UPSIDE DOWN PRIORITIES

The following direct quote comes from STATIN’s October 4 Trade Bulletin:

Jamaica’s total expenditure on imports during the first six months of 2012 was valued US$3,120.8 million a decrease of US$40.0 million or 1.3 per cent [over] the same period in 2011. Earnings from total exports during January to June 2012 were valued at US$847.1 million, down from US$848.5 million a decline of US$1.4 million. During the 2012 review period the merchandise trade deficit was US$2,273.8 million, compared to US$2,312.4 million in the 2011 period.”

No wonder our Net International Reserves (NIR) has declined by 36% this year.  Instead of (or in addition to) chasing the Almighty IMF Agreement, why aren’t we, as a nation, addressing the unsustainable trade deficit?

Stay with me now.  The IMF can only lend us money to shore up the NIR.  That opens doors for others to lend us for recurrent and capital expenditure.  But to cross the first hurdle, government must satisfy the IMF that we’ll be paying down on our equally unsustainable external debt.  That’s the single-minded purpose of IMF “conditionalities” disguised as fiscal responsibility imperatives.  So, government’s sole economic focus is borrowing IMF money to increase our NIR; then borrowing more from others to pay down our debt.

As interim strategy, we’ve secured high interest (even higher if you uncover the additional interest points disguised as up-front fees) bridging finance from a private bank to make a debt repayment recently due thus placing even more pressure on the yet-to-be-borrowed funds which are realisable only if we sign with the IMF.  Despite this parlous economic outlook, government will claim “success” if borrowed IMF money props up dwindling NIR followed by adding to already unsustainable public debt to make regular payments on said public debt.  As a bonus, the above trade imbalance continues unabated threatening to return our NIR to square one.

Round and round the Mulberry Bush                                                                                                                                   the monkey chased the weasel.                                                                                                                                                                     The Monkey thought ’twas all in fun.                                                                                                                                                     ‘Pop’ goes the weasel!

Are we stark, staring, raving mad?  Don’t we care what we do to our grand-children?  What’s government’s plan to eliminate the trade deficit?  We require a State of Economic Emergency plan NOW whereby paying our external debt isn’t our first priority.  An immediate priority must be import reduction and export increase.  We must pull our heads from the sand and recognize that a negotiated external debt exchange (EDX) is our only sane alternative to a Belizean style debt default.

Nothing else matters.  The IMF is obviously playing us like Stradivarius violins because our Prime Minister was vacuous enough to announce (in December 2011) that we’d get an IMF Agreement in two weeks.  It appears to enjoy showing us who holds the scheduling handle.  Well, it’s time we stopped acting like fish farm stock looking for an IMF hook upon which to joyfully wriggle and instead shock the angler.  Time with fishless hooks will do the IMF no end of good.  Remember what eventually killed notorious villain Captain Hook?  In time, he ran out of toilet paper.

Can’t we see our external creditors want this IMF Agreement more than we need it?  Why?  Because this ballyhooed “seal of approval” is code for “will make regular debt payments”.  Without that security blanket, our creditors are up crap creek with Captain Hook Syndrome and only valueless commercial paper to soothe the chafe.  What’ll they do?  Seize Jamaica and sell it at auction?  Pout and refuse to play with us again?

We’re forever permitting multi-national bullies to frighten us with the spectre of not being able to import (especially oil) if we’re in default.  But, this illusion that unending indebtedness bolstered by IMF’s “seal of approval” is desirable is created to keep us in perpetual enslavement.  As always, reality is the opposite of the illusion.  It suits nobody for Jamaica to sink beneath the Caribbean Sea so this “no imports” bluster won’t materialize.  If it does, we’ll be better off (long term) with no more SUVs, no cellophane wrapped Trinidadian heart attacks; fewer civil servants; and expedited alternative energy solutions.  These obvious choices should’ve been made decades ago not imposed as “IMF conditionalities”.

Whatever the catastrophic sequelae, our greatest supporters will be our external creditors who’ll still be hopeful of recovery.  Through fear, we keep putting the cart before the horse.  We’ve believed the “bitter medicine” mirage that debt payments come first; a restructured economy later.  But, Jamaica’s reality calls for a restructured economy first followed by delayed external debt repayment.

Peace and Love

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