The views expressed herein are those of the writer and do not necessarily represent the opinions or editorial position of iWitness News. Opinion pieces can be submitted to [email protected].

Drinking the Kool-Aid” metaphorically refers to a person or group uncritically holding a doomed or dangerous belief, argument, or philosophy. The term comes from the behaviour of over 900 mainly African-American men, women, and children who blindly followed Jim Jones’ ultra-socialist vision at Jonestown, Guyana, by committing so-called “revolutionary suicide” in 1978 by drinking cyanide-laced Kool-Aid.

This metaphor nicely applies to the just released Staff Report (Adobe Acrobat must be loaded to read the file) of the International Monetary Fund (IMF) following bilateral discussions with the government of St. Vincent and the Grenadines during Feb. 22-March 3, 2016.

The IMF is a United Nations organisation whose, “primary purpose is to ensure the stability of the international monetary system–the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other… To maintain stability and prevent crises in the international monetary system, the IMF reviews country policies and national, regional, and global economic and financial developments through a formal system known as surveillance. The IMF advises its 188 member countries, encouraging policies that foster economic stability, reduce vulnerability to economic and financial crises, and raise living standards.”

The IMF’s annual Staff Reports consist mainly of the compilation and interpretation of material supplied to the visiting team by the relevant government ministries, supplement by other data, in our case, mainly Eastern Caribbean Currency Union (ECCU) material. There is no independent collection of data by the visiting staff though it does question the way material supplied to them is collected, compiled, and interpreted. For example, the Report argues that:

“Only part of PetroCaribe St. Vincent’s debt to Venezuela is fully accounted in the public sector debt statistics. At end-January 2016 the total debt to Venezuela under the agreement stood at EC$183.8 million, of which only EC$71 million is recorded as government debt, to fund the construction of the international airport. This suggests that the public sector debt should be about 5.3 percent of GDP (EC$112 million) higher to reflect the full debt to Venezuela”(p. 43).

Aside from such tepid rebukes, the Report makes many pie-in-the-sky projections about economic growth and debt reduction, the most questionable being the prophesied growth stemming from the completion of Argyle International Airport (AIA).

“Growth is projected to further increase in 2016 and over the medium-term, spurred by investment prompted by the new airport. This game-changing project is expected to boost tourist arrivals and agriculture exports through expanded airlift capacity and direct routes to main markets. Risks to this projection are balanced” (p. 20; italics added).

Jonestown massacre
Jonestown massacre, Nov. 18, 1978, at the hands of its white pastor.

Recall what I wrote in my last essay:

Economic predictions are among the most fallible of all [predictions]. How many economists accurately predicted the global economic recessions of 1975, 1982, 1991, 2009, or the Great Depression of the 1930s? How many knowledgeable pundits forecasted the plunge in oil prices that began in the second half of 2014?”.

Why would the IMF conclude that AIA would be a “game-changing project” (referring to it in positive terms no fewer than 12 times in its 78-page report)? Because this is what they were told by the Honourable Dr. Ralph Gonsalves and his government.

Recall also that it was Glen Beache, CEO of our Tourism Authority, who said that building AIA was necessary because, “It’s always been about access and direct flights. This airport is a huge game-changer for us”.

Keep in mind as well that the chronically criticised IMF does not conduct nor carefully evaluate existing feasibility studies (which is part of the mandate of its sister institution, The World Bank, which was never asked by our government to carry one out) in these annual reports. Finally, remember that no genuine economic feasibility study was ever carried out for AIA by any local or external body.

That IMF officials simply drank Dr. Gonsalves’ Kool-Aid helps explain the contradiction between their “game-changing” prediction and the data in Figure 1 where they compare SVG’s tourism growth to that of the other ECCU members (Antigua and Barbuda, St. Kitts and Nevis, Dominica, St. Lucia, and Grenada).

Figure 1. The IMF’s Summary of ECCU Member Tourist Arrivals, 2004-2015 (p. 23)
Figure 1. The IMF’s Summary of ECCU Member Tourist Arrivals, 2004-2015 (p. 23)

These data clearly show how poorly our tourism industry has performed since the collapse of the Lehman Brothers global financial services firm in 2008, which helped precipitate an international economic recession whose aftermath apparently and inexplicably is still being felt by the tourism industry in SVG.

Among other criticisms, the IMF has been accused of: (1) “being ‘out of touch’ with local economic conditions, cultures, and environments”; (2) having policies that “lack a clear economic rationale”; and (3) making it hard for “indebted countries to say no to environmentally harmful projects”.

Each of these criticisms applies to its unsubstantiated and uncritical support of the AIA project. (1) No attempt was made to query why our tourism numbers are so out of line with the other ECCU members by asking, for example, whether environmental conditions on our mainland (most notably the absence of white sand beaches) is a mass tourism limitation no international airport could ever overcome. (2) The suggestion that the airport will boost agriculture exports shows a remarkable ignorance of the nature of our small-scale and costly local agricultural system and the realities of global marine agricultural transport. (3) There is no appreciation of the potential harmful effects of mass international tourism on the local ecosystem.

Conversely, implicit in the IMF’s mindless support of AIA is the weird assumption that the fallout of the Lehman Brother’s bankruptcy has been stronger in SVG than elsewhere in the ECCU. This support is also the antithesis of its mission statement because it gives a stamp of approval to a project whose imminent failure will foster local economic instability, increase our vulnerability to external economic and financial crises, and lower our living standards.

But I guess this is the kind of crazy policy-making you get when you drink the Comrade’s Kool-Aid.

***

C. ben-David

The views expressed herein are those of the writer and do not necessarily represent the opinions or editorial position of iWitness News. Opinion pieces can be submitted to [email protected].

3 replies on “Did the IMF drink the Comrade’s Kool-Aid?”

  1. Well… For those of us who have managed to somehow get ourselves and our families to SVG at least once a year for a couple of decades, it has never been “all about direct access.” It’s always been about what we find when we get there.

    As for Kool-Aid, I myself much prefer a couple of rum punches!

  2. As usual, very good analysis C. ben-David. You forgot to mention that the IMF does not mention how bad governmental management, corruption and poor work ethic will prevent any fairytale results from having a “happily ever after” effect on the economy. I do not think Dr. Salt can manage cooking Macaroni and Cheese let alone a tiny Caribbean Economy. Thus far he has done very poorly. I think anything from the IMF can be completely disregarded, obviously the information is tainted.. As you point out there are far too many factors involved to make an accurate prediction of any economy, let alone that of SVG.

  3. On point here Ben… IMF report is nothing but blah blah blah, filled with so call false hope in an attempt to make false leader look relevant to people who see the truth but still clinging to the lies he feeding them ..Airport no game changer here..maybe it would be a game changer us if the streets of SVG is paved with Gold..and I hope he promise them that too

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