Editorial | Why Brian Wynter should eye Barbados
Brian Wynter, governor of the Bank of Jamaica (BOJ), should keep an eye on ongoing developments in Barbados involving his counterpart, DeLisle Worrell, and Dr Worrell's boss, the finance minister, Chris Sinckler.
At the dead of night last Sunday, Dr Worrell's lawyers gained an ex parte injunction from a Supreme Court preventing Mr Sinckler from firing their client. The injunction was extended on Wednesday. The parties are to be back in court today for continuing arguments on the issue.
The rumours in Bridgetown prior to these dramatic developments were that Mr Sinckler had given Dr Worrell an ultimatum: either he tender his resignation or face the sack. The context in this for Mr Wynter is more than the fact of the constructive dismissal in 2009 of Mr Wynter's predecessor, Derick Latibeaudiere, after a falling out with his finance minister. It includes, too, the proposals for enhancing the autonomy of the BOJ.
The specific disagreement between Mr Sinckler and Dr Worrell, whose current contract has another two years to go, is not known. But we can reasonably assume that it includes differences over policy, notwithstanding that Dr Worrell's style of management and supposed lack of engagement with the press have been matters of some controversy in Barbados in recent times.
What is indisputable, though, is Dr Worrell's stellar reputation as a central banker and public intellectual, who has long lectured Caribbean governments, including Jamaica's, on the need for fiscal discipline and the merits of a fixed exchange rate - the latter long a feature of Barbados.
Dr Worrell was a deputy central bank governor during Barbados' fiscal crisis of the early 1990s. He was among the architects of the aggressive public-sector adjustments, including higher taxes and a containment of spending that fixed the problem and created the environment for a long stint of economic stability.
He, apparently, however, has not been quite as influential in the aftermath of the Great Recession of 2008 that hurt Caribbean economies. While Barbados' economy picked up a bit last year, growing by 1.6 per cent, the government is still to demonstrate the will to curb its habit of spending and borrowing. Its fiscal deficit for 2016 was eight per cent of GDP.
GDP lower than pervious years
Gross government debt, at 105 per cent of GDP, was slightly lower on the previous year's, when the IMF, in its Article IV review of last August, noted required funding of about 45 per cent of GDP, "mostly met by the Central Bank of Barbados, the NIS, and growing arrears".
Dr Worrell recently spoke on TV about the government's management of its fiscal affairs. He said: "We cannot continue to have a deficit and we cannot continue to have a wage bill as high as we are ... because the only way we are able to do this is by central bank financing." Indeed, sections 32, 45 and 46 of the act establishing the central bank, despite its sometimes circumlocutory language, provide clear cover for the printing of money.
Further, like Jamaica, ministerial authority, if exercised, has sway over central bank policy. That, in part, is what the IMF has suggested be changed for the BOJ in order "to improve central bank governance and independence", and strengthen its control over monetary policy and its focus on inflation.
Mr Wynter, no doubt, eagerly awaits the rollout of the proposed amendments in September.