BASSETERRE St. Kitts - KITTITIANS AND NEVISIANS are being asked to revamp their image of IMF and look upon this institution as a new ‘partner’; as someone who is here to help; as one who will cause the return of confidence in their economy and who will lobby international investors to stoke their flickering economic fires bringing them once again to a raging blaze.
Is this a ‘new’ IMF? If not, why were we led to believe that the IMF was the organisation that would demand draconian economic measures in return for any monies loaned by them? Where did the impression come from that once we called in IMF we were in a form of terminal ‘receivership’?
This image of the IMF came from professionals and politicians alike. Speaking at a Sir Arthur Lewis Memorial Lecture in 2000, Professor Kari Polyani Levitt of McGill University said, “Debt dependence has provided the international financial institutions with the leverage to tell developing countries – in microscopic detail – how to restructure their economies.” She goes on to talk about IMF’s Standby arrangements which had declined over the period 1981 to 1998.
Politicians often boasted that they had kept their countries from the IMF and gleefully bade them adieu when their repayment terms were met. One such politician was P. J. Patterson, former Prime Minister of Jamaica who used choice words “Tata, goodbye IMF” - words that were pregnant with relief.
Noted journalist, Peter Richards, was well aware of the image IMF held in the Caribbean then, and described it thus:
“Even though Patterson was speaking at a conference of the ruling Jamaican People’s National Party (PNP), his remarks embodied a mindset that several Caribbean countries had embraced after emerging themselves from harsh conditionality attached to their Standby Agreements with the Washington- based financial institution in the 1970s.
“Many Caribbean countries, reeling from the effects of the oil crisis of that period, had turned to the IMF for assistance, then watched hopelessly as the IMF called for cut backs in public sector expenditure, a reduction of social services, and a freeze on salaries that ultimately led to increased unemployment. What occurred next were open street demonstrations, empty supermarket shelves and increasing violent crime.”
Now quite a few Caribbean leaders are returning to the IMF and are telling their citizens that they will be borrowing on their own terms.
Antigua and Barbuda Prime Minister Baldwin Spencer said, "It is not that we are going to be dictating to them …"What we are saying is that we have a clear idea as to what is possible, what is bearable, what is manageable and what we think we can do at this stage without creating further social and economic dislocations in the country."
Jamaican Finance Minister Audley Shaw has told Parliament that the package would not be accompanied by "traditional" IMF conditions.
“Those lending arrangements led to denial of ownership by borrowing countries and the development of a political stigma around IMF arrangements," Shaw said.
When Barbados was seeking 40 million dollars from its IMF reserves in 2009, the late Prime Minister, David Thompson, tried to allay the fears of his countrymen. Said he, "I am acutely aware of what we went through in 1991."
The news coming from the recently held press conference in St. Kitts (June 3, 2011) held by the St. Kitts Prime Minister and Mr. Alfred Schipke, chief of the International Monetary Fund (IMF) mission to St. Kitts and Nevis, indicates that IMF has approved in principle the “home grown” policy or plan presented by the St. Kitts Nevis government, and would be willing to put $84 million dollars in a “standby arrangement” with the federal government.
FAITH OR FEAR?
As early as 2004, José Fajgenbaum, Deputy Director, Western Hemisphere Department International Monetary Fund, had informed members at a seminar in Trinidad that the role of the IMF had changed dramatically; that the IMF was now a lot more flexible in its approach; and was focusing more on crisis prevention rather than management.
He recognized that Caribbean countries are generally not keen to avail themselves of financial assistance from the IMF. “We will tailor our work in the region so as to be consistent with your priorities. Indeed, as I mentioned earlier, a high degree of ownership would increase the chances of success” he said.
It is also worthy of note that at the press conference on St., Kitts, Mr. Alfred Schipke, IMF Staff Member, spoke pointedly of the “New IMF”
Should St. Kitts Nevis then release its fear, put its faith in this new standby arrangement and warmly embrace the IMF as a new Partner in development?
Consultant psychiatrist Wendel Abel, head of the Department of Community Health and Psychiatry at UWI, is warning countries not to be sucked into the "new IMF" approach.
"The reality is that only a fool lends money on the borrower’s terms," said Abel. "This is our greatest fear. For the past 30 years, we have been on a downward economic trend. What lies ahead? Will it be pain and more pain? Will we break the vicious cycle of poverty this time around or will it be pain and more pain."
But many in St. Kitts Nevis will question: “What should we fear most? The regular annual deficits and the mounting national debt or the HOPE of change via IMF since change does not seem possible with the present electoral system? Let us pray…
