In 1995, then Jamaican Prime Minister PJ Patterson had a few choice words for the International Monetary Fund (IMF). "Goodbye, ta-ta, au revoir," he said. Now, 14 years later, a number of Caribbean countries - Jamaica included - are going back to the IMF for assistance, this time on their own terms. Dominica, St. Kitts-Nevis, St. Lucia and St. Vincent and the Grenadines have already begun using either the IMF's Rapid Response Facility (RRF) or the Exogenous Shocks Facility (ESF).
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Within its new Strategic Framework for Development and Climate Change the World Bank (WB) acknowledges that the principal factors responsible for the global warming are greenhouse gas emissions and deforestation. However, the projects financed by the WB involve both of them. According to Robert Goodland, an environmental consultant with the WB for 23 years, "A quarter of the Amazonian forest has already disappeared and this with the assistance and the encouragements from the World Bank".
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Jamaica is set to re-enter a borrowing relationship with the IMF and, understandably, there are concerns about the conditionalities which will apply to secure a short-term balance of payment support through the Fund's Stand-By Arrangements. These concerns are rooted in the bitter experiences of the 1970s when the IMF imposed a set of harsh conditionalities with devastating social, economic and political consequences for Jamaica. But it was not only Jamaica experience which informed us; for certainly in the last 10 to 15 years the crises in Asia, Argentina and Kenya provided further proof that the economic measures imposed by the IMF to stabilise economies and foster economic growth did not work.
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The global economic crisis has led to renewed worries about the debt situation in developing countries, which will reportedly have to roll over more than USD 3 trillion in this year. This happens in an environment of scarce and expensive credit and while trade, the main source of foreign exchange that these countries rely upon to service their external debt, is seeing its worst contraction in more than 60 years. Compared to the magnitude of the solution that will be needed, the timid mechanisms implemented in the last several decades such as the HIPC/MDRI initiative, or the recent Debt Sustainability Framework do clearly not offer an applicable model.
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At end May, Ecuadorian president Raphael Correa publicly denounced the International Center for the Settlement of Investment Disputes (ICSID) and claimed Ecuador's withdrawal from the ICSID is necessary for "the liberation of our countries because [it] signifies colonialism, slavery with respect to transnationals, with respect to Washington, with respect to the World Bank." Following this, at the UN conference on the economic crisis at end June, the presidents of Bolivia and Ecuador called for the closure of ICSID and challenged existing free trade agreements.
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As government officials from around the world descend on New York this week for a UN conference on the economic crisis and its impact on development, the main issue up for debate is how the poorest countries can influence the way the International Monetary Fund (IMF) and the World Bank operate. Few would agree that, in any society, denying a voice to the poor and the vulnerable is a good way to build a healthy social contract. And there is no reason why this should be any different in the international community. Yet developing countries have the least say on the conditions that are applied to development finance agreements with the IMF and the World Bank, despite the fact they are bearing the brunt of the economic downturn.
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