Parliament and the IMF

Robert Buddan

The Government of Jamaica has acted on its own in submitting a letter of intent (LOI) to the International Monetary Fund (IMF) to explain its medium-term economic plan in return for an IMF loan. It did so without reporting, much less debating, this plan in Parliament, and without national consultation. There was only a Cabinet retreat last weekend, following some nine months of non-transparent negotiations with the Fund. Our Parliament, financial sector, manufacturers, public sector and all those who stand to gain, or, more likely, lose, knew nothing that was to be a part of this letter of intent.

A year ago, Jamaica's debate was whether the IMF had changed and how appropriate its policy prescriptions would be, bearing past experience in mind. That debate has shifted in the last six months. It is now more about how competently Government is managing and can manage the economy, with or without the IMF. Doubt has grown after a period of bungling that has led to calls for the finance minister's removal. This is all the more reason to bring Government's plans to Parliament for public buy-in and scrutiny.

The same Audley Shaw led us into this letter of intent. But it is the Government's intent, not the people's. It has not had the benefit of consultation with the people. If the IMF's policies are inappropriate (as Bruce Golding said a year ago) and Shaw is incompetent (as many say now), then the executive has to take responsibility for this LOI. If the IMF has changed and its policies were not inappropriate a year ago, they might be now because of Government's year-long bungling in delaying and dealing with the economy, including clinching a deal with the IMF much earlier. The economy has declined from crisis to deep crisis in the meantime.

In either case, the economy is such in a deep hole that the GOJ-IMF partnership looks incapable of rescuing the situation any time soon or doing so in any way that will not bring greater dissolution of the middle class and much greater anguish for the poor.

Role of Parliament

There must be good reasons why our constitutional founders devoted sections 55 to 59 of our Constitution to parliamentary procedures to ensure accountability for money bills. These five sections are further detailed through 25 subsections and 12 subparagraphs. These sections reference the Constitution and standing orders of the house on the procedures for introducing and debating money and bills, and the respective and joint authority of the two houses of Parliament all the way up to the authority of the governor general to give or withhold assent to bills.

The reasons are to require debate in Parliament (which in itself ensures transparency), accountability of the executive to the legislature, of the Government to the Opposition, and of both to the people. There is a reason why the elected house of Parliament is called the House of Representatives. The nature of Jamaica's democracy is parliamentary democracy and the theory of parliamentary democracy is that, through Parliament, the executive is accountable to the legislature and the legislature is responsible to the people.

Inside Gordon House, the seat of the island's Parliament. - File

The Constitution is very detailed and specific about two areas in particular - fundamental rights and freedoms; and parliamentary procedures for money bills that concern taxation, debt, borrowing and spending. There is an expectation of fiscal responsibility in the Constitution not often appreciated. This is also why the Constitution requires that the minister of finance be a member of the House of Representatives.

Yet, for a period of one month, from December 17 to January 19, Parliament is to be circumvented. The minister of finance announced a major tax package unprecedented in size and consequence outside of the annual budget debates, without debate at all. And, only after the Government had sat in a three-day retreat to discuss and agree to a letter of intent with the IMF will Parliament resume sittings. It now intends to report to and 'debate' its economic plans in Parliament, after the fact, when the LOI is already a done deal. This is not how parliamentary democracy works. This is what the British themselves sometimes call prime ministerial or executive dictatorship.

government avoiding debate

Worse, Government seems to have gone this route to avoid debating the Opposition, despite widespread calls for consultations over taxation and the medium-term economic plan, despite the call by the parliamentary opposition to reconvene Parliament immediately in the new year for this purpose. The Opposition even showed up for work at Parliament at the first opportunity on January 5. It followed this up by taking its case directly to the people at a People's Forum on January 12. It said Government missed six opportunities to come to Parliament on and between those dates when Parliament could have met.

Government has denied itself the benefit of feedback from MPs and constituents, bankers, manufacturers, trade unions and taxpayers, in general, over taxation, interest rates, impact on inflation, impact on economic growth, money supply and social protection. It could have had the benefit of the alternatives they have in mind and avoid dangerous practices like printing money. Government should certainly have kept the nation abreast of its negotiations with the IMF, its possible medium-term economic plan and its letter of intent through the medium of Parliament.

Business with the IMF

Government has done things in reverse. It has gone about its business with the IMF first and then come to Parliament after to tell the nation, in effect, when the deal has been done. Worse, the Government is almost certain to fail quarterly IMF tests and, each time it does, it will have to come back to Parliament - the Parliament that never had the opportunity to debate, amend, approve and legitimise the Government's economic plan in the first place. How will it expect to ask for more and more sacrifice from the people whose Parliament it had ignored and gone out of its way to circumvent?

Government will be required to face eight quarterly IMF tests, beginning March 31, over the duration of the IMF agreement. It will have to prove that it is meeting targets for inflation, the budget deficit, money supply, and the Net International Reserves. It will only receive disbursements after these tests and according to conditions that could be increasingly harsh based on its quarterly performances. The Government might be able to make some announcements outside but it will need to come back to Parliament time after time to pass money bills. Even then, it might try to do so without debate.

We must bring Parliament back to the centre of our parliamentary democracy. It is more important than ever if we are to avoid secret government and bungling government. It is only there that bankers, manufacturers, public sector workers, workers in general and all the critical sectors of society will get a fair hearing. This is what it means to say, 'no taxation without representation'. It is there that all, not just the most powerful, can get a hearing at all. That is how we avoid 'state capture'.

Robert Buddan lectures in the Department of Government, UWI, Mona Campus. Email: Robert.Buddan@uwimona.edu.jm or columns@gleanerjm.com.