Jean Antoine-Dunne writes a weekly column for the Newsday.
The IMF in its wisdom has recommended devaluation for Trinidad and Tobago. Many within TT have also advocated this. After all, one euro is now worth a little under eight TT dollars and fluctuating, while sterling is selling at just under nine TT dollars to one pound.
It is also becoming increasingly difficult to withdraw money from an ATM machine abroad. An official from Scotiabank told me recently (speaking from Colombia on their customer affairs line) that this will continue. When the ATM machine says it cannot read your card, this means apparently that the country will not allow you to withdraw money.
It is an issue that transfixes me, in particular as it relates to import and export matters. In the first instance when I taught at UWI, I often screened a film called Life and Debt by Stephanie Black as part of post-colonial studies. It is a film about Jamaica and the IMF and the effect of globalisation policies on a Caribbean nation. Its script is written by the Antiguan writer Jamaica Kincaid who never pulls any punches.
The filmmaker takes you on a journey across Jamaica, first as a tourist soaking in the sun and sea and images of paradise, then cuts in-between with little narratives on the effect of devaluation and of implementing the policies of the IMF, specifically. The focus is primarily on a situation where foreign products are given equal or preferential treatment to those of local producers. According to this documentary, free trade policies resulted in the slow destruction of local industries. The IMF recommended devaluation for Jamaica at its time of crisis in the 1980s. According to UWI economist Dr Anthony Birchwood, “Jamaica tried to allow market forces to determine their exchange and they went from almost $2 Jamaican to US$1 to over $100 Jamaican to US$1 in no time.”
It seems from this perspective that allowing market forces to dictate the exchange rate can lead to rapid and increasing depreciation, unless there are stringent measures put in place to enable greater productivity and competitive markets for local producers. The “30-year-long dribbling devaluation” to which Jamaica was subjected during the years 1990 to 2011, according to one commentator in the Jamaican Gleaner, was “unsupported by anti-inflation policies” and led to “deepening economic stagnation.”
But how does the ordinary layperson understand this debate? What exactly are the benefits of devaluation or indeed depreciation and what are the perils?
It seems to me as a layperson that our productivity has not increased despite successive governments talking about industry and managing industries. Therefore, I see little gain for local producers. We are, by and large, a nation of consumers who like buying foreign goods. Perhaps the first thing we need to do is buoy up our sense of the value of what we produce, and then produce more.
With devaluation, we should be able to sell our produce abroad with greater ease and, presumably, there will be a greater flow of foreign currency.
However, we will also have to pay more for goods coming into the country.
This said, there is little likelihood that the incomes of those on low pay will increase. So, the poor will become poorer.
I have always believed that much of the crime in this nation is due directly or indirectly to inequities. The fact is that many in this country are on very low wages, while the cost of housing and land and now petrol and electricity and all that these affect, is on the increase. There is no levelling of the playing field. The devaluation of TT dollar will in fact create greater hardship for those in the lower income brackets.
For those on TT pensions that are fixed, devaluation will also mean greater hardships. For those who travel or spend time abroad, devaluation will mean severe cuts in their incomes. They will accrue no benefit. It is a truth that many retired older people spend a great proportion of their year with children and grandchildren who live abroad.
Will devaluation actually benefit the nation as a whole or will it only be of value to those who now line their pockets and who wish to avail of a free flow of foreign currency?