Although the Government seems loathe to admit it, we are clearly into a period of structural adjustment (SA) and it is therefore useful to reflect on similar periods in our history in an effort to compare political conditions, economic approaches and ultimately the political impact.
This review will of necessity begin in 1981, following a successful BLP win in that year’s election. The fact that the Adams administration faced SA at that time was reflective of a shift in economic policy approaches from the Barrow to the Adams era.
Barrow’s era was one of balanced budgeting and also one when grant funding for major projects was more popular due to our recent post-colonial status.
Barrow often bragged about the fact that when he left office he could write a cheque and clear our national debt, which was reflective of a general economic conservatism of those times. As such, Barrow’s major economic challenge was the energy crisis which is minor compared to what we have faced since and SA was not “on the table”.
It was customary in the 60s and early 70s to practice conservative economics while the late 70s ushered in an era of deficit financing and borrowing to finance major projects. This approach coupled with the 1981 general election brought us to require structural adjustment in 1981 which Adams affectionately referred to as “belt tightening”.
Adams’ government was not politically challenged at the time although he was only ahead of the DLP by five percentage points. He was comfortably ahead in the seat count and his leadership was in no way challenged internally.
The Adams government could therefore easily withstand any political fallout that SA occasioned. Notwithstanding his political strength, Adams approached the IMF discreetly and announced a stand-by agreement shortly thereafter.
His secretive approach was heavily criticized but it would be fair to say there was no major local dislocation as most of his medicine was administered by way of a mini budget. There was no mass public service protest largely because there were no mass public sector terminations and the burden seemed equally shared.
It is also important to remember that the Adams SA programme would have been compared to others regionally and his compared favourably with these. In Jamaica Seaga engaged the IMF in a more aggressive programme that included devaluation and major public sector cuts which caused political pandemonium.
In our instance, however, the medicine seemed mild and we appeared more concerned about the secretive nature of Adams approach and the fact that these problems developed quickly after an election when everything was apparently fine economically.
Adams never lived to fight the 1986 election so it is difficult to gauge the impact of the 1981 SA programme on his political fortunes.
If, however, one looks critically at the results of the 1981 election, it becomes clear that he almost lost that one since a swing of -3 per cent (instead of -1 per cent which he achieved) would have put him into opposition in 1981.
The 1981 margin was the lowest ever (before 2013) and one can argue that the seeds of the BLP’s 1986 defeat were sewn in 1981, regardless of the programme of belt tightening.
The political scene in 1991 was very different since Sandiford’s government was more popular, although his selection created a fracture within the DLP that would later come back to haunt Sandiford.
Like Adams, Sandiford never hinted that there were economic storm clouds on the horizon when he fought the 1991. However, he did admit his intention to seek IMF assistance and his letter of intent outlining his specific measures was placed in the public domain.
Sandiford appeared to use an economic sledgehammer as he imposed an 8 per cent cut on the salaries and wages of all public servants in central government as well as statutory corporations. This was along with a stabilization tax of 15 per cent across the board and the termination of an estimated 4 000 public service workers and the imposition of a three-day week for several others.
Sandiford also initiated several novel initiatives along with the cuts and taxes. He eventually established a productivity council, a wages and prices protocol and a privatization unit which disposed of entities like BET.
Sandiford’s programme was not popular, but his gaze remained firmly fixed on the prime objective of avoiding devaluation for which he would always be commended.
Comparatively, we now have a programme of SA that is frighteningly ad hoc. We are not in an IMF programme and the Minister of Finance has stated categorically that we will not be going to any such agreement which is very different to 81 and 91.
This time around, there is no VAT left to introduce, and his Government has circumscribed its policy environment by putting public sector job cuts and privatization off the table.
In addition, it is striking that both Adams and Sandiford instituted programmes to “unlock” funds from the IMF and counterpart agencies.
On this occasion, Stuart/Sinckler are imposing austerity with no promise of any major foreign currency injection in the short term, so while the cuts will positively impact the current budget, the longer term issues are still very much “up in the air”.
• Peter W. Wickham is a political consultant and a director of Caribbean Development Research Services (CADRES).
