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Wednesday, April 14, 2021
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IMF vs Teachers

Dear Editor,
The friction between GOB and teachers and public officers because of proposed salary cuts is not surprising. It is clearly a big-picture, small-picture battle: planning from the viewpoint of macroeconomics, the way of the IMF, vs. microeconomics.

GOB is likely going to press on with “well, the IMF says salary cuts are appropriate” in order to proceed with salary cuts. Yes, salary cuts are appropriate – from a generalized point of view. The problem is, the IMF does not ask “what’s going to happen in the streets as a result?” The IMF never thinks like that. They are about the big picture, the nation (not to be confused with the ‘people’) and the global economy.

A government seeking IMF assistance is required to correct its macroeconomic (big picture) imbalances in the form of policy reform. The IMF examines the economic and financial policies of the borrowing member to determine if their policies caused a shortage of capital, e.g. budget overruns, and what policies, in its opinion, would ensure economic recovery.

Those policies, however, are mostly theoretical and standardized. That standardization is borne out in the usual one-size-fits-all solution of macroeconomic belt-tightening, which looks good on paper, but, broken down to the details, the small picture, is felt differently in the streets.

The IMF has been highly criticized for generalizing policy and governance problems with no consideration of different conditions from country to country. Belize is seeing this today, and it is fomenting tensions. As Belizeans are learning, GOB in large part is foregoing the formulation of policies based on real conditions in Belize, further burdening the people. GOB can’t claim it was caught off balance. It had 13 years to observe and plan!

Regarding two of those conditions, on the revenue side, allow me once again to call attention to the free tax ride that rural luxury residences are enjoying. I say, delay this year’s March-April tax bills and quickly pass legislation to end that. As to expenses, the government’s large fleet of vehicles is big enough to purchase wholesale from one manufacturer.

Finally, it is reported that the Covid-19 pandemic caused heavy borrowing by the previous government. The IMF website indicates it expected the global economy to shrink because of the pandemic. It announced a year ago in March that it was ready to mobilize with in excess of $1 trillion as its response. By that April it was providing debt relief for some member countries.

Did Belize seek IMF relief?

Beryl Young

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