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Noted economist reacts to Central Bank’s report of $7.3 million in losses

A noted economist says it is crying shame that the island’s Central Bank has now found itself in a position where it has chalked up over $7.3 million in losses in 2014 – that’s double the loss it reported in prior year.

Ryan Straughn’s comments came even as the Bank’s Governor Dr DeLisle Worrell today assured that steps were being taken to achieve a turnaround in the Central Bank’s overall balance sheet, which has been in the red for the past four years.

On the heels of a 2013 deficit in the order of $3.7 million, the Bank made a loss of $7.3 million, bringing the accumulated deficit at December 31, 2014 to $22.1 million, according to the latest Annual Review of Policy Operation Report.

In a brief interview with Barbados TODAY this afternoon, the Governor acknowledged that a number of steps would have to be taken to ameliorate the institution’s loss position, which is said to have exceeded the Bank’s General Reserve.

However, Dr Worrell, who had earlier this year indicated that restructuring of the Bank would take place by the middle of this year and would result in a smaller team, said he would await the outcome of work by consultants before saying exactly what areas would be addressed and what specific steps would be taken.

Dr Delisle Worrell

Central Bank Governor General Dr Delisle Worrell

“We are in a process of renewal for the Central Bank because this is not the first year we have made losses,” the Governor told Barbados TODAY.

“So we have got to make some fairly basic changes in order to ensure that we are in a position where our expenses match our revenues.

“We have engaged with consultants to assist us in identifying options for that, then we will report to our board of directors, who will then make decisions going forward,” he added.

In response, Straughn said the Central Bank’s losses did not come as a surprise to him, even though he was of the firm view that they should never have occurred in the first place, given the Bank’s position of supporting the Government’s fiscal policy.

He insisted that steps should have been taken years ago to ensure the losses were minimized, while blaming them on “a lack of effective management”.

Economist Ryan Straughn

Economist Ryan Straughn

“With respect to the losses, the Bank, as the chief regulator and chief banker in the economy, it really should be in the vanguard of being able to cover its additional costs,” Straughn told Barbados TODAY.

“That above all else, [is] where the focus [should] be,” he emphasized.

The former president of the Barbados Economic Society also warned that the Central Bank’s deficit position stood to impact on the credibility of the country’s leading financial institution, pointing out that the Bank would most likely require a cash injection from the Government.

He noted that commercial banks had in the past taken actions early enough to ensure that they did not register losses.

“So the fact that they [Central Bank] are now looking at what they can do internally, raises some concerns to mind, because this is not the first time they have made losses,” said Straughn.

“The fact that the Central Bank may need some recapitalization, which could only come from Government if they are making losses, suggests to me that the management of the institution would have to be under greater scrutiny,” he said, while querying how it could advise Government on finances, when its own financial house seemed to be out of line.

“So if they are now presumably looking at what they can do internally, then I must say we are in for a sweet ride, because it really points to a lack of foresight in my mind.

“It is not a good thing because this is where the market is concerned, as far as the credibility of the Bank.

“I think it is a big issue as far as I can see with the fact that the Central Bank is making losses,” said Straughn.“I am not surprised at the loss, but what surprised me a little bit is the loss is so small.

“I was expecting a bigger loss given the amount of money they printed,” he added.

12 Responses to SHAMEFUL!

  1. Patrick Blackman May 27, 2015 at 8:52 am

    It is not unusual for a central bank to make a loss (minimal at that) as its revenue generating capacity is quite limited. The reference to the Federal Reserve Bank is not relevant as this bank is a privately held bank (it is not owned by the US government) and has far more power and influence than the central would every have.

    The economist needs to do some more research before he open his mouth.

    • Carl Harper May 27, 2015 at 1:37 pm

      Deal with the issues at the Central Bank. The losses have have been recurring and doubling due to poor management practices.

      Ryan Straughn does not need to do any further research. The fact are clear–Central Bank in disarray; Barbados in a mess.

  2. Gavin Dawson
    Gavin Dawson May 27, 2015 at 9:11 am

    All friends of this govt; including this Govt; are killing Barbados.

  3. harry turnover May 27, 2015 at 3:57 pm

    See now why Barbados is in disarray ??

  4. Patrick Blackman May 27, 2015 at 7:05 pm

    Recurring losses is not necessarily an indication of poor management. An erosion of the revenue base or a high cost more likely but I don’t see this as a major concern nor should it be a deterrent for giving government economic advice.

