HomeBusiness DigestCandid Comment: Let’s give IMF prescriptions a chance

Candid Comment: Let’s give IMF prescriptions a chance

The organisation says through these consultations it attempts to assess each country’s economic health and through its advisory services help forestall future financial problems. It is this aspect of advisory services that our government loathes. And indeed it is not alone. Several other governments worldwide, particularly those whose economies have at one stage or another been in distress, share the same sentiments. But if we pick a keyword in the purpose of the Article IV Consultations, that of assessing the “health”, we may see where the acrimony comes in.

If we liken the IMF to some form of economic doctor who examines world economies’ health and offers preventative medicine to some, therapeutic medicine to others and in worst case scenarios offers surgical operations, the picture becomes clear. Those that have taken preventive measures, ie many in the developed world, see little wrong with the IMF for the simple reason that they stopped at the preventive stage.

 

Had they proceeded to the next stage, ie where they had to be given prescriptions, they might share the same views as those of us who have had to take IMF drugs. So the bottom line is prevention is better than cure. And by the way, the cocktail of drugs has generally remained the same; fiscal discipline and monetary discipline. And for economies in transition from central command systems add financial sector reform and public enterprise reform. The rest are derivatives of these four pillars and lead to a stable balance payments position, a central objective of the IMF.

But countries like ours have resisted this over the years arguing, among other things, that the IMF prescribes the same medicine for all the countries in the world. Well, generally, a drug does cure a particular illness in all people, be they, short, tall, fat or slim. What may differ is the dosage. And even where an individual responds better to a different drug, it is in the same class of drugs, eg antibiotics. Had we listened to advice in the booming years after Independence when there was more goodwill towards our economy by the international community we would not be lamenting today. Those were the days of prevention.

 

However, we allowed ourselves to fritter away all the funds that came our way in rampant populist expenditure and in the process squandered the goodwill. Because we ignored the preventive stage, illness set in and by the early 1990s we needed therapeutic medicine in the form of the Economic Structural Adjustment Programme. We actually followed the doctor’s orders for a while and showed signs of great recovery with our economic health peaking in 1997.

However, from 1998 we thought we were fine and no longer needed to take our medicine, and in fact we exposed ourselves to greater economic pathogens, including our costly misadventures in the DRC and the like. Not surprisingly, our health became worse, culminating in the economy being literally on its deathbed in 2008. It was then that we grabbed one of the drugs in the cocktail prescribed ages ago; exchange stabilisation, through the multi currency regime and now we are recovering.

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