The Tribune

EDITOR, The Tribune.

ACCORDING to Kristalina Georgieva, IMF managing director, “Today we face a new Bretton Woods ‘moment.’ A pandemic that has already cost more than a million lives. An economic calamity that will make the world economy 4.4 percent smaller this year and strip an estimated $11 trillion of output by next year.”

I am concerned because the IMF is still pressuring countries that got loans to privatise and carry out austerity measures in terms of government service which leads to unemployment.

For example, IMF gave a loan to Tanzania and had chains attached. According to the IMF press release in regards to Tanzania, “Looking ahead, structural reforms remain crucial to support a robust economic recovery. The focus includes addressing arrears on VAT refunds and government expenditures, enhancing human capital and the business environment, and improving the affordability of bank credit.”

Tanzania now has two doctors per 100,000 and with the structural adjustment prescribed by the IMF the situation will get worse during the midst of a pandemic.

Across the globe, lockdowns are easing and economic activity is gradually resuming.

But with the pandemic likely to be with us for a long time, the world is going back to the old, but developing countries will become more indebted and poverty will increase substantially.

According to the World Bank, “Specifically, under the baseline scenario, COVID-19 could generate 176 million additional poor at $3.20 and 177 million additional poor at $5.50. This is equivalent to an increase in the poverty rate of 2.3 percentage points compared to a no-COVID-19 scenario.”

As millions of people all over the world lost their jobs at the height of the crisis, billionaires increased their wealth by more than a quarter (27.5 percent) or US $10.1 trillion according to a report by Swiss bank UBS. The number of billionaires has also reached a new high, rising from 2,158 to 2,189.

Political forces that were already underway before are likely to accelerate because of the pandemic – the US-China tussle, the backlash against widening inequality and the growing attraction of inward-looking economic policies.

Caribbean countries will suffer who depend on tourism because travelling, and especially tourism will be diminished for years to come.

I recommend that countries invest in agriculture to ensure food security for their population and sell food on the export market.

The demand for food will increase due to the disruption of supply chain and the closure of many food producing facilities.

The central bank and government should have as its primary directive to maximise employment.

There will be economic, political and commercial forces to cut back on labour, but this will be detrimental.

The tax base will shrink drastically and the economic will shrink and it will make it impossible for Caribbean countries to pay back their debts.

They will have to privatise and get help from international lenders like the IMF that will make cutting public spending a conditionality so the international elite can come in and invest and get steals of deals.

“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger - but recognise the opportunity.” John F Kennedy

My advice is to invest in technology and use technology to improve and increase productivity while keeping workers employed. Germany, Switzerland and Scandinavia is a good example of how it will work; Increase manufacturing and agro-production. This can be started immediately and expanded in the future.

It will be costly to build a new economy but it will cost much more to go back to an economy designed by our former colonial masters.

The economies in most Caribbean countries have barely change since they gained their independence.

I am not sure if the Caribbean has ever had a “true political leader” who does not pay attention to the dictates of the developed world instead of the prosperity of their population.

They talk a good game about prosperity but deliver crime and poverty. The value of research and development is not captured by capitalism (Adam Smith) or communism (Karl Marx), but is the key to success in the 21st century. To paraphrase Bob Marley, Wake up and put your vision to reality.

BRIAN ELLIS PLUMMER

Nassau,

October 17, 2020.