THE EDITOR: Why does the International Monetary Fund (IMF) keep insisting that this country’s currency is “overvalued?” How does one arrive at a “correct” value? Is there indeed such a thing? Who benefits and who loses when a country devalues its currency?
I was a medical student at Mona, Jamaica, in 1972. At that time I recall that the exchange rate was almost five TT dollars to one Jamaican dollar. At Papine and Ligueny, a tasty Jamaican patty would cost less than J$1.
According to data from the Bank of Jamaica in 1972, US$1 equated to J$0.77.
I am sure that the politicians in that country were pressured, lied to, tricked, and increasingly coerced to devalue their “overvalued” currency.
The IMF must have used much the same type of trite, one-sided logic to convince Jamaicans that reducing the value of Jamaica’s dollar would redound to the benefit of their country’s economy and that such a move would eventuate in “growth” in GDP for which all Jamaicans yearned.
The process of devaluation — just as we are being told every day — would be “marginal” — just ten per cent or so. It would be just sufficient to nudge the economy into a turnaround.
Well, the devaluation of the Jamaican dollar continued relentlessly. It went from US$1 to 77 Jamaican cents in 1972, and it depreciated incrementally and annually, until 1990 when US$1 equated with J$7.24. The process has continued inexorably and this year, US$1 was the equivalent of J$131.
Rest assured, social conditions have persistently deteriorated in Jamaica since 1970 and following the progressive and radical devaluations of that country’s currency. Ordinary Jamaicans are reeling up to today, under the impact of the many inhumane and for the most part unjust conditions that the IMF has imposed on that country over the past decades. To be sure, devaluation has hurt and continues to decimate many hapless Jamaicans.
Garfield Higgins in a newspaper commentary in that country remarked that “for those of us who truly love [Jamaica] more than political party, church, social and or civil group affiliation, taking the ostrich approach to life in Jamaica is not an option.”
Another Jamaican, Rev Garnett Roper, commented, “Isn’t devaluation the strategy that has always been used — a way of victimising the victim? So (the country) will be a stomping ground for suitcase investors like in the Asian Tigers and we end up with a country of migrant workers exploited by the metropolis? Is there an outcome different than that which you envisage from this round of devaluation or right-valuation as you call it?”
Roper put this question to IMF managing director Christine Lagarde at one of her lectures at the University of the West Indies, Mona, some time ago.
Lagarde’s answer, like so many of those among us who designate themselves “economists,” was a regurgitation of IMF “policy” which remains largely unchanged in the face of irrefutable evidence that these policies do not work, they have never worked and will never work to the benefit of the developing country.
The Fund’s policies have been developed for the benefit of the international banking cartel — a cabal of vampires who are content to suck the lifeblood of poor vulnerable countries who are sufficiently blighted to have traitors as leaders. Largarde asserted, “You cannot bleed your reserves in order to support a currency that is overvalued. The currency has to have the right value and the Jamaican dollar was overvalued. It is a credit of this Government, the Finance Minister and Governor of the Central Bank to have taken the bull by the horns because it is hard, as it impacts on consumers in the short term.”
She forgot that Jamaica has been spinning top in mud for more than 40 years because of the Fund’s self-serving advice.
Should Prime Minister Dr Keith Rowley be reckless enough to heed their treachery, he would be drawing many more lines on the Beetham asphalt. And he cannot say he wasn’t warned.
STEVE SMITH via e-mail