AFRICANGLOBE – The Bank of Jamaica posted on its website February 15 an IMF press release with the caption, ‘IMF and Jamaica authorities reach staff-level agreement on key elements of the EFF-Supported programme’. This is the first of two steps in the approval process; the other is approval by the IMF board that should take place by the end of March.
This means that Jamaica will be able to draw down U$750m, 175 per cent of the amount to which it is entitled. It also means that Jamaica will be able to receive loans and grants from other multilateral and bilateral sources.
That is, however, as good as it gets. What this loans means is that Jamaica will be able to kick the can down the road. It does not mean that, as a nation, we will fundamentally break with the cycle of poverty, low rates of economic growth, and indebtedness that has been our lot for more than three decades.
When the Government of the Jamaica Labour Party re-entered a borrowing arrangement with the IMF in 2008, one of the antecedent required actions was the Jamaica Debt Exchange. JDX meant that for the first time in its history, Jamaica defaulted on a credit arrangement. A National Debt Exchange (NDX), like the JDX, was an antecedent to the 2013 IMF agreement. Those who have been close to the negotiations have indicated that the NDX is the lesser evil. The IMF had insisted on a 25 per cent default on principal on local debt.
It has to be clearly understood that this anticipated IMF agreement is nothing but bridge financing. The real challenge is to grow business by expanding production in the Jamaican economy. This is a truism.
What we do not know is whether there are any available and viable options remaining to grow the Jamaican economy.
The major markets of the North Atlantic, Europe and America are less than robust at this time. The most cynical among us believe that capitalism, including crony capitalism, is in irrecoverable precipitous decline.
What Does Sovereignty Mean For Jamaica?
The grand announcement of an IMF deal and its prior actions raises the important question of the meaning of sovereignty for Jamaica. Are we truly an independent nation? And in what sense are we in charge of our affairs? The order paper presented by the IMF team to Jamaica, with the list of requirements in 2012-13, is exactly the same as the one presented to the previous administration in 2008. In fact, those who have seen the order paper tell me that the date on the document was 2008.
In 2008, the IMF presented the Jamaican Government with a list of conditionalities. It, however, advanced loan funds in the sum of US$1.2b. The Government received the funds but ignored and abandoned the conditionalities. In addition to the heavy injection of IMF money, there was the fiscal space created by the JDX that amounted to J$42b per year.
When the current administration began its negotiations with the IMF in 2012, the Fund presented it with the conditionalities that had remained unmet since 2008. The IMF demanded that the Government meet those conditionalities before – not after – the agreement is forged.
The Government of Jamaica, therefore, has complied with these conditionalities, including a public-sector wage freeze, J$16b of new taxes, and an NDX. The total loan from the Fund is U$500m less than the U$1.2b in the first agreement.
The fiscal space created by NDX is not J$42b, but J$17b. What was not achieved with US$500m more in loan funds and J$25b more in fiscal space – namely, to turn the corner on our indebtedness and deficits – is hardly likely to be achieved on less.
The more significant issue is that not one of the decisions is ours as a sovereign people. The decisions were all made by others elsewhere and we had no choice but to do their bidding. We now have to face the harsh truth that our independence has been divested and we have little to show for it. Like Esau in the Bible, we have sold our birthright for a mess of pottage.
Don’t get me wrong. It was wrong for the JLP to take the money and not fulfil the conditionalities. To do so is not what independence means; it is closer to being charlatans and tricksters. Nor is it my point that there is some way around getting Jamaica’s fiscal house in order.
I am suggesting the rudder has been taken from us. The decisions are not being taken by us and they are not in our interest. I am suggesting further that the loss of sovereignty is not confined to the economy alone. It has been amply demonstrated in the areas of law enforcement and in respect of the inadequacies of our justice system.
In law enforcement, we have required the involvement of the emissaries from Scotland Yard to play roles in our affairs. They have been less than complimentary in their assessment of us.
David Smith and his Ponzi schemes remained unmolested by the Jamaican criminal justice system. It took the criminal justice system of others to apply the full arm of the law. When Dudus was arrested and extradited elsewhere, murders in Jamaica declined. He was convicted by the criminal justice system in the Lower Manhattan District in New York, not the Supreme Court in Kingston. Our sovereignty did not mean enough, nor were our systems of justice robust enough to make the difference in our own interest.
What does sovereignty mean when we cannot pay our way or prosecute our crimes? It seems to me that we must treat this IMF agreement as the nadir. We must vow to make this the last one. We must find the tissue and the fibre to rally our people to action, not of protest but of production.
For this to become the flashpoint, and the nadir from which the Jamaican people and economy begin their ascent, we need first to change the conversation. We need a conversation that unites. The narrative that we have in Jamaica pits us against each other. The discourse is one that is used to mock, ridicule and hurl abuse. In almost every case, one section of the society is placed at odds with the other.
Political leadership is set against the people; the Church against the society; the business class against the working class; civil society and environmental activists are set against those who are trying to do things that are worthwhile. A new national conversation needs to be forged in which we develop the notion of ‘we the people’.