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The announcement on
23 April 2010 by Greece’s Prime Minister, George Papandreou, that his
country would draw on emergency aid from the IMF and the EU confirmed
fears about the toxicity of that country’s sovereign liquidity, and
solvency issues.

The subsequent
downgrade by Standard & Poor’s, a rating agency, of Spain’s
sovereign debts reinforced concerns that one consequence of Greece’s
incontinence might be what the IMF referred to in its April 2010 Global
Financial Stability Report (GFSR), as “a full blown and contagious
sovereign debt crisis”. Together with the EU (contributing €30 million
into the rescue fund), the Fund is expected to provide €15 million to
help the Greeks deal with the output-depressing effects of a budget
deficit clearly in excess of 15% of GDP.

The derision with
which the Greek government’s decision was greeted in certain quarters
in Greece was understandable when you remember that until recently, the
IMF was perceived in certain quarters, especially outside that country,
as a tool in the hands of imperialists and allied colonialists bent on
keeping Africa and Africans in perpetual bondage. Within the context of
the “Cold War”, this made plenty of sense. Africa is (still) home to
some of the most important mineral deposits in the world, and Western
strategists and their spooks would have been loath to have these fall
under what was then the Soviet sphere of influence. The Mobutu Sese
Sekos and Jean Bedel Bokassas were thus no accidents. Their buffoonery
was okay, so long as it guaranteed Western access to their countries’
primary resources. This was in the sixties and seventies.

Much later,
conspiracy theorists in this country, baffled by the domestic economic
crawl, and aware more than most of the tremendous potential of this
country, approached the 1980s debate over accessing the Fund’s bridging
facilities in the knowledge that it could not be a good thing. After
all, the same Western economists behind the Fund had persuaded
successive governments in the country to borrow massively against our
crude oil earnings. The heavy hand of the West was evident once again;
its agents and privies scarcely concealed themselves, and the IMF’s
nostrums were the blunt instrument with which we were to be bludgeoned
financially. In the end, this economy made the painful transition from
being under-borrowed to debt peonage, without anything to show for it,
besides the fat Swiss accounts of our leaders – elected and usurpers.
To the argument that the country was mismanaged by its indigenous
rulers, you got told that these were “comprador bourgeoisie” in cahoots
with “Western imperial circles”. Somehow, for “western imperial
circles”, Africa, and not Asia, had to be restrained from developing if
the global balance of forces was not to be disturbed. So while South
Korea, Taiwan, Malaysia, Singapore, Chile, etc. all under the heavy
hand of the West, saw material increases in net welfare, Nigeria, and
places like Indonesia saw a sad reversal of fortunes.

Cleaving to this
logic, what are we to make of Greece and its recourse to the IMF’s
bridging loan? Clearly, the Fund cannot mean thereby to under-develop
the Greek economy? The Greeks are not just Caucasians. Theirs is the
cradle of much of the West’s intellectual heritage. Unfortunately, they
share some bad habits in common with some of our best leaders on the
continent. Over the years, Greece has spent its way into trouble. Not
just spending more than it earned, but spending unsustainably. Sadly,
the €45 billion loan package might just help repay some of Greece’s due
debt, and finance its budget deficit until December.

Over the
medium-term, Greece will have to restructure: cut down on spending and
find ways of increasing its revenue stream without hampering the
outlook for output. The people will have to bear much of the cost of
any such adjustments.

Governments will
struggle to remain popular, as they define growth paths that take full
cognisance of the need to meet debt obligations as they fall due. The
IMF will of course insist on Greece meeting all its debt obligations,
and pursuing policies that place public financing on a sustainable
basis. There will be much pain, but it would not have been caused by
the Fund, or by its strong medicine. It would, instead, as with us, be
the result of inept rule by past governments in Greece.