There is talk of the possibility of the current Jamaican administration returning to do business with the International Monetary Fund (IMF).
The IMF was founded at the end of the second World War. It’s original reconstruction objective was simply, and directly to augment the coffers of countries’ foreign exchange holdings or reserves, providing them with some sort of cushion to withstand any cyclical fluctuations, emanating out of imbalances in a country’s imports compared to its exports. In other words, its initial goal was basically one to foster an economic atmosphere that would ensure that imports of a given nation were not curtailed due to liquidity challenges. Facilitating trade on the part of these nations in the long run, would be a win-win situation for the borrower of the lending institution was the IMF’s outlook at that early stage of its existence.
However, the IMF has come to be known, by means of its stringent monetary and political policies evolved overtime, as an imperialistic oriented institution whose aim chiefly is to dictate to poorer nations and to prescribe stringent economic measures that ensure these nations rely on the powerful USA indefinitely. This is the perception of many, at least not in the long past.
In addition, so-called Third World nations like Jamaica, have come to visualize any relationship with the IMF as one of constant suffering, especially by the poorer classes of its people. Its relationship with developing nations, for the most part, has come to signify public sector salary freeze, layoffs, shortages of goods and services and high inflation, among other challenges.
This is why any talk of a possible return to the IMF will be expected to create jitters among many, even if NOT expressed overtly at this time, and the reason that the then PM, P.J. Patterson of the People’s National party (PNP) had used his intention to break away from the IMF as an important platform of his election campaign.
The fact that there is NOT much hullabaloo regarding the pending talks in the Jamaican Parliament re a return to the fund should NOT be interpreted that the people are not wary of the IMF. The questions that many will be asking, or should be asking now are: Will a return, by Jamaica, to the IMF be helpful to the Jamaican economy in the long run? Is the current attempt and decision to return to the IMF, not merely based on a short term measure to fix or avoid any shortage in the foreign exchange reserve? If our main goal to return to the IMF is just based on the latter reason, is it worth the component challenges that may emanate as a consequence? Finally, can a leopard change its spots, in reference to this hard nosed institution in the form of the IMF? Will Jamaica be generally better off with a new signing on to the perceived, new-policy focused IMF?
It is true that the IMF has recently pronounced a different approach to the way its relationship will be engaged with its debtors and those seeking to do business with it, but is this merely a temporary ploy to augment its financial coffers in the long run and to resort to its old ways, as the so-called recession normalises?
Jamaica, Dominica, St Lucia, St Vincent and the Grenadines apparently are among those Caribbean jurisdictions that have recently had a renewed hope in the IMF and may very well be obtaining loans in the near future.
The fact that these Caribbean islands have been affected by the global recession has not merely given them a genuine need to seek these IMF loans, but it has also granted these Caribbean nations an excuse to do so as well. Whilst it may be true that these Caribbean jurisdictions are significantly dependent on tourism and that the global economic crisis has some adverse economic effects on them in this respect, had there not been a recession, would the Jamaican economy, for instance, be in a significantly, better shape? Would its employment dilemma be more tenable? Would its public servants be much better paid and their condition of work more improved?
There may currently be a need for foreign exchange to boost Jamaica’s reserves or this may be the case quite soon. The IMF is no doubt, the easiest source to provide this fund in a timely fashion. However, we must not forget that there will be consequences for this loan, irrespective of how reformed or lenient the new focused IMF may be.
Joshua Spencer is a Jamaica-born educator, author and poet in Toronto, Canada