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