CENTRAL BANK PRINTING MONEY
The vital importance of professional economics training and the experience of its practical application in government were amply demonstrated on Thursday, October 13, 2011 by two of Barbados’ most highly respected practitioners in this field, Opposition Leader Owen Arthur and Clyde Mascoll, the Barbados Labour Party ‘s lead spokesman on economic matters.
Speaking to the media at the Opposition Leader’s office in the West Wing of the Parliament Buildings in Bridgetown, the two BLP representatives showed the value of their training and experience to the nation and the party when they were able to reveal worrying aspects of the economy that had not been explained by Central Bank Governor Dr. Delisle Worrell in his recent review of the third quarter performance of the economy.
Devaluation of Dollar on the CardsFormer Prime Minister Arthur made it clear that the BLP took very seriously its obligation to draw to the attention of the public any matters that threatened to undermine the country’s stability and the welfare of citizens. In this vein he said he was putting at the centre of public discussion a matter of the utmost seriousness since it related to our ability to maintain the value of the Barbados dollar.
Arthur, Finance Minister for nearly 14 straight years, warned that the printing of money by the Central Bank on a large and sustained basis could lead to the devaluation of our currency and lamented that Worrell had the opportunity to draw this occurrence to the people’s attention at last week’s review, but had failed to do so. The Central Bank Governor using language which the ordinary Barbadian could not easily unravel, should have alerted the country to the fact that the Central Bank was now the chief financier of the government’s large deficit to the tune of $150 million and a recent Bank document had revealed that the Bank intended to continue and increase this procedure of the printing of money for the rest of the financial year.
The Political Leader of the BLP explained that money printing by the Central Bank had been indulged in since government had already virtually exhausted all other sources of financing. He recalled that Finance Minister Chris “Unclear” Sinckler would have earlier spoken on major policy occasions like the 2011-2012 Estimates and the 2011 Budget debates and had not mentioned that government planned to print money, something that the Medium Term Fiscal Strategy had not mentioned either.
Central Bank Board Must Take ResponsibilityArthur chastised Worrell for not taking the public into his confidence to explain how Barbados had come to such a sorry pass whereby the printing of money was at the core of government financing. For while the law allowed for such temporary and short term financing by the Central Bank, there was no legal provision or practice for the Bank to be the large scale and sustained financier.
Declared Arthur: “We are now on the brink and if this continues Barbados will be on the slippery slope of devaluation and all that this state entails. Government must pull us back from the brink.” However, we now have a “gloriously incompetent” Minister of Finance and an accomplice in Worrell who would not do what needed to be done and give the public an unvarnished account of our finances. He pointed to the fact that the Bank had given different versions of the rate of growth of the economy and had said Barbados should expect a “spurt” in growth , but the exact opposite had happened.
Furthermore, the printing of money was the worst thing that could be done with a fixed exchange rate currency whose value we would not be able to maintain if the printing of money continued. Arthur said that as a former member of the Board of Directors of the Central Bank , he knew that directors had to see that the interests of the country were protected and they now had to intervene and put the institution on course to ensure the stability of the economy, since the Bank had now “gone rogue” and had a “stabilisation coalition ” in action.
The Statistical Department ‘s survey on unemployment was based on scientific methods used all over the world, and these had been replaced by something Worrell had concocted because the department’s findings had proven to be an “inconvenient truth” to him and the government. This meant that a man like Worrell with professional training had ignored science because he and others were intent on hiding from people the truth about unemployment.
Productive Sectors Mismanaged by DLP The BLP leader said he had already deemed the Fiscal Medium Term Strategy a hoax since government was not building the productive capacity needed to put the country in a good position for life after the recession, and projects such as Merricks, Foul Bay, Pickerings, and Four Seasons had failed to materialise since the government did not know what it was doing., to the point where we were falling behind, were being left behind and could go under.
As far as he was concerned, the Central Bank no longer could be believed since its integrity had been undermined, and if the printing of money was not stopped we would pay a heavy price. He said he had already called for the resignation of Worrell, but now it was time for Prime Minister Stuart to act. Economist and Former Minister of State in the Ministry of Finance Clyde Mascoll also lent his voice and expertise in support of the condemnation of the extensive and massive printing of money by the Central Bank.
He noted that while historically the NIS could be relied upon to help finance the fiscal deficit, it was now being forced to get involved in on-budget matters and so was no longer able to take up government securities, at a time when the commercial banks were running away from both short-term and long-term government securities. This meant that the Central Bank had now positioned itself to be the main financier for government’s excessive spending.
The part-time lecturer in economics at UWI, Cave Hill, said that Barbados was now delicately poised and what was going on now was what had happened in Jamaica in the 1970s since Barbados was at a stage where government was spending $500 million more than it was earning. Barbados had already been categorised as being near ” junk bond status”, a condition in which it had never been before. Follow the link for video of the Opposition Leader’s Presentation: http://www.youtube.com/watch?v=RwlrGlGiXbs
BETTER MUST BE DONE!
Something bothers me.I ,to this day still have forms/literature for application of a Hardwood House.When my cousin and I went to look at the show houses we were informed that there was no need to pay in on these houses but rather to fill out the forms and return them to the office.
What I want to know is how Mr Mascoll has been accused of being part of a scam.I shall like a video placed on the BLP website explaining the concept behind that Project and what were the problems which prevented it from lifting off.
I shall also like to hear my party on a lot of the issues these poor-rakey excuses for a government are accusing them of and I want it available at my fingertips.