Bumbling along with IMF negotiation as things fall apart?
THE EDITOR, Sir:
ARE OUR IMF negotiators bumbling along? The latest negotiations with the International Monetary Fund started in early 2012. The Government promised an agreement within months, which was not achieved.
Successive promises of an agreement were attended by corresponding failures to deliver on those promises.
As recently as last November, the finance minister was implying that a letter of intent would be in place in 2012. Now we are told that a number of prior conditions must be met, one of which is getting the unions to accept a wage freeze.
This all begs a series of questions. Is the IMF continually moving the goalposts? If not, were these prior conditions not clearly seen by our local negotiators several rounds ago? Is it that our negotiating team has just not been able to support with actions or valid arguments the positions it has espoused?
Is it that the bureaucracy just cannot deliver on the actions committed to by our negotiators?
Worse still, has the IMF been required to teach our negotiating team, step by step, how to correctly interpret our economic dilemma? Allowing them to understand why what we have consistently failed to do in the past is precisely why we are facing them again today.
It is very evident that our prescriptions for fixing our economy has not been finding much traction. And if this be true, do we just continue to suffer the incompetents who are managing the process?
All pundits seem to agree that we do not have the option of saying goodbye to the IMF. What is not being said is that we are also now beyond avoiding a severe contraction in the economy.
I challenge those commentators who are putting the best economic spins forward to refute this storyline: increased taxation; further contraction in consumption; continued decline in trade balances in real terms; declining exchange rates; a scramble to hold foreign exchange in accordance with our well-established precautionary principle; loss of confidence in government paper due to the almost certain unilateral modification to existing contracts; NIR eroded defending the exchange rate; looming stagflation?
Let's leave the bad news there, conveniently overlooking increasing unemployment and underemployment and the "can't tek no more" flashpoint that might tip the dominoes into falling.
I offer this advice to our prime minister: Get on a flight to Washington and meet personally with Christine Lagarde, the managing director of the IMF. That office is extremely influential (and even more so within the IMF itself) and has, and can, rein in field negotiators who are perhaps trying to establish or defend reputations as tough negotiators.
It's worth a try, Madam Prime Minister. That's the way power is played. For in the meantime, things are falling apart.