- The IMF/World Bank Intervention into Guyana
Guyana has had a long and fitful relationship with the IMF and World Bank. In the 1960s, Guyana was hard pressed to obtain foreign aid. Jagan wrote, “Actually, US foreign aid has dropped from US$3.5 billion during the Kennedy period to $1.4 billion in 1969” (Jagan 1968). Aid had been used historically in an attempt to shape the politics of Guyana. In fact aid was used both as a carrot and a stick in an attempt to defang Marxist economics. In the late 1970’s when Burnham was under threat by the WPF, aid was forthcoming in the form of an IMF loan. According to Premdas:
Significantly, the year 1978 was also the year when the Guyana (sic) received a significant loan from the International Monetary Fund. Changes in the U.S.-Guyana relations became identifiable when the U.S. extended a sum of US $24.7 million to Guyana in 1978. In the same year, the IMF agreed to provide the PNC government with a standby loan of US$135 million…From practically losing all U.S. aid by 1975, Guyana, according to U.S. Ambassador George Roberts, was receiving the highest per capita aid from the United States during 1978-1979…The Washington Post noted that the sudden massive aid to the Burnham regime as of 1978-1979 onwards, was part of ‘U.S. efforts to check the spread of leftist influences in the Caribbean’ (Premdas 1995, 131-132).
By the 1980s, however, with the advent of the Reagan administration in the United States, a new philosophy guided the distribution of foreign aid. The Washington Consensus tied aid to the implementation of Structural Adjustment policies. These adjustment policies began in the early 1980s under Burnham and necessitated a reduction in the size of the Public Sector, something that affected supporters of the PNC more than those of the PPP. Burnham led a campaign against the IMF because of the layoffs in the Public Sector and by 1985 Guyana became the first country to be refused access to IMF funds (Ferguson 1995, 54-55). With the death of Burnham in 1985 and the accession of Desmond Hoyte to the Presidency, a new era in relations between Guyana and the International Financial Institutions (IFIs) began. Tyrone Ferguson gives a comprehensive account of the effect of Structural Adjustment (SA) on Guyana. He makes clear the connection between Structural Adjustment and Good Governance under the Hoyte administration.
According to Ferguson, Hoyte was open to instituting economic reform to the socialist model that Burnham had established. “The new administration began in 1986 in unmistakable terms to define a different vision of political economy by articulating its commitment to a project of market-oriented development and the imperative of normalizing relations with the Western financial community” (Ferguson 1995, 56). Ferguson also points to the association of Structural Adjustment with good governance and the impact of its requirements on the politics. Ferguson writes, “a fundamental element of good governance is the implantation of political democratization in those adjusting countries which are, in fact, distinguished by the absence of a tradition of competitive electoral politics, perceived and deemed to be free and fair by domestic participants in, and external observers of, the process” (Ferguson 1995, 204).The requirement for free and fair elections was held out to the opposition PPP as an incentive so that they would become part of the Adjustment process. The opposition forces and the unions had opposed the implementation of SA. The opposition, feeling that the PNC was continuing Burnham’s opportunistic policies, was distrustful of Hoyte’s intentions. SA loans seemed to be just another lifeline thrown out to the PNC to perpetuate their rule. The idea of good governance, however, held out some promise. SA Loans were tied to free and fair elections. Ifill states:
From the early months in 1990, a large number of external actors (both governmental and nongovernmental) brought their individual and combined influence and pressure to bear on the Hoyte regime to force extensive electoral reform. They all publicly and unmistakably alluded to the connection between SAP and electoral democracy. The most significant and influential pressures emanated from the US authorities and culminated in the US government’s decision to discontinue financial support to the ERP in 1991, and the clear association between its resumption and conducting free and fair elections. The British and Canadian governments followed suit, linking potential aid to the holding of free and fair elections. (Ifill 2002)
Not only were SA loans dependent on free and fair elections, the opposition PPP, in order to gain the benefit of free and fair elections, had to accept the free market, SA assumptions. Ifill claims, “It is important to note that explicit support from major Western donor, in particular the US, did not occur until there were explicit statements from the political opposition, in particular Cheddi Jagan, indicating that he had moved away from his radical leftist, anti-capitalist stance and had accepted the principle of laissez-faire in economic affairs” (Ifill 2002).
