… Hit the fan!
“Let me lay it on the line as true as John 3:16. If you raise the Treasury bills limit by one billion Bajan dollars, even with the new notes, it will be spent locally and will find itself impacting negatively on our foreign exchange outflow.”
These words were taken from an article published by The Wild Coot in the DAILY NATION on 20th May, 2013. I made a horrible mistake for which I now apologize. The article was called Scary Billions. Not only was I referring to the intention to bring new money into the economic system to the tune of a billion Barbados dollars, but, I was referring to the reluctance of people to place one billion Barbados dollars brought into the island into the coffers of our Central Bank. My guess, and it is only a guess, is that they are worried that when they want it back, it would not be available. I am advised that while all of this was happening and The Wild Coot was in a ding dong, do or die, David and Goliath, guttaperk battle with our Central Bank, 500,000,000 dollars expected, did not materialize, (50 million dollars more than The Wild Coot predicted).
In what was a hope that they would heed the imprecation and implication of swearing on the Holy Book that this would happen; The Wild Coot warned Government to cease from borrowing to pay salaries, its efforts to pay off obligations and beating its head to collect taxes due in a wilderness with few oases. Maybe it is now too late to develop a mild stimulus as was suggested – something like pulling your hands from the lion’s mouth. The amoeba-like attention that the powers that be are giving to the urgent needs of the ailing sectors of our economy will certainly go down in history as a record for ministerial inertia.
Where did the 500,000,000 dollars go is anybody’s guess. No earnings from tourism, loss of confidence in bringing money into the island, spending of liquid resources on foreign goods, saying to the people that all was well and that they could spend as they like. Saying nothing was wrong with the economy, asking where we should cut, and horse dead and cow fat.
How was this situation not anticipated by the learned brethren when the head honchos got together on Fridays – as they say – to monitor foreign exchange defies explanation in the light of common sense. Expediency or carrying out of a political agenda! It seems that the money spent on the Central Bank would be better spent in paying Mr Barrack or the University of the West Indies. Let the Central Bank fend for itself.
“Wild Coot, that can’t work; better we shut it down.”
What shall the people do now? Reminds me of the La Fontaine fable “The two doctors”.
Two skilled physicians, Drs. Grave and Gay met by a sick man’s bedside day by day. While Gay was hopeful, Grave with grim authority pronounced that he must join the great majority. The treatments they prescribed were contradictory; but Grave’s opinion carried off the victory, and in due course the docile patient died. Each claimed a triumph for his chosen side. ‘He’s dead,’ quoth Grave; ‘th’ event confirms my view.’ ‘Had mine prevailed,’ quoth Gay ‘he’d have pulled through.”
Naturally, the Government is left with no alternative but to place restrictions on the use of foreign exchange. Banks will be instructed to refer requests to the Central Bank – Private Sector, see what’s in ram goat’s tail. The public reaction to this will be to hoard, not repatriate and surreptitiously engage in these activities – as happens in Jamaica where the going rate for dollars is now 100 Jamaican dollars to one US. (In 1958 it was one dollar twenty US to one dollar Jamaican).
Irrespective of the outside world being chaotic, we did not have to be likewise. There are many countries that are thriving. We have 280 000 people to feed as against other countries with millions.
Should we blame the Central Bank? Are they now like Pilate when Jesus was his victim?
Advice to the Minister!
But when the prince who trust in them is a man of courage who is able to command, who is undismayed by adversity, who has not neglected his other defences and can keep up the morale of his subjects by his orders and by his example, then such a man will never be deceived by them… – The Prince.
• Harry Russell is a banker. Email: [email protected]