The tragedy of the central bank
How does a country face a crisis of confidence involving the Minister of Finance and the Governor of the Central Bank, and the Prime Minister sees it fit to leave the country to attend a CARICOM Summit?
I admitted to you that last week’s article was easily the hardest I’ve had to write thus far because of the deep level of introspection required to see things for what they are. These are the classical signs of a banana republic.
You might not have totally agreed with my assessment last week and perhaps you might have felt I was a bit harsh. However, this week’s debacle involving Dr Delisle Worrell, Governor of the Central Bank of Barbados, and Chris Sinckler, Minister of Finance, ought to make Barbadians pay serious attention to what is taking place.
I am on record for expressing the view that Dr Worrell has embarassed himself professionally and, by so doing, he has allowed himself now to be embarassed personally by the Minister of Finance. Sections 47, 48 and 49 of the Central Bank Act outline clearly the conditions under which the Governor should act to maintain the 2:1 currency peg or what we economists call monetary stability.
Since his initial appointment and subsequent reappointment, Dr Worrell has increasingly behaved as if he is an extra member of the Freundel Stuart Cabinet rather than the Governor of the Central Bank of Barbados. This public bust-up is totally the responsibility of Prime Minister Freundel Stuart because he has presided over the utter mismanagement of both the public finances and the Central Bank of Barbados.
It is absolutely preposterous that the Minister of Finance can seek to fire the Governor for administrative concerns when the Central Bank has been making huge financial losses over the last three years. It also is absolutely preposterous that the Minister of Finance can seek to fire the Governor for when the Governor has not held a public press conference in over three years.
It is again absolutely preposterous that the Minister of Finance can seek to fire the Governor for administrative concerns when he has overseen the printing of money to support government expenditures which has clearly now put the 2:1 currency peg in jeopardy. All of these actions were sanctioned by both Stuart and Sinckler by virtue of their reappointing Dr Worrell in 2014.
The existing senior management at the Central Bank also must take full and collective responsibility for allowing the internal management of the institution to fall apart. It seems the Board of Directors is now scrambling to seek absolution for this sad state of affairs.
The Prime Minister appointed the Minister of Finance who then appointed the Governor and the Board of Directors. Since the Prime Minister is responsible for this current situation, he should dismiss both the Minister and the Governor. He also should throw himself at the mercy of the people for presiding over the worst economic management of this country that has caused his predecessor to ask “how did we get back here?”
Some years ago, Gypsy sang the calypso “Captain, the ship is sinking” which is now most applicable to the situation in Barbados even though Barbadians still seem oblivious to how serious the economic circumstances really are. Whatever the verdict of the court today, the Central Bank as an institution has suffered serious reputational damage and the repair job will be no small task.
I have said long ago that if Barbados were a football team, the Central Bank — not its Governor but the institution itself — is our goalkeeper and is the one player that cannot
be substituted. Therefore, it must be relied upon to do what it has to do to achieve its objective.
In that vein, the goal keeper does not leave the 18 yard box. However, the management of the bank has allowed the Governor to play the game as if the bank is a midfielder or striker through the printing of money, leaving us, Barbadians, exposed at the back to devaluation.
In our current situation, our goal keeper should be on the goal line and not even venture anywhere near the six year line because of the seriousness of our economic crisis. However, our goal keeper is in the centre circle arguing with our last man – defender (Minister of Finance) whilst the game is still in play. In the meantime, the captain has left the field and has said not a word to anyone.
For the avoidance of doubt, Mr Stuart must be reminded that he is the captain and the ship is sinking. He is the current captain of the football team called Barbados. Examining his approach, it seems to us watching the game that he is neither interested nor cares. In the circumstances, the only honourable thing to do is call for a substitution.
What is perhaps most alarming is we all seem to be going through the motions waiting for someone else to take charge of the situation when, clearly, the captain and his crew have signalled to all and sundry, that they have prepared their life vests and rafts (10 per cent increase in salary, pensions) and are preparing to launch to try and reach the safety of the nearest shore. Meanwhile, the rest of us are left to sink or swim.
(Ryan Straughn is a UWI Cave Hill and Central Bank of Barbados-trained economist and the endorsed Barbados Labour Party (BLP) candidate for Christ Church East Central. Email: email@example.com)