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Rambarran v PNM Gov’t exposes lie of Central Bank’s ‘independence’

Just when we most need our leaders to stand together and assume their joint responsibility for guiding T&T through the rough waters of an economic downturn, we get instead a fireworks display of cheap shots.

Hostile relations between a Dr Keith Rowley-led Government and the Governor of the Central Bank were always on the cards given the then Opposition PNM’s declared lack of confidence in governor Jwala Rambarran.

Photo: Central Bank governor Jwala Rambarran. (Courtesy Afi-global.org)
Photo: Central Bank governor Jwala Rambarran.
(Courtesy Afi-global.org)

With a change of government and no change in the position of either government or governor, it was only a matter of time before the differences would explode with serious consequences for all.

Beneath the fireworks display, however—the confrontation which has been simmering since 2014 and is now erupting in full public view—is yet another example of the institutional anomaly that defines our dysfunctional governance system.

If we’re not careful here, we could easily end up in another constitutional crisis of the kind that broke out between prime minister Patrick Manning and house speaker Occah Seapaul in 1995 and later between PM Basdeo Panday and president ANR Robinson.

Despite our many assertions of institutional independence, the hard reality is that the entire system is the creature of the government which, in our case, boils down to whichever Prime Minister is in office. This is the true meaning of the politics of maximum leadership.

In appointing the Central Bank Governor, the President acts as no more than the government’s functionary in carrying out the government’s decision to appoint.

Photo: President Anthony Carmona (right) swears in Prime Minister Dr Keith Rowley. (Copyright Reuters)
Photo: President Anthony Carmona (right) swears in Prime Minister Dr Keith Rowley.
(Copyright Reuters)

This has always been so and it was still so in July 2012 when then prime minister Kamla Persad-Bissessar announced the appointment of Jwala Rambarran at the end of a two-day cabinet retreat in Tobago: “I am very pleased to announce that the Cabinet of the Republic has made the decision to appoint Mr Jwala Rambarran, financial economist, as the Governor of the Central Bank of Trinidad and Tobago.”

Contacted by the media for an immediate response, Mr Rambarran acknowledged the political authority in his appointment: “Thank God, thank the Prime Minister and Cabinet for choosing me to be the next Central Bank Governor.”

If there is any value to the confrontation between the Government and the Governor, it is that it pierces yet another of our illusions about the nature of our power system.

The system works beautifully when all the parts are in political sync. When the parts are out of political alignment, as in the current case of a PP-selected Governor in a PNM administration, disharmony is inevitable unless one party agrees to conform to the wishes of the other.

Photo: Finance Minister Colm Imbert. (Courtesy Ministry of Finance)
Photo: Finance Minister Colm Imbert.
(Courtesy Ministry of Finance)

Although the Governor-Government dispute has been exacerbated by certain personality issues, the problem goes far deeper than the merely personal. It is inherent in the nature of the system.

If, as a society, we openly faced the fact that the Central Bank Governor is a political appointee, then there would be no question that, like any other such appointee, he would serve or not, at the pleasure of the government.

If, however, we wish the appointment of the Central Bank Governor to be above party politics with the office-holder surviving changes of political administration, then the system should be changed. In this case, the Government should submit its nominee for parliamentary approval with input from the opposition and Independent bench.

Whatever the legal merits or demerits of the Governor’s position, including his declaration that he will be in office for the remaining 19 months of his term, neither the Central Bank nor the country is served by him getting into a war with the government or key sectors of the society.

Confidence, not law, being the decisive condition, Rambarran’s position as Governor will become untenable if he loses the trust of the government, the banking sector, the business sector, the trade unions and members of the public.

Photo: Central Bank governor Jwala Rambarran.
Photo: Central Bank governor Jwala Rambarran.

Last week, the dispute claimed its first casualties when the Governor went public with the names of businesses that had received the largest allocations of increasingly scarce foreign exchange over the past three years.

In contrast to the howls of protests from the business and banking sectors, the disclosure could not have been better calculated for winning him public support.

