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July 1, 2009
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Your Money eZine www.yourmoneyezine.com
Stephanie Black’s 2001 documentary “Life and Debt” was a stark depiction of the Jamaican debt situation and placed the blame squarely on the IMF and its use of financial aid as leverage to implement policy change, for better and in most cases worse, in its member countries. This depiction of the IMF is one that is shared by a large majority of Jamaicans and a great number of people outside of Jamaica specifi-cally in Asia and South America.
It apparently seems that the Jamaican Minister of Finance and the Public Sector believes that the IMF has ceased to behave like a petulant child of affluent parents, who lends the poorer kids his bat and ball only to inform them of the new rules which tip the odds heavily in his favour. Minister Shaw believes that the IMF has indeed grown up and he would like if all of Jamaica believes this too. But is the IMF a better playmate now or are we in for another sitting of the same story?
One of the major grouses with the IMF over the years has been the use of Structural Adjustment, which are policy changes dictated by the IMF as prerequisites for new loans or lower rates on existing loans. These Structural Adjustment Programs (SAPs) range from forcing governments to devalue the currency of the country to the privatizing of state run companies and many other policies which many feel undermine the
ability of governments to exercise their national Sover-eignty. The IMF has always defended its SAPs by say-ing that that the “conditionalities” are there to ensure that the loans are used to further the IMF’s founding goal which is to eventually decrease poverty.
In a 2003 release the IMF admitted that many of its policies had not fostered any growth in many poor countries and might even have contributed to the failure of some economies like Argentina for example. This supports many critics claim that the while the IMF strives to promote economic stabil-ity, most of its member states have suffered banking collapses since 1980 which have done more dam-age to GDP far more than any other time in the Post Depression Era.
So has the IMF noticed that there are a lot of bad feelings being thrown its way? Apparently. Since the turn of the millennium the IMF has become more “us-er-friendly”. User countries are implored to find com-mon grounds between their needs and the conditions set down by the IMF with the implementation 2006 reform agenda known as the Medium Term Strategy which was set out to enhance the role of the mem-ber countries in decision making processes and let-ting countries feel more like guests at the table rather than the indentured help. The surveillance of mem-ber countries by the IMF has also come under reform with the 2007 passing of a measure which replaced the IMF’s 30 year old method of analyzing economic outcomes.
One recent major success story of the IMF is the im-plementation of a Policy Support Instrument (PSI) in Nigeria which was concluded in late 2007. Nigeria benefitted greatly from the PSI which is aid structured for countries which do not need or want regular IMF assistance.
The IMF has certainly tried to clean up its image for the better part of this decade but we as Jamaicans will know soon enough whether the rich bully has grown up or is only playing dress-up.B
USIN
ESS L
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EHas the IMF really changed?
or is Jamaica in for another sitting of the same story?
Story continues below
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Question: I saw an article promoting mutual funds as a good option for people who are looking to invest. How can I benefit from putting my money into a mutual fund?
Answer: A mutual fund is one of the invest-ment choices that more persons are considering as for their portfolio. Here are ten key things to learn about mutual funds:
1. What is a mutual fund? It is an investment vehi-cle managed by a professional company that pools together investors’ funds to purchase assets such as stocks, bonds and money market instruments.
2. How does a fund manager select assets? The fund company has specific objectives dictating how it can invest money collected from investors. These details are found in the prospectus of the mutual fund.
3. How do I decide which mutual fund to invest in? Funds can be classified by their investment strategies and the types of assets invested in. Inves-tors should match the objectives of the fund with their own investment objectives.
4. Where can I invest in a mutual fund? In Ja-maica, a mutual fund has to be registered with the Financial Services Commission. You can invest directly with the mutual fund company or through its agents.
5. What do I get when I invest in a mutual fund? Investors purchase shares or units in a fund. The number of shares you can get for your money is dependent on the individual price of each share.
6. How is the fund price determined? The fund price is found by calculating the value of all the assets that are held by the fund, subtracting any expenses incurred in the running of the fund, then dividing by the total number of shares available.
7. How do I make money from mutual funds? You profit when the value of the share price increases over what you initially paid for it. You would have to sell the shares to receive your gains. Some funds offer payments, called distributions, based on trad-
ing gains or income received. 8. Are fees charged when I invest in a mutual fund? Some funds have sales charges, some of which are applied when you buy into the fund, and some when you wish to sell your shares. Op-erating fees can also be deducted from the fund’s value.
9. What are the benefits of investing in mutual funds? Investors can rely on the expertise of the fund managers to make investment choices; they can get a diversified portfolio at a lower cost; liq-uidating mutual funds shares is usually easier than individual stocks.
10. What are the risks of investing in mutual funds? Returns are not guaranteed; it is difficult to project future profits; fees can negatively affect the value of your investment; you could lose all or a portion of your principal.
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10 Smart Steps to: Learn about Mutual Funds
Provided by: Financially Smart Services
Financially S.M.A.R.T. Services is Ja-maica’s number one source for prac-tical, down-to-earth and independent answers for all questions relating to personal finance. Get more money smart advice at www.financiallysmart-online.com. Email [email protected] with comments or questions.
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