability about what is to be done, with, or without the IMF. At least, that is if there is a genuine intent to give the economy a decent shot of sustained growth after 40 years of stagnation.

Jamaica's basic economic problems are well known. Over the past 40 years, we have accumulated a debt that is now upwards of 140 per cent of GDP, without much to show for that liability. The debt is now unsustainable, its servicing consuming nearly 60 per cent of the Government's annual budget and the great bulk of its tax revenue. The Government then borrowed some more to meet its obligations. But now, there are few people willing to lend to Jamaica, or at interest rates we can afford to pay.

The result is that we now have to make adjustments to meet the circumstances. The IMF has told us to reduce the relative wage bill of the public sector and to make it more efficient; to make civil servants contribute to their pension; to be far better about collecting taxes and to limit political discretion in the process.

But these are things about which there should be no need for instructions from the IMF. We should see them as inescapable obligations in a scheme to lift Jamaica from its economic rut. Indeed, the finance minister, Peter Phillips, has claimed the Government's ownership of these ideas/policies.

That ownership, however, appears to be merely intellectual. What, so far, has been absent is a will to implement these policies.

This brings us back to our concern about the debate over the new date for the IMF agreement ,now that 2012 has passed.

There has been no coherent articulation of the programme or a concerted effort - beyond sporadic statements - to explain to Jamaicans why it is necessary. We have no clear timetable for the implementation of various elements of the plan.

We do not need an IMF agreement to start to do what is right, which should be the focus of the debate - not the date for the signing of the agreement.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.

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