Gary Spaulding, Senior Gleaner Writer
Hard-hit politically, by the structural adjustment programme that the International Monetary Fund (IMF) foisted on his administration in the 1980s, former Prime Minister Edward Seaga can now empathise with the Portia Simpson Miller-led Government.
Even though this time around the Fund is adamant that it is not imposing conditions on Jamaica, but is instead demanding that the country implement strategies to show a credible plan to move forward.
Seaga, who was also the finance minister throughout the decade of the 1980s, last week told The Sunday Gleaner that he understands the predicament of the current administration.
Asked whether there was any difference between the 1980s and now, Seaga unhesitatingly responded: "No difference, no difference whatsoever - there was the same 50 per cent loss in bauxite earnings."
Seaga was also unhesitant when asked what advice he would give the current administration.
"It's too late for advice. The IMF will insist on an adjustment programme."
Added Seaga: "There is only one way to deal with these types of problems - you have to adjust your fiscal side so you don't spend more than you earn and you have to do the same on the foreign-exchange side. If not, you will have to borrow to cover the loss."
Seaga argued that the hand of the Portia Simpson Miller-led administration's is being forced just as his administration's hand was forced in the 1980s.
"Once you sign up and the ball starts to roll, you don't have any choice after that," said Seaga.
The former prime minister also outlined how, under pressure from the IMF, he was forced to lay off 30,000 public-sector workers in the 1980s, a decision that his predecessor had shirked.
When the recession hit Jamaica, Seaga said he had no choice but to release the axe that Michael Manley refused to drop in the late 1970s.
According to Seaga, from October 30, 1980 when his party was voted into office, he spent most of his time getting the economy in recovery mode.
"But it carried with it very strong adjustments."
The retired politician recalled that his remedial action in the 1980s were in two major parts - the first being adjustments to the economy arising out of the problems of the 1970s, characterised by high unemployment, high interest rates, borrowing of $2 billion, 20 per cent loss in GDP and a 17.5 per cent fiscal deficit.
Then came the global recession in 1983 that sent the local bauxite industry out of kilter.
"That recession brought a massive fallout in terms of bauxite production as distinct from alumina," said Seaga.
"We had a loss of 50 per cent of all export earnings, and 36 per cent of that was as a result of the fallout in bauxite/alumina - that cost us 44 per cent of revenues," he recalled.
As a result of the devastating effects of the recession, Seaga said his administration had to tip-toe in the 1980s in order to be able to make ends meet.
"When you don't have foreign exchange to meet your obligations, you have to borrow," Seaga stressed.
"We also had to borrow $2 billion, so the country which had no national debt before 1970, ended up with $2 billion in the 1970s and another $2 billion in the 1980s," said Seaga.
For the former prime minister, the difference is that the $2 billion borrowed in the 1970s produced a loss of 20 per cent of GDP; fiscal deficit of 17.6 per cent and widescale fallout in the economy.
"When Manley rejected the IMF proposal in the 1970s, what he rejected most was the 10,000 layoffs that he would have to carry out on the public sector. By 1983, the 10,000 ballooned to 30,000.
"The IMF refused to include fallouts from the recession in their figures as to what they would be providing in order to restore the economy from the debacle of the 1970s," said the former finance minister.
"So we had to dig further into our own assets in order to come up with more money to last us through and to close the gap - the only way you could do that was to triple the number of layoffs that had to be undertaken because there is no other section of the economy that can give you that substantial amount of funds," Seaga explained.
"By 1986, we had an economy that was in surplus," Seaga added. "From then, the surplus increased to the point where it was equivalent to that of the 1960s," he added.
"So we were really on our way to putting the country back where it was in the 1960s - as we had got earning, back to $600 million and started to rebuild it by 1989," said Seaga in reference to the general election that was to end with a crushing defeat for his party.
"When Manley rejected the IMF proposal in the 1970s, what he rejected most was the 10,000 layoffs ... by 1983, that ballooned to 30,000."