Jagan was accused by the PNC of pursuing “Machiavellian politics”. Jagan himself said that he had moved away from leftist politics and had accepted free market principles. In an interview with Fred Rosen and Mario Murillo, Jagan said “Let me just say that socialism is not on the agenda in Guyana. We can speak of a period of national democracy” (Jagan 1997, NACLA Report on the Americas, Vol. 31:1. Copyright 1997 by the North American Congress on Latin America). In that interview, he appeared to be saying that his Marxism was a product of the historical circumstances of Guyana, and that one should not be ideological when it comes to economic policy, but do what is best for the country, a philosophy that seems remarkably close to pragmatism. In all fairness to Jagan, at that point he could do little to oppose the IMF/World Bank policies considering the economic crisis that faced Guyana. In this sense Jagan’s turn towards free market economics resembles Michael Manley’s similar conversion.
Ferguson outlines the effect of Structural Adjustment on the exchange rate, fiscal policy, monetary policy and public sector reform among other things and he analyses the consequences on various sections of the populations. There were winners and losers in the post Adjustment Guyana. According to Ferguson, in writing about the IMF-EFF agreement in 1980 and the World Bank SAL programme of 1981 – “These two programmes gave a stronger focus to the supply-side of the economy, but within an ideological context that was concerned to reverse the existing situation of a dominant public sector in economic activities” (Ferguson 1999, 359). The consequences of rolling back the state’s activity in the economic domain “…presented the PNC government with a major dilemma” (Ferguson 1999, 360). It would be beneficial mostly to those opposed to the PNC government. Ferguson makes these observations –
The main losers from any such programme could only be the PNC’s core political support – the urban-based African group which, when sugar was taken out of the equation, provided the bulk of public sector employees… Importantly, also, private sector led growth had another significant implication of prime political import. Its beneficiaries would come primarily from ethnic groups opposed to the PNC government and more directly the East Indian group that was basically aligned with its main political opponent, the PPP. (Ferguson 1999, 360-361).
Ferguson’s observations can be brought into sharper focus – those who benefited in the society by privatization and liberalization were private sector elites, many of them being East Indian, along with Chinese and white businessmen – the latter being the very sector that both PNC and PPP had initially fought against. The political history of Guyana can be recounted as: the domination by elites, the struggle against this domination and the eventual return to precisely that domination by business elites (albeit now expanded ethnically to include numerous East Indians). The ideological change of direction can be taken, from one interpretation, to be an indication of the failure of socialism and nationalism to engender economic well being (or as Manley had put it – to bring about growth), and its replacement by free market principles. However, this study argues that a more accurate interpretation may be that the private sector led liberalization policies promoted by the IMF/World Bank have been ideologically based, and underpinned with a political agenda – the re-colonization of the Third World.
Apart from emasculating the state and benefiting business elites, has this ideologically driven free market reform (as opposed to pragmatic reform) been beneficial to Caribbean people as a whole? Certainly in Guyana some have prospered, however, many have not. In 1993 statistics, the income of the lowest 40% of the population was 17% of the total income of Guyana; the income of the highest 10% was 32% of the Guyanese national income (2000 World Development Indicators). The gap between rich and poor is significant and increasing. The same holds for Jamaica and Trinidad and Tobago. The elites have certainly benefitted. The middle classes are disappearing. The poor sink into deeper poverty. The cycle of ethno-politicization in Guyana continues with new winners and new losers. Plus ça change, plus c’est la même chose – one might be tempted to say.
The philosophy of Darryl Naranjit 