    I think the dear economist needs to understand the basics of central banking and stop being political. I am an economist as well (Monetary & Tax Policy) and I can say quite confidently that this is a non starter.

    • Carl Harper May 28, 2015 at 9:15 am

      Patrick Blackman (the economist): “…I don’t see [the massive losses at the Central Bank] as a major concern….”

      Tell that to those staff who are likely to lose their jobs at the Central Bank as a result of the $22 million dollars in losses sine 2008. If that isn’t poor management, then I don’t know what is.

      Read the following and go into denial, then “shoot” the messenger just as you have attacked Ryan Straughn:

  5. carson c cadogan May 27, 2015 at 8:02 pm

    Ryan Straughn is a BLP operative, what else do you expect from him?

  6. CHARLES WORRELL May 28, 2015 at 9:22 am

    You know, so often we are seeing persons whose knowledge is something that we need but whose integrity is so questionable, one must also question the motive from which they emerge.
    WHAT KIND OF NOTED ECONOMIST ARE YOU AND WHO MADE YOU THAT, when in the face of a billion dollar economy, you are talking about a $7.0 million dollar deficit as if the country gone to hell?
    WHY wont the Central Bank, like any other business operation not from time to time incur shortage and WHERE is the manual that says, “no deficits shall occur” and more importantly, who wrote it?
    HOW shameful is it if at all, for a bank to incur a shortage like any other business and WHAT makes it shameful? Mr. economist, are you also condemning other businesses ALL over Barbados as shameful because they incur losses? Is it not business, where losses occur, you put policies in place to recoup that loss and on and on?
    Sir, you have no integrity and whether you are a BLP or any other p, you have compromise your knowledge however deceptive, to win cheap spot light. This will not give it to you. You are intellectually dishonest and therefore, should not be given and ear until you show that you can balance knowledge WITH TRUTH.
    I wonder too, WHERE were people like you, WICKHAM, MASCOLL and the whole economics society WHEN Owen Arthur was giving away our bank? WHERE were you when our sugar was given over to Muritius; WHEN our plantations were being sold to T&T?WHEN Mr. Arthur paid FULL PRICE UP FRONT for the business park WITHOUT a stone being laid; WHEN cost over runs were eating us up? And on and on, we can go but WHERE were you? You came alive the minute Barbados said, ENOUGH and look to the Democratic labor Party to correct and get them back on track again and NOW, you are once again alive…wow!
    You sat back on watched as our economy go to a bad place and this strategy is still being uttered by Mr. Arthur, where we sell all we have and just collect some rent here and there; bow and kiss the backsides of those who come in and offer some minimum wage while they repatriate all they can from Barbados and have a good vacation in our Sun and Sea. This thought is hinged on one thing: WANTON DEPENDENCE and this is your expert guidance of our country. A country that held its own for years WITHIN its setting and now, its not even good enough to direct its own education or anything else. Yes, ALL of us will forever be guilty of sitting back and allowing our country to go down the drain LEAVING ITS CITIZENS BEHIND AS IT SITS IN THE ARMS OF THOSE FROM OTHER LANDS.

  7. CHARLES WORRELL May 28, 2015 at 9:27 am

    “as our economy went”

  8. Ralph Talma May 28, 2015 at 11:02 am

    @CharlesWorrell. 1. It is a pleasure to read your posting above. I concur fully with your final 2 paragraphs, and would only add how sad it is that it appears some people will be made redundant due to the need to balance the books.
    2. Those who lead must really do better.

  9. Patrick Blackman May 28, 2015 at 3:33 pm

    Carl Harper: There are two things:
    1:We can look at the impact these losses have on the bank as a going concern or

    2: the need for a restructured organization.

    As unfortunate as it may be, jobs are lost everyday and if the central bank has to rationalize its operations and eliminate jobs to remain a viable entity then that is the prudent thing to do.

    People in Barbados constantly believe that they are entitled to a job for life, things don’t work that way in life and it is about time we wake up and face the music.

    Charles Worrel: Good points even though I don’t get into the political stuff.

  10. Patrick Blackman May 28, 2015 at 3:40 pm

    Mascol’s analysis just provides a rehash of political nonsense, when he can address this issue with some measure of maturity then may be I can entertain his comments. The losses are minimal and to a large extent not significant in any respect.

    This grand standing by these guys is what causes problems for the country. When I read this stuff in the paper from here in Quebec where I live, it just makes me wonder if we have really developed as a country. We have to move pass this party crap and address real issues in an honest and non-partisan way, thats the only way Barbados can move forward. All of this nonsense for a few million, my god..


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