Submitted by Heather Cole (The Barbados Lobby)
We often think that some of the subjects that we took in High School and College are a waste of time and not practical to use in everyday life since we never used them again.
My last interaction with chemistry […]
was in third form but low and behold a few weeks ago the Acid Test came to mind as I read a newspaper article and it make me smile because I was finally able to apply it to a real life economic situation.
On Wednesday 11th November, 2015, the Central Bank Governor Delisle Worrell and the Minister of Finance and Economic Affairs, Chris Sinckler signed a trust deed for $70 Million for an Enhanced Guarantee Fund from the Inter-American Development Fund and the China Co-Financing Fund for Latin America and the Caribbean. On November 14, 2015, Barbados Today carried an article in which the CEO of the Small Business Association, Lynette Holder queried the Central Bank being the administrator of the Fund. She cited that Government already had a mechanism in place named Fund Access to disburse funds to small and medium sized enterprises.
The role of a Central Bank is to:
1. Advise the government on monetary policy;
2. Supervise the banking system;
3. Act as banker to other banks;
4. Act as banker to Government;
5. Raise money for the Government though issuing treasury notes and bonds;
6. Issue bank notes (cash, coins etc.) for circulation;
7. Provide stability by controlling inflation.
8. Compile economic statistics.
In order to carry out these functions, a Central Bank must remain independent from Government’s fiscal policy and must be uninfluenced by political party, that is why it is separate and distinct from the Ministry of Finance in a country. Political decisions should not influence the operations of the Central Bank. It must also not hold interest in any of the commercial banks. It does not lend to the public, neither does it hold deposits for the public. In essence, the role of the Central Bank is set in stone.
This leads one to ask why the Central Bank has gone outside of its mandate yet again. Last year during the CLICO scandal it was discovered that the Central Bank was illegally holding $5M in deposits for Leroy Parris who is a member of public, then there was the sale of junk bonds on the domestic market as well as producing economic statistics that are less than stellar. This brings into question the integrity of the Governor of the Central Bank.
There is no structure or staff in place at the Central Bank to disperse the loans from the Fund. There are already established procedures and staff at Fund Access to be competently responsible for the disbursement of the funds. One wonders if additional staff will be hired at the Central Bank thereby creating an anomaly in the system. At present there are no demarcation lines to prevent these funds from being used for another purpose. There are no mechanisms in place to verify how the funds will be used. There is no mechanism to verify that one cent of this money will reach any small or medium sized enterprise. Government has not provided a reason why Fund Access was over looked and not used to disburse the funds.
This opens the door for speculation regarding the motive of Government. It makes one wonder if there is some type of scam occurring because within the past few months, almost every article in the news with the Prime Minister or the Minister of Finance was in reference to the signing of documents for a loan. Could it also be that they are borrowing money supposedly for projects but the destination is really to repay Governments loans? Could that be the reason to lodge $70 Million in the Central Bank and not Fund Access? Will there be an audit?
One can also speculate that Barbados has crossed the threshold into Idi Amin style politics, where the primary functions of institutions were twisted in order for Government to manipulate the system. Is the Government using this method of fund disbursement to further divide the people along party lines? Will it allow their party supporters to be the only ones to get loans? Will this system be the new pecking order that may be added to the package for buying votes? If so it is wrong because the economic success of the people should not depend on political patronage. One can only wonder what the next event involving the Governor will be or what else is hidden away from the public view at the Central Bank.
Another speculation is that the Government is restructuring the Central Bank to broaden the range of its services because Barbados does not have a development bank. However, if this were the case, by now Government would have informed us that the Central Bank was assuming a development bank status and Fund Access was about to close its doors. No such announcements have been made.
Maybe there is a connection between this chain of events and former Prime Minister Owen Arthur’s request for a development bank, which he made in his address at the SBA Awards Ceremony early in November. He spoke then of the need for a development bank that would be a source of funds for entrepreneurs in Barbados. He wants a development bank but it does not appear that this will be an option the Government will be putting on the table anytime soon based on this action by the Governor of the Central Bank. If Mr. Arthur accepts the position to be the advisor of the Government joining the unholy alliance of the Governor of the Central Bank and the Minister of Finance he may be setting himself up to become the poster child of institutionalized corruption.
However being optimistic, I will be mindful of the fact that the Governor may do just as the fund is intended, which is to assist to small and medium sized enterprises. To justify my optimism, there needs to be an Acid Test. That test that I learnt by heart eons ago simply states that acid turn red litmus paper blue and blue litmus paper red.
There is an opportunity for all the small business men and women and all those who dream of opening their own business, the four thousand who did not make it to the University last year and the thousands who did not make it this year, as well as all those vendors of Swan Street who were removed by the police a few weeks ago. It is also an opportunity for small farmers as they can form a cooperative and apply to the fund for a loan to take the land off Mr. Ward’s hand that Bjorn Bjerkman no longer wants at a fair price of $1.3 M. These groups need funds to expand or start their business and the governor has $70M to assist them.
I am even willing to help the Governor to conduct the Acid Test. The best I can do is to extend an invitation on the behalf of the Governor of the Central Bank to all those whom the fund is intended including those mentioned above. All they have to do is arrive at the Central Bank and inform the Governor that they are in need, qualified and ready to apply.
Will the good Governor live up to the commitments to which he attached his signature? I am waiting for some well deserving souls to step forward to state with clear proof that they are indeed beneficiaries of that loan fund. Only after the test has been conducted will we know for sure the colour of the paper that the acid determined the Governor originally held in his hand.