There is no need for hurry with the arrangement with the International Monetary Fund or, as the Romans say, Festina lente – hurry slowly. And to say a priori that the arrangement with the IMF will be made without having data is the domain of “simple answer”, economic analyst and professor at the Faculty of Management, Mr Vasilije Kostić, said to Pobjeda.
Commenting on the recent announcement of Prime Minister-designate, Mr Zdravko Krivokapić, that an arrangement with the IMF is one of the options, Mr Kostić said that this should be preceded by a detailed analysis, which must evaluate the impact on the future, not just the need for the moment.
“Answers to the questions of essential importance such as this, especially in the present situation should come from considering all possible impacts on the social-economic system, its growth and development, the sustainability of economic and fiscal policy in the short and medium term, as well as to maintaining the already worrying low standard of living of citizens, etc. By the way, short-term should not be crucial option although the need for it is already manifested as “condition sine qua non “- an indispensable condition”, Mr Kostić points out.
Social component, this analyst warns, deserves special attention.
“The social component is often marginalized by the adjustment policies created by the IMF, and it is of paramount importance for building the social cohesion of society, which is a condition for prosperity,” Mr Kostić said.
As he added, we have the opportunity to see the phenomenon of the absence of social cohesion and its severe consequences through current events in Montenegro.
“It should be clear from this that the answer to the question regarding the possible establishment of Montenegro’s arrangement with the IMF should be given in Schumpeter’s sense as “useful” because it is related to the answers to the questions about (re) vision of development, defining the reform strategies, economic recovery and growth, investment, stabilization and sustainability of public finances, as well as answers to the question about the social cost of economic and financial recovery, “main burden bearers” – the most affected social strata … And finally, this is also about answering the question of social justice, whatever that means,” Mr Kostić said.
When it comes to the IMF, he adds, there is still a dominant negative perception regarding its policies, i.e. the ways in overcoming financial crises in the countries with which they had arrangements with.
“Countries were usually faced with extremely restrictive – rigid demands that in many cases caused significant damage to the domicile economy, and opened serious wounds on its social being that did not heal decades later. Stabilization or “adjustment” was paid at extremely high economic and social price, which was often paid by the most vulnerable social groups, while the applied model of functioning did not offer sustainability, leading the countries to quickly return to the old situation – this time with worse positions”, Mr Kostić reminds.
The IMF today is somewhat different institution.
“Requirements have been relaxed, they are less rigid, but they are not mild either – far from that. Vulpes pilum mutant non mores – The wolf changes his coat … “ Mr Kostić states.
In addition, he adds, due to the mentioned negative perception, the countries that have an arrangement or are in the “lobby” of the arrangement with the IMF are seen as those with big financial and other problems because they had no other choice but to accept such difficult conditions.
“It is clear that such a view is very unfavorable for these countries and that it has many potentially bad consequences. In financial markets, it always costs more, but, it should be said that the reverse is also true, so in the eyes of investors to beneficiary countries regarding its prospects for the future convey part of the Fund’s authority as an institution, ” the analyst explains.
Finally, the answer to the question whether an arrangement will be made with the IMF should be provided by an exhaustive comparative analysis of all relevant factors.
“The short-term nature of political interest as well as the pressure of the current situation should by no means be decisive factors in making a decision. I am sure it would be a mistake with long-term potentially serious consequences. We should not a priori rule out any possibility – we do not have that luxury,” Mr Kostić said.
After comparing and evaluating the alternatives and their agreement with our development goals, Mr Kostić believes that it should be decided whether to make an arrangement or not.
“We should not decide on facts, but also allow facts to decide. Wise actions are often more important than knowledge and sequence of actions, it makes the difference between success and failure. This is called” path dependence” in science,” Mr Kostić points out.
Mr Kostić says that most questions related to economic and fiscal policy and strategy cannot be given “simple answers” without being exposed to a serious possibility of error, because it is a complex system in which there are interactions between parts and serious interdependence and interdependence internally and externally with other systems.
