“THE CENTRAL BANK has lost its way.” That statement must carry a significant ring of truth. I take my hat off to Harold Codrington for publicly making it, as is reported.
He joined the Central Bank of Barbados around the same time that the Wild Coot was engaged to start our Barbados National Bank some 45 years ago. It must have been with a heavy heart that such a statement could have come from him after a lifetime of dedication.
What I find inconsistent is the delivery of the economist Dr Justin Robinson in his address at the monthly lunchtime meeting of the Democratic Labour Party on December 2. The two positions do not make sense. Should there not have been a correlation? There should have been no “on the one hand, then on the other hand, but on the third hand”.
The Wild Coot’s voice is hoarse from hollering to the people of Barbados that what is happening at the Central Bank for the last seven years does not make sense. His perspective is that of a commercial banker. Perhaps his failing is that he is not an economist, although once or twice he has looked at economic books – part of a banker’s training. Is Dr Robinson not a director of the same bank where Harold Codrington worked for over 45 years? So therein lies the inconsistency as seen by the Wild Coot.
What confuses the fragile mind of the Wild Coot is, why are the perspectives not on the same page? Is not Dr Robinson also the chairman of the National Insurance Scheme? Is not that scheme heavily (some say too heavily) supportive of the Government’s direction, hence the supportive role of the Central Bank as it turns the switch to the printing press?
This is serious. I cannot “sheath my sword” when there is argument. The printing of money is leaving Barbados little elbow room for any non-devaluation approach to the International Monetary Fund (IMF). The IMF has been consistently opposed to the Central Bank’s printing of money as a means of financing the deficit and debt of Barbados.
The minister refuses to draw back from the practice of “destruction”. Does he not realise that he will have to live in the same destroyed and devalued Barbados? He is reported as saying that he liaised with members of the IMF, and that they did not feel that a non-devaluation approach by Barbados would pass their board. Somebody should remind the minister that even if he were asleep, three years have elapsed since 2013 and that our situation is worth a try at negotiation.
Worthy of a read is the interaction of the veteran columnist Pat Hoyos who recounts meeting with Royal Bank’s Marla Dukharan of Trinidad and Tobago. I take the liberty to quote from his article recounting the words of the lady in the BARBADOS BUSINESS AUTHORITY of December 5, 2016: “The fiscal deficit widened 60 per cent y/y (i.e. 2015/2016) to BBD$242 million in H1 FY2016/17 and the CBB financed 234 per cent of this deficit, to the tune of BBD$566.3 million in just six months – the same level of CBB financing for the entire FY2015/16, the CBB report revealed.”
We cannot go on like this. The above simply means that everything is out of control. “The Central Bank has lost its way”.
The Wild Coot witnessed at first hand the impoverishment of the Jamaican people as devaluation tightened its grip on especially the poor and forced the middle class to migrate to Florida. But even so, Jamaica was still exporting and able to feed itself. However, it could not service its foreign debts. And so the foreign debts were discounted on the world market. The consequences of that was a further devaluation imposed on the Central Bank and the assets of the country by external vultures. In plain language, foreign investors sold their debt at a discount leaving the purchasers of the debt to make harsh demands on Jamaica.
The report that the government of Guyana will not accept Barbadian and Trinidad currency means that there is fear that they will not be redeemable by the Central Bank in US currency. Simple! Our Minister of Finance and the supporters at the Central Bank should realise that they are playing with fire and that they hold the well-being of the citizens in their hands. To where would they devalue the Barbados dollar, and for how long would it stay at the peg?
• Harry Russell is a banker. Email: quijote70@gmail.com
