... split over IMF, austerity and the development agenda
The People's National Party administration's struggle to craft an agreement with the International Monetary Fund has revived memories of a similar struggle by the party when it formed the Government in the 1970s. Today, two of the major players around at the time share their memories.
Gary Spaulding, Gleaner Writer
Reports are persisting that the Portia Simpson Miller-led Cabinet is split over the prior actions required by the International Monetary Fund (IMF) despite repeated claims by the administration that it is united on the way forward.
But if there is a split in the Cabinet, that would be nothing new because decades ago another People's National Party (PNP) Cabinet was rocked by disagreements about how to handle the IMF with a finance minister, the late David Coore, resigning because he did not see eye-to-eye with his colleagues.
Former Finance Minister Hugh Small was in the heart of the developments at the time, and last week he went down memory lane with The Sunday Gleaner days after Simpson Miller and her team faced the media to present a united front.
Last Tuesday marked exactly 33 years since Hugh Small first met with officials of the IMF to negotiate a deal as part of the Michael Manley-led administration of the 1970s.
It was on January 15, 1980, that Small, not yet appointed finance minister, was named on a team to meet with the IMF.
He was then the minister of education, youth development and sports and that was his first experience with the Fund.
Small said he accompanied Manley and then Finance Minister Eric Bell, who had been appointed to replace Coore, to meet with the IMF.
In fact, Coore had been asked to resign over disagreements with his Cabinet colleagues over the IMF deal.
According to Small, the team had gone to the IMF seeking a waiver for a loan payment that was due as Jamaica's economic fortunes tumbled.
"We had run into balance of payment problems in 1975/76 due to instability in the international system that had started in 1972.
But what led the PNP into the throes of an inflexible IMF of the 1970s in the first place?
In an article published in The Gleaner in July 2012, it was noted that when the PNP campaigned on a platform of democratic socialism before the 1976 general elections, Manley declared, "We are not for sale."
Manley suggested then that in the context of that ideologically charged campaign, the Government dared not publicise that it was even meeting with IMF representatives, much less negotiating a loan agreement.
It had been rumoured that the IMF team had been meeting secretly on the north coast, disguised as tourists, with leading Jamaican technocrats and a senior member of the political directorate.
In the mid-1970s, large sections of the public believed that the policies supported by the IMF's loan conditions would undermine a path of economic development that was inclusive of all social classes.
With the first IMF agreement of 1977, the process started off forcing the Government to cut funding for many development projects, and to lessen its control and direction of the economy.
loss of popularity
By 1979, the Government's resistance had been broken by the loss of popularity because of the economic hardships.
For his part, Small noted that by the mid-1970s the international economy was in an unstable condition, characterised by widespread stagflation.
Added to that, the oil crisis of the time caused increased prices globally and this knocked Jamaica's balance of payment out of whack.
Small remembered that as the foreign-exchange situation worsened, Jamaica experienced great difficulty paying for oil and financing the country's food import bill.
"The Manley Government also took a hostile position, in my view now - I did not think so then - and we had too high a profile in the struggle of the non-aligned movement which antagonised the western forces," said Small.
"So we had to be dealing with not only an economic issue, but a political one as well."
He said Coore's stance had caused rifts in the PNP Government and this was one of the reasons it had to limp back to the IMF in 1980, leaving political casualties in its wake.
Small recounted that in 1976, when Coore announced at the party's annual conference that he had to attend an IMF meeting in Manila, the news triggered a shock wave through the hierarchy of the party, as nothing of this nature was discussed at the political level.
"I am not even sure it was discussed at the level of the Cabinet, said Small.
"That discussion was the first of the move to obtain an extended Fund Facility - even as David Coore was denying it, he was speaking with the IMF," charged Small.
"This was the complete opposite of what we had been saying to the electorate and was a fulfilment of the predictions made by Edward Seaga in the lead-up to the 1976 general election.
Small recalled that the return to the IMF sparked a major battle in the PNP between 1977 and 1979.
"The long and short of it is that we failed to meet the targets," said Small, who was the finance minister at the tail-end of that troubled Manley administration and again in 1992 after P.J. Patterson resigned from the Cabinet.
Small was to be retained as finance minister after Patterson replaced Manley as prime minister but that was a short stint as he resigned in 1993.
For 20 long years, Small said he has declined to speak about the reasons for his resignation, but last week he told The Sunday Gleaner that he quit because Patterson refused to support the austerity programme he had created as finance minister.