President-designate of the World Bank, Paul Wolfowitz. - REUTERS
JAMAICA FINALLY ending its repayment arrangements with the International Monetary Fund, (better known as the IMF), was I think, one of the major news of the year. It is an arrangement that has been likened to that of a 'shotgun marriage', where one only gets deeply involved with the bride (the IMF) when one is forced to do so, by her father or relatives (international creditors with deep pockets).
Over the years between 1977 to 1996, Jamaica has long had a checkered history when it comes to its relationship with the IMF, having gone through standby facilities; extended fund facilities; structural arrangement conditionalities; and monitoring mechanisms. It has not been a match made in heaven.
Many of these facilities were never successfully completed, regardless of the party in the reins of the Government, and the social adjustments that the country had to bear (in health care and educational support) during the years, still continue to influence situations in this country.
THE MANLEY GOVERNMENT
The initial consummation with the IMF under the Manley Government in 1977, would take Jamaica almost 20 years before it could stop borrowing from the Fund (as it is also called). Over that period the IMF has been called many things, not all of them good, and with the IMF looking for feel-good success stories in countries that successfully completed IMF programmes, the jury is still out on whether Jamaica's relationship with the IMF was a success or not.
First, of course, we have to clarify what exactly is the IMF, of which there is much misunderstanding. It is not the World Bank, which lends long-term loans, although as a sister institution, the two sometimes work together. It is also not a central bank although it does influence what central banks do (especially in borrowing countries). It is also not a development bank. The IMF is a multilateral institution that is comprised of over 180 countries, with its mandate to ensure financial stability around the world, through temporary balance of payments support; orderly exchange rate arrangements (to ensure convertibility), and to foster free trade arrangements.
IMF CANNOT FORCE
Whether seen as an ogre, trying to force fiscal austerity programmes in borrowing countries, or an institution of help, the IMF cannot force borrowing countries to adopt all of their monetary and fiscal policies, unless there was prior agreement between the Fund and these governments. What happens, however, is that given the level of quota subscription (a sort of membership fee if you like), the institution' chain of command clearly emanates from its more influential members and clearly 'who pays the piper calls the tune'. The IMF has, therefore, followed certain strict guidelines to ensure that borrowing countries comply with what are called loan conditionalities that seek to ensure macro-economic stability in the various agreements, even if it creates internal imbalance (riots and widespread shocks).
It would be useful for historical posterity, if the various ex-finance ministers from Jamaica, who still are alive, would write their own views on the past arrangements they had with the IMF, not so much as to what was in the agreements, but what 'horse-trading' they did (or their team did) to influence the arrangements that were concluded. It would also be useful to know why some facilities were aborted and what technicalities they would not have accepted in borrowing from the fund. It may not be an accurate history, unless the Fund members who were on the various negotiating teams also write their own account of the circumstances but, it would give us a better insight into the power arrangements between the IMF and Jamaica, over much of the country's political independence. As to the country's economic independence, the jury remains out on that one.
