Imagine waking up one morning to find your savings virtually worthless and your job barely paying enough to put food on the table – if you’re lucky enough to still have a job. Imagine this all happened because of a decision made far away in another country, by people you neither know nor can influence.
This is exactly what’s been happening to millions of people in the South who have been subjected to the structural adjustment programs of the International Monetary Fund and the World Bank.
Guyana may be the first country to insist on taking its own path. With the help of Davison Budhoo, a senior IMF econmist who resigned in 1988 (see box) and the organization he founded, the Bretton Woods Reform Organization, Guyana has developed an approach to development that is aimed at fostering the long-term well being of the people of Guyana, rather than responding to the short-term demands of the international market.
So Rich and Yet So Poor
Guyana, which is rich in natural resources including bauxite, gold, diamonds, and one of the largest remaining rain forest areas in the world, was once a prosperous Caribbean country. However, following independence from Britain in 1966, a corrupt civilian dictatorship succeeded in placing 80 percent of all economic activity under state control for its own benefit and for that of the western powers that supported it.
In 1988 the country instituted an IMF-supervised structural adjustment program (SAP). The value of the Guyanese dollar subsequently fell from $10 to US$1 in 1988 to $144 to US$1 in 1995. Malnutrition, infant mortality rates, disease, unemployment, poverty and hopelessness rose dramatically as access to clean water, education, and health care plummeted. Crime, drug abuse and trafficking, street children, and resultant prostitution also rose dramatically.
Today Guyana is the most heavily indebted country in the world. Since 1988, 80 percent of the revenues collected by the government have gone into servicing foreign debt. Guyana is also the poorest in the western hemisphere, surpassing even Haiti.
It is not unusual for SAPs to cause this type of hardship and poverty. The IMF/World Bank approach to economic development typically subordinates the needs of a country’s domestic economy to that of the international market place. Subsistence agriculture is replaced by export crops. Forests are cut for short-term profit, with timber often shipped off unprocessed. Likewise, minerals are mined to be used for production elsewhere. Budgets for education, health care, and clean water are cut in order to pay loans to finance the development of exports.
A few elites within the country benefit, particularly those with connections to the international corporations that obtain these resources at rock bottom prices. But millions of people receive little and lose much in the way of access to indigenous resources and basic social services.
In 1992 the people of Guyana voting in the first free elections in 30 years elected as president Cheddi Jagan of the People’s Progressive Party (PPP). (Interenstingly enough, Jagan had been overthrown 30 years earlier with the help of the US.) IMF policies prevented Jagan from implementing social and economic reforms designed to address the poverty and backwards economic status.
A People-Centered Path
In August 1993, citizens of Guyana joined forces with the Bretton Woods Reform Organization (BWRO) to create the world’s first concrete alternative to SAPs, called the Alternative Structural Adjustment Program or ASAP (see below).
Creating an ASAP, "involves democratically designing a comprehensive, highly visible, and quantifiable economic policy to meet the basic needs of the entire population" with a clear time frame for implementation, said Patrick Budhoo, BWRO program director.
The first step in developing an ASAP is to form a National Committee which serves as a focal point for the work. The committee is responsible for getting input from all affected sectors and groups. Members are involved in education programs and economic planning, and organize local and national forums for discussion and action.
This is what took place in Guyana where a core group of people who were excited by the BWRO approach organized seminars and symposiums. Representives of labor, women, educators, farmers, business people, and indigenous peoples discussed and formulated an economic development plan aimed at meeting the needs of the people of Guyana.
The result is an approach that is in marked contrast to that of the IMF and World Bank. It is based on the principle that a healthy economy does not rely on exports for income and on imports for daily needs. Rather, a healthy economy provides for the needs of the people in a sustainable and egalitarian way that fosters self-reliance.
Food and Forests
Sustainable agriculture is a key component of the Guyana ASAP. Exporting raw materials and food stuffs, and importing processed products is no longer encouraged. Instead, domestic food production and domestic consumption receives priority. Crops are diversified, and non-traditional crops – which both lower the cost of food and increase employment – are encouraged.
This approach also promotes a broad economic base with priority given to small-scale, labor-intensive, high value-added enterprises. Appropriate rural infrastructure is emphasized, including roads, communications, and affordable energy and technology. Friendly credit promotes local business development through Grameen-type banks, which make small loans for income-producing activities at no or low interest, using a peer-group lending process.
