IMF whistleblower: 'We make or break human life every day of every year'

'We make or break human life every day of every year as probably no other force on earth has ever done in the past or will ever do again.' Strangely enough these are the words of an economist from the International Monetary Fund. Anthony Swift interviewed him in London.

Illustration: Alan Hughes

Dear Mr Camdessus
Today I resigned from the staff of the International Monetary Fund after over 12 years, and 1,000 days of official Fund work in the field, hawking your medicines and your bag of tricks to governments and to people in Latin America and the Caribbean and Africa. 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 peoples. Mr Camdessus, the blood is so much, you know, it runs in rivers. It dries up too; it cakes all over me; sometimes I feel there is not enough soap in the whole world to cleanse me from the things that I did in your name ...

Budhoo: The charges I make strike at the soul of humankind and its conscience.
Photo: Anthony Swift

Thus begins the unprecedented, open, 150-page resignation letter of Davison L Budhoo, who this year relinquished his position as an economist on the staff of the IMF in order to raise public clamour for the Fund's reform. Blasting through the grey language that usually cloaks such matters he accuses the Fund of corruption, self-interest and deceit.

The IMF's programme in Trinidad and Tobago is a case in point and in his resignation letter Budhoo asserts: 'We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about (the) economic and financial performance of that country.'

According to Budhoo, IMF employees 'manipulated' a key indicator of Trinidad and Tobago's ability to compete and export (the labour cost index) to hammer home the point that massive devaluation was needed if the country was not to head for mounting economic chaos; the true figure he says, was far more encouraging. 'What we had done was to manufacture this and other statistical indices to allow us to prove our point and push a particular policy line, irrespective of the economic realities of the country,' says Budhoo who claims that such 'errors' were commonplace within the Fund.

Even when the inaccuracy was exposed by the Fund's own statisticians, the IMF neither owned up, nor apologized to the government, nor publicly corrected its misinformation despite the implications of its judgement for foreign investment.

'It was simply dropped as a hot potato and not referred to. Publication of a correction would have damaged the case for further devaluation, real wage cuts and other demand management measures wanted by the Fund.'

Budhoo puts the excesses of such 'joyrides in the IMF bulldozer when the moon is high' down to the zeal of what he calls the Fund's 'professionalized' political ideology, rather than to a political conspiracy. The generous financial rewards paid in salaries and extras to Fund staff, combined with a lack of accountability, have produced a 'honeypot' mentality; a preoccupation with material gratification and a lust for power which has stimulated personal greed and ambition, commitment to the status quo and an environment of 'yesmanship and stultifying conformity'.

Budhoo was allegedly on short rations from the honeypot because of his intransigence, but he nevertheless pulled $143,000 a year in salary and other subsidies, excluding those related to official travel and mission work. A staffer on the same rate of pay but on assignment in the Third World and with five children being educated in Geneva 'compliments of the honeypot', receives more than the basic pay of any head of state.

And the IMF's charms become virtually irresistible when supplemented by the 'intangibles': VIP treatment at airports, royalty-class and first-class travel, Dallas-style hotels, generous allowances for overnight stays in playground cities and for high-class nightclubbing in 'sin cities', personal secretaries on every mission, G-5 Visas allowing staff to bring maids into the United States, not to mention medical, insurance and pension perks.

'In a very meaningful way,' writes Budhoo, 'our staff perversion is the logical consequence of... the prevailing 1944 international ethos of superior man (sic) and inferior man, and the Western man and his system to be saved and nurtured, and the Southern man to be overlooked and cast aside ...'

Hopes of joining what Budhoo dubs the 'new nobility' in this 'ultimate paradise' are often enough to gain the compliance of Third World officials who might otherwise oppose the introduction of Fund programmes. The honeypot's charms make it easy for the Fund to poach skilled personnel from Third World administrations already desperately short of such skills.

Lured by the honeypot, staff sent on IMF missions to applicant countries develop an evangelical zeal. 'You go saying: "This is what we want. This is the programme. We must get it anyhow - whatever is necessary to get it". It's from this spirit that a lot of the manipulation comes.' What is wanted out of a mission is contained in a briefing paper, drawn up in advance by the mission chief and approved by the managing director of the IMF. 'You refer to the briefing paper in everything you do, because it details the official Fund stand for the country. It's the way the Fund operates.'

Less flamboyant and more measured in person than in print, Budhoo speaks with disillusionment about the Fund: 'The IMF was never designed to help the Third World or end poverty. It was established by the Bretton Woods conference of 1944 to restore economic and financial order to the Western world. There was no element of compassion for humanity in its formulation. The Fund's aim is first and foremost to secure the interests of developed countries.'

