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I return to the matter of the model because whilst the criticisms have been diverse, it has been impossible for me, having read all the various contributions, to understand the context within which these comments/suggestions are being made. We have made it unequivocally clear that we do not believe that the country's economic growth and development can be based on instability in the exchange rate system or instability in terms of price movements. As such, we have implemented measures, costly it is true, which have produced for the first time in our history a stable, totally liberalized, foreign exchange system with foreign exchange reserves equal to 12 weeks of imports. I challenge all those who criticize to state unambiguously whether they are for or against this achievement. Would they prefer to return to a situation where there was an artificially contrived exchange rate system or when our Net International Reserves stood at minus US$863 million. The Opposition Spokesman on Finance says he doesn't understand the concept of negative growth but he seems quite comfortable with the idea of negative NIR. In terms of inflation, as I indicated in my opening presentation, the achievement of single digit inflation for Financial Year 97/98, makes it only the second time in ten years that we have had two consecutive years of single digit inflation. This is not a record about which the country can be proud. There are those who are suggesting that we should slow down our drive to reduce inflation. I challenge all those who take this stand to state this explicitly; but at the same time, explain to the pensioners, to the workers and all the fixed income persons how they will compensate for the erosion of their purchasing power. Our approach inevitably has costs and a major difficulty relates to the reluctance of those who have been accustomed to concealing their inefficiencies behind the inflationary spiral to start concentrating on efficiency measures. Hence, the call for lower interest rates as the solution to all problems. I have said explicitly that we recognize that high interest rates pose a difficulty. But we fool ourselves if we believe either that the Administration.can unilaterally reduce interest rates overnight or that would solve the fundamental problems we faced. As my colleague Minister of Agriculture said to the potato farmers recently in his own unique style, interest rates cannot be blamed if your competitors elsewhere are reaping 20 pounds of potatoes from a hill when you are reaping five pounds. In the same vein, I must deal with the question posed by the Opposition Spokesman on Finance why is it that we are seeking to borrow from the international capital market when cheaper funds are available from the multilateral institutions. The Prime Minister and I have on various occasions reiterated the policy with regard to our relationship with the multilaterals. Simply put, we remain vibrant and active members of the multilateral financial institutions. We will seek financing for projects, social, infrastructure or economic from all. However, we are neither seeking to borrow from the IMF, or seeking balance of payments support from the World Bank and IDB. This position has been taken not from a political stance, but from the fact that we have fundamental disagreements with many of the conditionalities which accompany balance of payments support or loans from the IMF. Several of the areas where we have achieved great progress - in particular the stability in the exchange rate system and the lowering of inflation have come about by our pursuing policies which would not have been approved by the multilaterals. The Leader of the Opposition himself had similar problems and this led to him breaking off talks with the IMF. However, he was not in a position to walk away. He had to bow and sign yet another agreement. To be specific, I make reference to our intervention in the foreign exchange market, to stabilize it by selling whenever there is pressure brought about by speculation. Another specific example relates to the interest rates charged by the Development Banks. Were we still borrowing from the multilaterals for balance of payment support, we could not have reduced the interest rates below the level of Treasury Bills. Is it that those who call for us to return to such borrowing are unaware of these conditionalities, or is it that they would be willing to live by them. They owe it to the country to state unambiguously their position. As countries graduate from IMF borrowing or balance of payment support from the multilaterals, then they must seek alternative sources of financing. The resources of the multilaterals were meant for economies in distress and then when you are able to graduate, you deal with the commercial bankers. I note with disappointment and distress the statement by the Opposition Spokesman where he argues that I should tell the people the truth about the letter from Citicorp congratulating me on the Moody's rating. To quote him:
I am disappointed for several reasons. In the first place, it is just a continuation of the pettiness which has been exhibited elsewhere. This pettiness seems to make it difficult for some to realize that it is possible for institutions to take positions informed by principle rather than by "cronyism". It is an inability to think beyond narrow parochial, petty, political boundaries. I am disappointed because I would expect that if you are going to be petty you should at least do your homework. It is not true that Citicorp has handled virtually all the GOJ bond issue placed overseas. In fact the US $200 million bond was not handled by Citicorp, but by Bankers Trust. I am disappointed because the letter which I read into the record of the House indicated Citibank's involvement in case he missed the relevant sections. Let me repeat:
But since you are worried about Citocorp's endorsement, let me give you much more to worry about. I have just received another letter from another major banking institution. Let me quote:
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