Home' Trinidad and Tobago Guardian : December 13th 2015 Contents SBG4 COVER STORY
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt DECEMBER 13 • 2015
It s become a public debate: is the Governor of the
Central Bank "obliged" to consult the Minister of
Finance before making critical announcements, like
his statement that the country was in recession, which
he announced last week Friday.
Under the Central Bank Act, as section 49, which deals
with relations with the government on issues of policy, it
states: "The bank shall keep the minister informed of the
monetary and banking policies pursued or intended to be pur-
sued by the bank."
And, on the issue of policy directives, the Central Bank Act
"The minister may after consultation with the governor issue
such written directives of a general nature as may be necessary
to give effect to the monetary and fiscal policies of the Gov-
The act makes the Governor the CEO of the bank and entrusts
him with the day-to-day management, administration, direction
and control of the business of the bank.
But one former Central Bank governor---who did not wish
to be named---told the GML Enterprise Desk: "I don t recollect
that the act makes it necessary for the governor to report to
the Minister of Finance on any issue or statement he wants to
make. If he is making a decision as opposed to a statement that
affects the Ministry of Finance, such as devaluing the currency,
then he is bound by tradition to inform and discuss the same
with the minister. However, revealing a fact, which is contained
in the monetary policy document is his prerogative."
The former Central Bank governor noted that, "the Central
Bank is independent. There is no legal obligation to consult
because, in that case, you just become a department of the
One former finance minister recalled that when the People s
Partnership government came into power in 2010 the then gov-
ernor of the Central Bank Ewart Williams was speaking about
recession in the public domain, but did not consult with the
then finance minister before making the public pronounce-
In the period 1997 to 2000 when Winston Dookeran was
governor of the Central Bank, he said he had a monthly meeting
with the finance minister to discuss issues which existed at the
time. Their job, he said, was to build confidence in the economy.
But Dookeran did not want to discuss the current public feuding
between the sitting Governor Jwala Rambaran and Finance
Minister Colm Imbert.
Economist Subhas Ramkhelawan is of the view, however, that
the public feuding between these two key financial towers must
be resolved. He said: "They have to work together and find har-
monisation in terms of fiscal and monetary policy."
On the issue of the minister awaiting statistics from the Central
Statistical Office (CSO), Ramkhelawan noted that, historically,
the CSO data has been unreliable and dated and this is not nec-
"The Central Bank gives credible figures to be able to pronounce
on whether there is economic decline for two, three or four quar-
ters," he said.
This view is shared by economist Indera Sagewan-Alli, who
said for the minister of finance to suggest that we look to the
CSO as a source is questionable. "This can only happen if the
CSO is functioning effectively, but for years it has been deprived
of funding and has been unable to perform its job."
Sagewan-Alli said the country had grown accustomed to the
Central Bank keeping critical data relating to unemployment,
GDP, inflation etc "so to reject data from the Central Bank has
She argued that the Central Bank Governor was merely stating
facts which had been in the public domain "when the cash cow
NGC announces a freeze on wages, we seeing lay-offs, gov-
ernment revenues declining, oil and gas prices falling, the foreign
exchange crisis, all those things are indicators the economy is
Sagewan-Alli further explained that oil and gas contribute
to 90 per cent of the country s earnings and, with prices falling
on both commodities, the economy would be affected. Succcessive
governments, she said, had failed to diversify the economy so
"we should not be surprised we are an economy that does not
shape its own future, we rely on the international market, what
we are seeing in the energy sector is not the economy but the
impact of global issues."
She is concerned about the public feud which seems to be
developing between the manager of the country s fiscal pol-
icy---the finance minister---and the manager of the monetary
policy---the Governor of the Central Bank.
She said: "I don t think that augurs well for the country.
While you want to ensure the Central Bank is independent of
the government, you want to ensure there is a good working
relation between both the minister and the governor. Both must
work together for the good of the country."
She believes the evolving scenario involves more than the
announcement by the Governor that the country is in recession.
She recalled Prime Minister Dr Keith Rowley saying prior to
the election that the Governor was not qualified to hold the
post, "which suggests he was saying that he (the governor)
should not be there."
The Governor of the Central Bank is appointed for five years.
While some argue the appointment is political, under the Central
Bank Act, the governor, deputy governor and all other directors
are appointed by the President.
The act states the criteria which the President
may use to terminate the appointment of the
governor or the deputy governor. Among the
criteria, if the person is found to be of unsound
mind and incapable of conducting his duties,
is convicted of any offence involving dishonesty,
is guilty of misconduct in relation to his duties, is absent except
on leave granted by the board from all meetings the board held
during two consecutive months or during any three months in
any period of 12 months, contravenes any provision of any pre-
scribed code of ethics in respect of which he is liable to ter-
mination of appointment or fails to carry out duties under the
act.On Friday, the Prime Minister told the Parliament that the
Cabinet had taken no decision to proceed toward the removal
of Rambaran from office saying: "If there is any person taking
action against the Central Bank Governor, the Government will
not be that person."
The Prime Minister continued to raise questions about the
Governor s pronouncement of a recession saying, "We have
received no data and we are asking what is the source of the
data. I am not aware that the Central Statistical Office has made
information available and, therefore, the reason for disclosing
it is questionable," he said.
The Prime Minister made it clear his government had no
problem acknowledging a recession if proper data shows this
to be so. He added that he had a "problem with arbitrary release
of data like that."
GML's Enterprise Desk
Economists advise Finance Minister, Governor:
for the good of the country
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