Budhoo asserts that the IMF and World Bank are key elements in an economic order that is deepening Third World poverty, the debt crisis, and a flight of capital from developing to developed countries which has soared in recent decades: in 1986 it amounted to well over $30-billion from the Caribbean and Latin America alone.

The IMF package for Trinidad and Tobago is an example of how Fund policies worsen Third World poverty. This programme required the removal of Government subsidies from basic food-stuffs, school books and drugs, The Fund also wished to cut the public wage bill (increase unemployment); lift import controls (allowing an influx of consumer goods, thereby undermining local production); privatize national industries at outrageously discounted prices; raise interest rates (also hitting the competitiveness of local producers); and remove exchange controls ('so that a privileged few could legitimately drain the country of the few remaining dregs of foreign reserves').

'Quite frankly, our "program" is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce,' writes Budhoo. 'It's like a terrorist attack, you know, splashing around rifle fire and bazookas and even nerve gas indiscriminately so as to get the highest death toll in the shortest possible time.'

Such packages - which are repeated in scores of countries around the world - affect the poorest first, and amount to economic suicide for the governments concerned. In effect, Budhoo writes, 'we are asking the Government of Trinidad and Tobago to ... self-destruct itself and unleash unstoppable economic and social chaos'.

Budhoo also explains why the IMF never suggests cuts to defence, police or public control measures instead of to basic services and subsidies for the poor: 'It's one thing to push around countries and say, "OK you have to treat the poor that way". But with the arms industry you are talking about very powerful people - both inside and outside the country. They won't be pushed around. They are supposed to be among those who benefit. The US being a Fund shareholder and the staff taking its cue from the US, who is the Fund to tell a country to limit its arms expenditure? You can tell them to let people die, but not to limit their arms.'

Meanwhile, there is little evidence that IMF programs have set countries on any sort of breakthrough path. Claims have been made about Taiwan and South Korea, but tremendous amounts of US aid have been pumped into those countries for political purposes. 'I dare anyone in the Fund to point to a country and say it is much better off economically today because of a Fund programme,' says Budhoo. And this is not an empty challenge. For Budhoo deals in cold, stark facts. He is a man in the know, whose voice is now unfettered.

'As from today,' he writes in his resignation letter, 'I tear off the mask of studied ambiguity that your organization did give me twelve years ago. As from today conscience becomes my only guide.

'In guilt and self-realization of my own worthlessness as a human being... I would like to enlighten public opinion about our role and our operations in our member countries of the Third World. Do I hear you bristling with disapproval? "Enlightening public opinion" are nasty words in the vocabulary of the Fund; I know it; I know it. Well, not so for me. In my new dictionary, 'enlightening public opinion' spells the only means to salvation. For If I can do that - if I can get people to begin to comprehend the universality and the depth of our perversion - I would have achieved something rare and precious for the starving and dispossessed two-thirds of mankind (sic) from whose ranks I come, and for whose cause I must now fight.'

Anthony Swift is a freelance journalist who is currently working on a book about children in difficult and dangerous circumstances.

The impact of IMF policies

Hunger
In one third of recent cases countries were required by the IMF to reduce badly needed food subsidies. The result was a dramatic increase in malnutrition: in Peru it rocketed amongst under six year-olds from 41% to 68% between 1960 and 1983; Ghana saw pre-school malnutrition swell from 35% to 54% between 1980 and 1984; and in Botswana child malnutrition increased from 25% to 31% between 1982 and 1984.

Sickness
Government spending on health was cut in nearly half the African countries and in 60% of Latin American countries where the IMF was involved from 1980 to 1985: the money spent on an individual's health plummeted by 85% in Ghana between 1974 and 1982; by 78% in Bolivia from 1980 to 1982; and by 32% in El Salvador from 1980 to 1984. The grim harvest of these cuts was an increase in preventable diseases and hence deaths - especially in Ghana.

Poverty

Between 1980 and 1985 inflation soared, and wages crashed by 9 per cent in Latin America and 15 per cent in Sub-Saharan Africa from 1980 to 1985: in Mexico they tell by 30% between 1981 and 1984; in Ghana by 22% between 1979 and 1984; and in Sri Lanka by 18% between 1978 and 1983. The number of people below the poverty line increased by up to 75% in parts of Ghana between 1974 to 1984.

From Adjustment with a Human Face: a study by UNICEF 1987.