2 Responses to “Growing Out of Debt: Jamaica, St Kitts and Nevis and the IMF, Colin Bullock”

• Paul Ward (Papine) on August 1st, 2011 at 2:31 pm

  Colin,

  Thanks for that. Re the IMF insistance on the expansion of PATH etc, I wonder when the Tea Party people in the USA will also realise that cutting entitelement programmes too much might just trigger that revolution from below so feared by those above. Spending on personal security continues to rise in the USA, just as it no doubt does in Jamaica.

  But to the crux of your article – growth as part of the road out of debt??? Ian Boyne points out in this week’s Sunday Gleaner that FDI into Jamaica has fallen preciptitously in the past few years. And with the gov’t in Jamaica still needing to borrow so much locally, and still after the JDX paying 11% risk-free interest, what hope for diverting local funds towards economic growth? Maybe another JDX is required, this time reducing interest rates to 5% and putiing a complete moratorium on capital repayment. With NCB profits at records levels in the past nine months, the JDX didn’t hurt the banking sector nearly as much as they pretended it would. Some protection for pensioners could be built into a new JDX but other than that, we have to stop recycling wealth amongst the wealthy in Jamaica (and elswehere) and stop this obscene diversion of taxes from much-needed services into the pockets of those who have too much already (in Jamaica, and elsewhere).

  Ralston Hyman points to other worrisome indicators including trade imbalance, high unemployment, poverty, crime and sky-high electricity prices. It makes me wonder why you are so sanguine, Colin.

  The bigger answers you pass over too rapidly. For example grants instead of loans. Or what amounts to the same thing, wtite off more of the loans before Jamaaica (and St. Kitts-Nevis) fall into the category that allows such things. Must all countries be impoverished by debt before any semblance of jubilee prevails?

  The IMF should for example arrange a write-off of the whole of the FINSAC debt. It was their poor advice (or more likely pressure) on liberalisation that caused it all – liberalisation without any controls. And see where this thinking has taken the world economy since 2008.

• Norman Girvan on August 3rd, 2011 at 6:41 pm

  I was surprised that Colin appears to have made light of the disastrous record of the IMF in Russia in the 1990s and in handling the Asian financial crisis of 1997-1998; and attributed the drying up of IMF lending in the 2000s to IMF successes. All the literature that I have seen–except from the IMF itself of course–suggests that it was not the successes, but rather the spectacular failures, of the IMF that led to several major borrowers paying of their debts to the Fund and freeing themselves of IMF supervision and control, notably Brazil, Argentina, Venezuela and I believe several others; as well as the reluctance of most large middle-income borrowers to go into IMF programmes.

  Some of the arguments Colin advances for suggesting that there is a “new” IMF, strike me as somewhat naive–the use of Caribbeans and UWI graduates as officials overlooks the fact that these people have to go through a rigorous process of screening and training to ensure that they assimilate and internalise IMF thinking and methods of analysis, which have a fair amount of embedded ideology.

  A great deal of what Colin says St. Kiits-Nevis should do seem to make a lot of sense, such as prioritising expenditure, protecting the vulnerable etc. But at the end of the day it is clear, even from his own analysis, that the St. Kitts-Nevis programme will depress the economy, and, since it means taking on more (IMF) debt, will as likely increase the debt burden as decrease it. And it is also clear from what he says that the Jamaican programme is already off the rails.
  Norman