How good was the good news in the lat­est IMF Re­port?

The Star (St. Lucia) - - LOCAL -

By Wally J. Du­palli

Politi­cians have con­ve­niently por­trayed the In­ter­na­tional Mon­e­tary Fund (IMF) as ei­ther a devil agency or a saviour. They have done an ex­cel­lent job de­mo­niz­ing the IMF. Many have come to view this agency as a plague that all gov­ern­ments must avoid. Iron­i­cally, th­ese very same politi­cians, when it suits them, quote the IMF as an un­chal­lenge­able author­ity on mat­ters on the econ­omy. Con­sider the fol­low­ing re­cent ut­ter­ances by Saint Lucia’s in­cum­bents: Our gov­ern­ment has avoided the jaws of the IMF; the IMF has said our econ­omy is re­cov­er­ing.

See what I mean? All IMFmem­ber coun­tries have agreed to sub­ject their eco­nomic and fi­nan­cial poli­cies to the scru­tiny of the in­ter­na­tional com­mu­nity. It acts as a sur­veil­lance agency of economies with reg­u­lar vis­its to mem­ber coun­tries in pur­suit of an as­sess­ment called the Ar­ti­cle IV Re­port. Its main ob­jec­tive is to iden­tify weak­nesses that are caus­ing, or could lead to, eco­nomic in­sta­bil­ity. The visi­tors pro­vide what they con­sider ap­pro­pri­ate pol­icy pre­scrip­tions.

So wha’ wrong with dat? Most gov­ern­ments will go out of their way to avoid scru­tiny. They pre­fer to op­er­ate in se­crecy which per­mits them to re­port as suits, when it suits them. So much for trans­parency and ac­count­abil­ity. It comes as no sur­prise, there­fore, that the IMF is con­sid­ered the enemy— re­plete with iron-toothed jaws, steel claws, and a killer big club in its back pocket.

But wait. One would think that Kenny An­thony was speak­ing of a dif­fer­ent IMF when he quoted from its lat­est eco­nomic as­sess­ment on Saint Lucia at the Labour Party’s pub­lic rally on 23 Novem­ber. Like a drown­ing man be­ing res­cued by his worst enemy, the party leader and prime min­is­ter ex­claimed, with undis­guised joy, that ac­cord­ing to the lat­est IMF as­sess­ment things are now start­ing to get bet­ter in Saint Lucia. The ugly IMF that he had sworn to avoid sud­denly had meta­mor­phosed into a saviour; bearer of the won­der­ful news that the long promised “bet­ter days” had at long last dawned.

Of course it suited the prime min­is­ter not to ad­dress our in­creas­ing debt lev­els, our record-high un­em­ploy­ment, the Cit­i­zen by In­vest­ment Pro­gramme, and other grave con­cerns un­der­scored in the IMF re­port.

It was only three months ago that the prime min­is­ter had de­clared Saint Lucia’s econ­omy on the way to re­cov­ery af­ter three years of con­trac­tion. He cor­rectly ad­mit­ted the econ­omy had ex­pe­ri­enced neg­a­tive growth since his re-en­ter­ing of­fice in late 2011. Buoyed now by the re­cent IMF re­port he for­got all he said be­fore about the co­matose econ­omy. Who knew the pro­tean IMF could cause se­lec­tive am­ne­sia?

For the most part, Ar­ti­cle IV tends not to delve into spe­cific gov­ern­ment pro­grammes but it does high­light is­sues se­ri­ously af­fect­ing the econ­omy, too of­ten in ar­cane lan­guage. For in­stance: the IMF re­ported that the grow­ing un­em­ploy­ment cri­sis in Saint Lucia is ‘mostly struc­tural’. What this means is that peo­ple are un­able to find jobs be­cause they lack the re­quired skills. Re­cently the prime min­is­ter re­vealed that 73 per­cent of Saint Lucia’s work­force can­not ac­cess avail­able jobs. He made this sound as if the un­em­ploy­able were alone to blame for their predica­ment. The lat­est IMF re­port (and pre­vi­ous Ar­ti­cle IV re­ports on Saint Lucia) calls for the ed­u­ca­tion sys­tem to be ra­tio­nal­ized and to re-fo­cus on ad­dress­ing labour skills mis­matches.

Mean­while in Saint Lucia, lap­top grants to one grade of high school stu­dent (in­stead of ef­fi­cient com­puter labs at all schools) seem to be the crown­ing achieve­ment of the min­is­ter of ed­u­ca­tion. It is also dis­turb­ing that even af­ter ad­mit­ting the Na­tional Ini­tia­tive for the Cre­ation of Em­ploy­ment (NICE) pro­gramme creates ar­ti­fi­cial jobs—mean­ing that th­ese jobs are not gen­er­ated by the pro­duc­tive or pri­vate sec­tor—the prime min­ster has spent close to $100 mil­lion so far on that pro­gramme. So much for the gov­ern­ment’s boast about ‘job cre­ation’ when the achieve­ment is al­to­gether ar­ti­fi­cial.

The prime min­is­ter’s new BFF also in­formed him that the pub­lic debt re­mains at ‘sig­nif­i­cantly high lev­els’ and the ar­ti­fi­cial fis­cal sur­plus (due to low im­ple­men­ta­tion of in­fras­truc­tural projects, hence, the un­der-spend­ing) will not pre­vent our pub­lic debt from con­tin­u­ing to rise. Saint Lucia in­vites dis­as­ter, with a pub­lic debt that is 80 per­cent of GDP and climb­ing.

In other words, our pub­lic debt rep­re­sents $800,000 out of ev­ery $1,000,000 of lo­cal eco­nomic ac­tiv­ity. This is above in­ter­na­tional stan­dards, ac­cord­ing to the IMF. In fact, our debt is mov­ing in the op­po­site di­rec­tion of the East­ern Caribbean Cur­rency Union’s (ECCU’s) 60 per­cent pru­den­tial tar­get. In all ar­eas our econ­omy is mov­ing in re­verse.

PM An­thony must understand that the first rule to be­com­ing a friend of the IMF is that noth­ing is se­cret. It expects trans­parency and open­ness with the good, the bad, and the ugly. There is noth­ing that the IMF re­ports on a coun­try that is not al­ready known by re­spec­tive gov­ern­ments. They are quite aware of the is­sues and of­ten the cor­rec­tive mea­sures to ad­dress them. The IMF ba­si­cally advises them to do what they know needs to be done. Gov­ern­ments hate th­ese cor­rec­tive rec­om­men­da­tions be­cause they tend to in­ter­rupt their po­lit­i­cal agen­das. They bring the hid­den truths to light. They be­lit­tle gov­ern­ment author­ity, and crush in­flated egos.

So was the good news from the IMF really good news? Was it a bit­ter pill pur­pose­fully honey-coated? The PM was right all along when he de­clared Saint Lucia’s econ­omy has de­clined in the last three years. He was re­port­ing fig­ures from our Eco­nomic and So­cial Re­view. What he may not have re­al­ized is that the IMF’s good news was based on in­flated fig­ures, as clearly noted in its re­port. Did the PM con him­self? De­spite con­trary declarations by un­con­scionable politi­cians, the IMF does not en­gage in un­pro­fes­sional be­hav­iour!

Prime Min­ster Dr. Kenny An­thony in Monaco in Oc­to­ber an­nounc­ing the

im­ple­men­ta­tion of the Cit­i­zen­ship by In­vest­ment Pro­gramme.

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