The IMF & World Bank’s crippling effect on Caribbean nationsBy David Muhammad | Last updated: Jun 7, 2012 - 4:40:06 PM
The IMF has been accused of further impoverishing already poor nations, boosting crime rates and provoking riots and unrest.
The IMF came into existence on December 27, 1945 when 29 countries signed an agreement, with the goal of assisting with the reconstruction of the world’s international payment system after World War Two. But a sinister agenda of death and suffering followed, especially in places like Africa and the Caribbean.
The oil crisis of the 1970s caused deterioration of Third World economies that were unable to repay loans given by the IMF and World Bank so structural adjustment programs were implemented as a pre-condition for debt rescheduling and new loans.
In Jamaica, Prime Minister Michael Manley’s government announced a plan in 1974 to alter the system of tax breaks offered to U.S. and Canadian bauxite companies. This ruling provoked the anger of the U.S. and the ruling classes. A massive destabilisation campaign followed. Bauxite companies filed actions with the World Bank’s international center for the settlement of investment disputes. Lay-offs and soaring price increases set off a spiral of inflation that wiped out previous wage increases. Foreign capital inflow plummeted, and the CIA became involved with fomenting local political rivalries. A terror campaign was unleashed as young people aligned to political parties found ready access to weapons in a guns-for-ganja trade. In the early 1970s the Jamaican dollar was of equal value to the U.S. dollar, now after years of IMF and World Bank interference the exchange rate now is around 85 Jamaican dollars to one U.S. dollar.
Revolutions in Grenada and Nicaragua in 1979 indicated that there was a growing mood of opposition to the U.S.-dominated market model in the region.
Around this time Guyana’s logging, forestry and mining industries were adversely affected by terms and conditions favorable to foreigners. Seventy-six percent of Guyana is forest.
But while other Caribbean nations were suffering in the 1970s, Trinidad & Tobago was enjoying a boost due to their oil reserves. But T&T’s economic problems came in the 1980s. A former IMF senior economist, Davison Budhoo, charged the IMF with misleading the Trinidad and Tobago government into adopting austerity measures on the grounds of “manufactured statistical indices.” In other words, the IMF’s lies negatively influenced the lending decisions of Western commercial banks. The IMF’s deliberate blocking of an economic lifeline to the country served to accentuate the internal and external financial imbalances in the economy. The austerity measures implemented by the Trinidad and Tobago government devastated the islands’ economy and took an especially heavy toll on poorer citizens.
Responding to IMF concerns about its competitiveness, the Trinidadian government devalued its currency, laid off government workers, cut the wages of those it continued to employ, privatized state-owned entities and drastically cut back social programs. As a result the standard of living is lower, there is more hunger, the signs of poverty have increased and the social sector has been thrown into serious crisis, virtually strangling the country’s public health system.
IMF structural adjustment and austerity programs retard social stability and lead to cutting of public spending and increasing taxes in order to bring budgets closer to a balance. Former Senior Vice President at the World Bank Joseph E. Stiglitz wrote in “Globalization and Its Discontents,” “the purpose of the IMF is no longer valid … they are reflecting the interests and ideology of the Western financial community.”
The effects of IMF policies are anti-developmental and quickly lead to losses of output and unemployment in economies where incomes were already low.
If poorer countries work together and are loyal to their regional association bodies, such as CARICOM, they would be able to withstand the devastating impact of involvement with the IMF and similar bodies.
To put it more plainly in summing up the Third World’s relationship with the IMF, a wise man once said, “You cannot expect to lay down with a diseased dog and not get up with fleas.