The Guyana ASAP rejects the IMF freeze on social sector spending asserting that "increasing the standard of living of the majority must be the first and foremost objective … investments in people are critical to achieving sustainable economic growth."
Guyana has one of the largest remaining rain forest areas in the world (9.1 million hectares), however approximately 80 percent of it has been leased for exploitation by multinationals. Under the terms of the IMF structural adjustment program, Guyana offered multinationals a 10-year exemption from all forms of taxation. The people with the most to lose from the logging are the indigenous forest dwellers who make up the majority of Guyana’s interior population.
A critical component of the Guyana ASAP is the appointment of an International Rain Forest Tribunal to review the government’s agreements with logging and mining multinationals. The tribunal will declassify and renegotiate the secret contracts between the government and multinational resource companies, and facilitate the reformation of the currently non-functioning Guyanese Natural Resources Agency and the forestry and the mines commissions. It will also ensure the indigenous people that their land titles will be honored and that they will have a strong voice in all development affecting them.
In 1994, President Jagan declared the IMF program for Guyana "massively flawed and inappropriate." Jagan also agreed "to cancel the IMF SAP and renegotiate with that institution on the basis of the conclusions and recommendations of the people’s ASAP."
In June of this year all eyes will be on Guyana. This is when the country will present its ASAP to IMF officials. BWRO’s technical experts including Budhoo can demonstrate that the ASAP meets the IMF’s stated economic criteria – though not its social agenda – and financial support for the proposed programs has been identified – much of it from waste in the current IMF program. Nonetheless, BWRO leaders do not expect the IMF to agree to Guyana’s plan easily because of the plan’s emphasiz on self-reliance rather than on serving the world market.
BWRO is planning for this major event. Representatives of European and Southern governments and NGOs will be in attendance. Plans are being made for a contingent of activists from Vermont and elsewhere to travel to Guyana. Bread & Puppet Theater, an internationally acclaimed political theater troupe, hopes to present their play, "Mr. Budhoo’s Letter of Resignation from the IMF."
The Vermont Coalition is working to garner support in the United States for the people of Guyana by holding house parties, organizing a film/discussion series, holding demonstrations, writing letters, and lobbying Vermont Representative Bernie Sanders to introduce a bill in support of the ASAP.
"Guyana is important," Budhoo says, "because we need to show that it can be done; that we can use peoples’ participation and economic technical skills to push through the ASAP."
However the big splash will come when India and the Philippines stand up to the international lending community to enact ASAPs. National Committees have formed in both countries and the people are already aware of the devastation caused by IMF policies. In the fall of 1993 in India, half a million people, mostly farmers, protested against the IMF/World Bank agricultural policy and GATT. Budhoo predicts massive participation and massive demonstrations in India and the Philippines in the months to come.
In the meantime, the Guyanese people are leading the way by standing up to the IMF and demanding the right to implement a plan of their own creation. As Budhoo wrote in 1988, "we are not speaking about technical problems in international finance, we’re speaking about our role in shaping the destiny of humankind and about the legacy that we will leave to generation upon generation yet unborn."
Susan Meeker-Lowry is the author of Economics as if the Earth Really Mattered (1988) and Invested in the Common Good (1995 – both from New Society Publishers). You can reach her at PO Box 734, Montpelier, VT 05601.
For More Information:
Bretton Woods Reform Organization, 18 Water Street, South Cummingsburg, Georgetown, Guyana; phone/fax: 592-2-70679
50 Years is Enough Campaign, 1025 Vermont Ave., NW, Ste. 300, Washington, DC 2005; phone: 202-463-2265. E-mail: email@example.com
"Enough Is Enough"
The story of this alternative approach to structural adjustment, began with the resignation, in 1988, of Davison Budhoo a senior economist with the IMF. For over 12 years. Budhoo was responsible for designing and implementing SAPs for Africa, Latin America, and the Caribbean. He served for two years as the IMF resident representative to Guyana and is a foremost authority on the economics of Caribbean nations.
"To me resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind’s eye is the blood of millions of poor and starving people," he wrote in his open letter of resignation called "Enough is Enough." His resignation sent shock waves around the world, making front page headlines in many countries (although not in the US).
In 1991, Budhoo started the Bretton Woods Reform Organization (BWRO) to launch a global campaign to promote accountability of the World Bank/IMF for their policies in the Third World.
The most exciting of BWRO’s efforts is the Alternative Structural Adjustment Program, which provides people in SAPed countries with a concrete alternative economic development approach that can stand up to the IMF. Guyana is BWRO’s first case.