Stung by the banks’ continuing refusal to sell them comparably paltry sums of foreign exchange, the public welcomed the Governor’s figures as hard evidence of the banks’ discriminatory attitude in favour of big business.

Beyond the hurt, however, few are likely to support the idea of their own bank giving their confidential banking information to a third party, much less having that third party release it to the media without consultation or permission.

Outside of this drama lies the greater challenge of managing the economy through rough waters.

Photo: United States dollars. (Courtesy Shutterstock)
Photo: United States dollars.
(Courtesy Shutterstock)

The responsibility lies squarely on the government to develop a social justice policy for sharing the burden of adjustment, including the allocation of foreign exchange. This is not a matter to be left to the market but to be guided by policy sensitive to the needs of all competing interests.

The second involves public education.

The huge foreign exchange allocation to big businesses is far more telling about the nature and structure of our foreign consumption patterns than about the businesses themselves.

Governor Rambarran was completely right in pointing out that “the insatiable demand for US dollars that exists in Trinidad and Tobago will always trump whatever distribution system is in place.”

Change will come only by changing the values that drive our taste patterns and determine our spending habits. No amount of naming and shaming will make a difference as long as we, the consumers, are willing to line up and buy.

Photo: An online shopper prepares to make a purchase.
Photo: An online shopper prepares to make a purchase.

What is needed is a massive consumer education programme designed to promote healthier eating, more thoughtful buying, greater planning, and better living.

This is where our leaders’ energies need to be focused. Not on cheap shots and cheap points.

AboutSunity Maharaj

Sunity Maharaj
Sunity Maharaj is a journalist with 38 years of experience and the managing director of the Lloyd Best Institute of the West Indies. She is a former Trinidad Express editor in chief and TV6 head of news.

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38 comments

  1. I think you are spot on Dan, Kenneth. I expect a devaluation mid 2016

    • It’s overdue, unfortunately! Could you imagine if Kamla Persad Bissessar won? No recession would have been declared, I am sure

    • Of course! We would’ve never known…the economy would be limping along…but we need some strong real action not pettiness. Diversifying the economy is about 20 years overdue

    • And I’m seeing 10/1 on the dollar

    • With all the ole talk, we’ve really been in a recession since last year…but with all the govt’s capex no one was talking. So the talk now with Roget trying to bully ArcelorMital is just ole talk and grand charge, he and the Unions should’ve been educating their members.

    • Savitri Maharaj We surely have to diversify our economy! The USA, for example, is working aggressively on reducing its dependence on fossil fuels, so its imports of oil and oil industry by-products will be significantly reduced causing oil prices to stay low. Economists are forecasting that some oil companies will be going into default.

    • Hence shale oil…but that project will slow down badly now. Renewables cant do it all but less dependency on fossil fuel has been a big fight. Hope Congress doesnt vote against it.

    • Roget is overplaying his hand trying to bring KCR into the AM thing. The way AM are acting, trying to force them to take back retrenched workers could cause them to pick up their tent and leave. Given the current circumstances, I cannot believe that the unions would be trying to force companies to operate in a non-profitable way. I can understand the government asking to consider ways besides layoffs but will the union accept pay cuts if that is what it takes?

      We know we are in for a hard time in the next couple (hopefully only) two years or so but it appears that someone else must shoulder the burdens. The marriage of labour and gov’t looks like divorce is on the horizon.

    • Savitri Maharaj Other areas are solar power, nuclear energy, wind power for homes and businesses, and battery powered vehicles. Sales of battery-powered vehicles are increasing and that technology is outstanding. So the oil industry will be feeling it. T&T has the human resources who are qualified and experienced to help the nation diversify accordingly. If T&T is serious, many of us will return to support.

    • Kenneth H. Ransome Jr. Im in the Renewable Energy industry and its hard work getting people on board. So I know what you talk about

    • Our economy is very different to the US…so.it is double the work here. If we do devalue it will make life a little harder to encourage the move to renewables. With further incentives there could be all sorts of people jumping on the bandwagon and messing it up. Its happening already

  2. There are people speaking about what happens in Developed countries, but do you know if large corporations in the US or UK did what these local businesses did, they would have been shamed for inconveniencing the average citizen? Just imagine, the irony of it all, where previously Marxist/Socialist unions are now supporting the Corporations and asking for the head of the whistleblower. Poor people were severely inconvenienced without an explanation or apology but now the PNM loyalists are ‘brake-sin’ for the financiers over the plight of the average person.

