Easy, peasy? IMF tests are a doddle…not

Jamaicans have a hate-hate relationship with the IMF. People hate it that a ‘big, bad, US-led’ organization has this poor little country jumping through hoops. For many, it’s all too easy to think of this in terms of painful history–it’s modern slavery. Many hate the idea that we are ‘begging’, especially if you feel that the situation from which the country is striving to move as in some sense created by those to whom it now ha to plead. It’s all demeaning and degrading.

This all makes for fertile ground for political mischief. When in opposition, it’s too easy to beat the government for any overture to the IMF. If the government follows the policy line agreed with the Fund they will be accused of ‘selling off’ or ‘not caring about’ the people.

Why? IMF policies are known to involve tighter financial discipline. That translates into lower spending by government, more taxing by government–both of which mean real pain and loss for most people. Jobs may go. Enterprises may close. Services may be cut. Prices may rise, especially in areas where costs have risen sharply but governments have been reluctant to exact compensation by raising fees or rates or prices. That might have been because these services are used more by their supporters. Pain for that group would mean the risk of disfavour for politicians and maybe loss of power, locally or nationally. Horror! That same set of fears is often at the base of the economic problems the country is facing. Unwillingness to address them led to the mess.

Governments have a hard time owning IMF programs. When they are being followed and ‘working’, the ‘pain’ gets attributed to the unholy alliance that was forged with the ‘foreign devils’. If they are not being followed, then the ‘what do you expect?’ jabs start coming.

‘Success’ means more money for the country, and in much needed foreign exchange, directly from the IMF and from other international agencies. Money also starts flowing in from other sources, as business confidence improves, and new or existing investors are ready to take a chance on Jamaica.

Most times, in Jamaica, the general population has a hard time seeing clear benefits from successful IMF programs. They may see projects that benefit them directly, but tend to give credit to the implementing bodies and not give credit to the IMF program that might have enabled them. Many continue on condition that the country is in ‘good standing’ with the Fund.

IMF money is usually invisible to most people because it goes into the national foreign exchange reserves. It makes it easier to pay for imports or debts. When it’s not there, people know. Imports get squeezed. Debt payments are harder to meet. National reputation gets compromised. The absence of good standing probably impacts people more.

I read a headline the other day about the opposition finance spokesman saying the current government had ‘easier’ IMF tests to pass. I had to smile. He was really being serious? The only easy test is to do something that’s already complete. Getting policy to have the projected outcome is rarely easy. Think how hard it is to get two people to agree. Now, imagine getting nearly three million to work in accord. Now, imagine if half of them will do anything to see the other half fail. Get the idea?

Maybe, the ‘easiness’ referred to a willingness to go the extra kilometer to get results, which wasn’t there before. If that’s so, then the story is in the camp of the teller. Why were people less willing when the current opposition in power? The answer to that lies behind why the opposition lost power. That’s a matter of fact, not politics.

It’s much easier for Jamaica to fail again with the current IMF program. Practice makes perfect. We’ve been good at not sticking with the hard course. If it continues to the end, that would speak volumes. Jamaica needs to change many things to stop falling into a cycle of repeated failure. Passing tests is part of that. Easy? Give me a break!

Author: Dennis G Jones (aka 'The Grasshopper')

Retired International Monetary Fund economist. My blog is for organizing my ideas and thoughts about a range of topics. I was born in Jamaica, but spent 30 years being educated, living, and working in the UK. I lived in the USA for two decades, and worked and travelled abroad, extensively, throughout my careers and for pleasure. My views have a wide international perspective. Father of 3 girls. Also, married to an economist. :)