What the IMF Does

It's a one-product institution according to Sebastian Mallaby: help countries having balance of payments (BOP) problems. Well at least in theory. Mauritius for example had to go knock on their doors in 1979 for a structural adjustment programme when economic hell broke loose on our mostly monocrop island.

The MMM, Berenger and Sithanen have used this episode as an indication of apparently typical Labour mismanagement. And an important section of the press has successfully drilled that in the heads of many of our fellow citizens over a couple of decades. They have also tried, this time rather unsuccessfully, to broadcast the lie that external factors are unfavourable only when Paul and Rama are in government. We've called this bluff recently.

It is interesting to note that when the Mauritian flag was raised for the first time sugar represented about 95% of our export earnings. While that was reduced by 20% over the next 7 years as the economic diversification program got underway our economy was still pretty much vulnerable when Gervaise visited us a week before Valentine's day in 1975 wiping out 30% of that industry's output (sugar represented 24% of our GDP in 1975 and 65% of export earnings in 1979).

Neither do we ever hear the fact that the UK was, as per Krugman, forced to accept loans and advice from the IMF -- a humiliation usually reserved for Third World nations. And they took that bitter pill in 1976, that is three years before Mauritius.