    Things real wrong side here boy.

  3. The PNM wanted Mr. Rambaran out a long time ago. When they came into Govt, they unleashed their pompeks in the forms of Imbert and Stuart Young. Mr. Young spoke of Mr. Rambaran during the budget debate in a manner to cause the listener to view the CB Gov with suspicion, even though Young did not say what the Governor did wrong.

    The question to be asked is, why? Why is CB Gov such a liability to the PNM Govt.?

    Why did Al Rawi and Imbert (allegedly) have a ‘ heated falling out’ during the Cabinet meeting last Thursday on this issue? There is more to this than just revealing info.

    These parties are at war, and there are huge stakes involved. The perceived victim is actually the perpetrator…..

  4. While I agree with most of this article, I think it is important to point out that the “insatiable demand” for foreign exchange is a direct result of our exchange rate being artificially propped up, which is unsustainable. Our currency should be 25-30% lower.

  5. Only in our Beautiful Banana Republic of T & T… the shit is allowed to continue year in year out!… just different players on a different day…Political Parties past and present are guilty of controlling the Central Bank activities…tell me if ah lie!! Every government in office have installed their own choice of Governor within the past 20 years. so there is nothing new with the present government wanting to replace the present Governor …but it does not matter which person is appointed …falling Oil and Gas prices will mean less money for the players demanding FOREX.

  6. Quite frankly.. we should all be able to get this data as part of freedom of information requests. Every time we struggle to access foreign exchange, we should understand exactly why the system is failing, and where we might access more. I have no issue with companies being named, but would like periodic disclosures as part of a more transparent public information process rather than reactionary chatter.

  7. Sunity, the Central Bank Governor is intended to separate the country’s monetary policy from the government’s fiscal policies. This is even the case in the US where the Fed Reserve Chairman operates in the same manner. I recall the legendary Greenspan had disagreements with a number of Presidents. The autonomy in essential and that is what the Act intended.

    To some extent, I do feel that the serious issues at hand have been missed in the furor over the speech and its content. We are talking about persons and behaviours while the actual problems remain unaddressed. Whether by design or not, I don’t know.

    I don’t have a problem in principle with your suggested changes but I think that the potential for conflict will always be there because it is inherent to the checks and balances in the position. These can and will spill over when the personalities involved don’t quite mesh as is the case now.

  8. This isn’t highly aggregated data. Would you be ok if your name was listed as the highest puchaser of foreign goods with your credit card with the amount stated in print? Because this is no different and it doesn’t really advance the discussion either.

    Aggregated data that would have been useful without giving any individual’s information would have been based on usage e.g.

    1. Amount spent on new cars
    2. Amount spent on foreign used cars
    3. Amount on retail goods
    4. Amount spent on industrial goods.
    5. Amount spent on foodstuff
    6. Difference in total sales of forex by corporate entities
    7. Amount spent on profit repatriation

    And your point about financial information disclosure is flawed because this level of detail isn’t part of any reporting requirement that I am aware of. You also neglect to consider entities like Pricesmart aren’t public companies in Trinidad.

    • Whose credit card was stated here ? There was no other data but aggregate foreign exchange usage published. We need to step back from the excitement and emotion and understand the data involved. Was there other data that might have also been useful? Sure. (And I’d love to know that too). But that wasn’t the question he was dealing with.

      We forget that it was Dr. Keith Rowley, in dealing with the $500m injection, its disappearance, the threat to our reserves who first told the public that “the first thing I want to find out is where the money went”.

      About disclosure requirements: As an accountant, what I’m aware of re required disclosures for listed companies in the US go far beyond this high-level data. My point about PriceSmart was not about their status in Trinidad. The point was about their intimate familiarity with international disclosure standards because of their listed status elsewhere.

