Home' Trinidad and Tobago Guardian : July 4th 2013 Contents JULY 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG7
The National Alliance for
Reconstruction (NAR) was
right in going to the Interna-
tional Monetary Fund (IMF)
during the 1980s, said Dr
Anthony Gonsalves, senior fel-
low, Institute of International Relations, Uni-
versity of the West Indies (UWI).
"I have always said it was useful to go to
the IMF. The country was having problems
meeting its debt and needed to restructure it.
That is a main reason countries go to the IMF
because creditors are concerned that countries
put their economies in order, and they want
to be guaranteed they can pay their debt.
Going to the IMF ensures that countries are
their doing their economic housekeeping. The
IMF gives you a kind of blessing to deal with
your creditors and to borrow money interna-
tionally," he said.
Three weeks ago, former NAR finance min-
ister Minister Selby Wilson said the IMF had
little or no influence on their first budget and
even mentioned they walked out of meetings
with the IMF and World Bank because they
were unhappy with some of their decisions.
This is seen as contrary to the common
belief that the NAR government s unpopular
austerity measures were entirely influenced
by the IMF.
"The IMF tells countries they must fill con-
ditionalities first before they lend them the
money, whether it is reducing the workforce
or reducing salaries," Gonsalves said.
"When a country goes to the IMF, there are
pre-conditions which a country ought to
He said during the 1980s, T&T was in an
"There was high inflation, the Government
was running a deficit. No matter how painful
it was, the Government had to do it."
He said countries usually approach the IMF
"Nobody forces a country to go to the IMF.
A country goes to the IMF because it thinks
this is the only way to solve the economic
problem that it is dealing with. It is voluntary
as the IMF does not force anyone to come to
Alternatives to the IMF
Gonsalves said the alternative to the IMF
is borrowing money from a bigger country
based on a bilateral relationship.
"There are bigger countries which do not
subscribe to the IMF---Chinese or the Rus-
sians---who are outside of the system. There
is the European Union (EU), but they are very
much behind the IMF and World Bank. Even
if a country goes to China or another big coun-
try, how much money can they get from those
countries; it will not be much," he said.
He said Jamaica, under its then left-leaning
government, tried that during the 1970s and
it did not work.
"Michael Manley tried that, he took the
money, but he was not implementing the tar-
gets and he thought he could money from
other sources. But it did not work as the alter-
native lender countries were not in a position
to help very much."
He said small countries like T&T and Jamaica
have problems accessing credit, especially if
their macroeconomic indicators are not bal-
"International lending agencies and bigger
countries do not like to lend money to smaller
countries because they think when they lend
they do not get the money back," he said.
Gonsalves believes T&T has learnt a lot of
lessons since the 1980s and its economic poli-
cies are now much more conservative and bal-
"Very soon after we paid back the IMF and
then we got oil and gas. Now we are smarter
and have Heritage and Stabilisation Fund (HSF).
We have built up reserves now. We learnt we
have to manage our business much better."
Dr Roger Hosein, senior lecturer, Department
of Economics, UWI, told the Business Guardian
by e-mail on Tuesday that as early as 1985,
the PNM Government began laying the foun-
dation for the IMF-inspired reforms that began
to be implemented around 1987.
"T&T s structural adjustment policy, if I
recall correctly, included a number of refor-
matory policies, among which were expenditure
switching policies in the form of a 33 per cent
devaluation of the value of the T&T dollar in
December 1985 and a further 15 per cent deval-
uation in August 1988. To me, this seems as
if we were preparing for the IMF s later involve-
ment," Hosein said.
He said the reforms that began with the
PNM during the mid-1980s did not stop with
the NAR during the late 1980s, but continued
with the Patrick Manning administration dur-
ing the early 1990s.
"The NAR Government also undertook to
privatise some of its state holdings, reschedule
some of its outstanding public sector debt
repayments. By April 1993, the then govern-
ment had liberalised the exchange rate and
dismantled some of its trade sector tariffs.
The structural reform process was engineered
with the assistance of two stand-by arrange-
ments with the IMF in 1989 and 1990, and
by a further World Bank structural adjustment
loan in 1990," he said.
Hosein said the structural adjustment pro-
gramme taken during that time had some suc-
cess, but other factors influenced where T&T
"I would say that whilst the economy
improved, the challenges that came after 1994
with growth until 2008 amidst improved nat-
ural gas production, improved crude oil prices
after 1998, and a small increase in crude oil
production for part of the time, prompted the
restructuring efforts of the structural adjust-
ment programme of the late 1980s to go asun-
der as the economy became typified by
resource-curse problems and very much in
need of some degree of structural re-engi-
neering again," Hosein said.
He described the current economy as being
"The shelf life of the proven reserves of its
main depleting asset is now at such a level
that if solid reasoned planning is not under-
taken, the longer-term growth prospects of
the economy will be definitely compromised,
" Hosein said.
Trade unionist Cecil Paul on Monday via
e-mail, told the Business Guardian the NAR s
policies were "harsh."
"To date, the IMF never apologised for
destroying the economies of T&T and the
developing world. Such an agency should
treat a country s natural and human
resources as sovereign, and to be used for
national development and not to be plun-
dered by the ruling corporations of the devel-
oped world while the owners of the resources
become poorer and poorer," Paul said.
On January 9, 1989, Paul, then general
secretary of the Council of Progressive Trade
Unions, one of T&T s two labour confed-
erations, sent a fax to the IMF voicing the
trade union movement s outrage over the
"major statistical errors and inconsistencies"
in the IMF s 1985, 1986 and 1987 reports,
and called for redress.
On March 20, 1989, the IMF replied. It
issued a denial of economist Davison Bud-
hoo s charges: "No error or manipulation of
data has occurred in the IMF reports, as
regards measurements of competitiveness."
Budhoo, a senior economist with the IMF
for more than 12 years, publicly resigned in
Budhoo claimed T&T was "only one coun-
try from the host of Third World nations
where we are perpetrating the same eco-
nomic nonsense, with the same catastrophic
His resignation letter read: "Today I
resigned from the staff of the IMF after over
12 years, and after 1,000 days of official
fund work in the field, hawking your med-
icine and your bag of tricks to governments
and to peoples in Latin America and the
Caribbean and Africa. To me, resignation is
a priceless liberation, for with it I have taken
the first big step to that place where I may
hope to wash my hands off what, in my
mind s eye, is the blood of millions of poor
and starving peoples."
Budhoo was Grenadian by birth and joined
the staff of the World Bank in 1966 and
later shifted to the IMF, where he was
responsible for designing and implementing
structural adjustment programmes for
African, Latin American and Caribbean
Budhoo s open letter to Michel Camdessus,
managing director of the IMF, titled,
"Enough is Enough," sent shock waves
around the world, making front page head-
lines in many countries.
He was the first person to break the IMF s
code of silence regarding internal affairs by
exposing alleged statistical fraud carried out
by the IMF in T&T during 1985-1987.
T&T s trade union movement took up
Budhoo s charges, however, and successfully
pressured the Government to establish an
official investigating committee.
The government committee, chaired by
Prof Compton Bourne of the University of
West Indies at St Augustine, found the evi-
dence substantiated Budhoo s claims.
The Bourne Committee concluded that
each of Budhoo s charges of statistical error,
concerning relative unit labour costs, real
effective exchange rates and the public sector
fiscal deficit, was correct.
Academics, trade unionist on NAR/IMF policies:
Adjustments and irregularities
Links Archive July 3rd 2013 July 5th 2013 Navigation Previous Page Next Page