    • I am also a finance professional so feel free to tell me what sensitive data listed companies are required to provide.

      I have no excitement and emotion on this matter. My point was simply that no entity should have its confidential banking information released lightly and it is exactly the same as your credit card usage data being revealed. As a legal entity, they do enjoy the same rights to confidentiality as a person.

      I maintain that this sets a dangerous precedent and that the intent wasn’t to illuminate the discussion otherwise the data I mentioned would have been the focal point.

    • Total foreign exchange usage – no details of for what, when or anything else. Almost useless from a competitive or privacy standpoint.

    • Kendall Tull and David Christopher Benjamin, Sunity has responded to your comments on the website. So you will have to click on the link to read and engage with her. Thanks

    • Great. So you know about corporations being required to disclose their assets, liabilities, revenues, expenses and profits etc. including detailed breakdowns and supporting notes. That the very concept of audited statements is to enforce disclosure of information, much of which many corporations would prefer to keep confidential. That in the US, the SEC disclosure requirements are not even restricted to actual historical facts but extend to projections of revenue and profit performance which have the potential of being seriously prejudicial at a competitive level.

      The reality is that “confidential” is not an inviolable label that covers everything. There has always been, and will always be a dialectic between what corporations want to keep “confidential” and what the public and the regulators want them to disclose in the public interest. That dialectic gets resolved in several ways including laws, accounting standards, and other reporting conventions. And it gets resolved not only after professional consultations but via public discussions like these. And different people in the discussion, having different interests, will have different perspectives on what the outcome should be.

    • While that is all very well and good, you still missing the point that the data released is not required to be released as part of any disclosure requirement anywhere and was done so in a prejudicial manner. I will say again that it is the equivalent of you being named as a top spender on foreign purchases with your credit card and the amount given. I sure as hell wouldn’t want that for myself and so I completely understand why everybody talking to their lawyers to find out if they have recourse.

    • Hi Kendall. I understand your position. I just don’t agree with it. I realize we have fundamentally different perspectives on what is ultimately important to us. That won’t be resolved here. We are just two of the myriad positions which are mow in the mix of this public discussion. I remain intrigued as to how it turns out.

  9. Even though this is a useful insight, it misses the point that it may be our third-world approach that makes us feel that “independent” professional operation is impossible without laws to force it upon us. We forget that in earlier times, despite everything that Sunity has said we actually tried to conform to the first-world approach even if we failed a few times. This also fails to make the distinction between the revelation of personal financial details and the release of the highly aggregated data that came out in this case. She (and we) also forget that the world’s idea of confidence in financial systems is mandating that corporations disclose, in excruciating detail, their operational and financial data once they access either the stock markets or government resources.

  10. Some good points Sunity but you didn’t mention that this isn’t the first time a sitting Central Bank Governor served under two different administrations or that it was designed this way as one of the checks against the government. It is for sure also not the first time there was friction between the Governor and the administration of the day. Indeed, it appeared that former Finance Minister Howai did not always see eye to eye with Jwala at times.

    Releasing the information on the large consumers may have been popular but it sets a dangerous precedent. As you correctly pointed out, international finance is a confidence game and we can ill afford to damage ours at these times.

    For my part, I would like to see an analysis of the impact of the changes made last year to the forex distribution system. There were good reasons to liberalise the distribution system as outlined in the IMF Article IV Consultation of 2014. However, I think the implementation was poor. I would be interested to know how the distribution of forex to the non-bank institutions was used and what guidelines, if any, were given for them to operate.

    I also think a discussion on forex hoarding, particularly by wealthy individuals and capital flight is missing. We all know this is a problem but nobody wants to quantify or acknowledge the issue.

    • Sunity Maharaj

      Kendall, Rambarran follows Euric Bobb and Ewart Williams in serving under different administrations. So yes, this is not new. My point about the political method of selection is that it creates the potential for conflict when the new administrations demand policy changes of the CB. I’m not convinced that the Governor’s term is deliberately designed as a check against the government, although we could investigate that further through the parliamentary debate of the initial CB legislation in 1964. For 22 years under the PNM, the issue of conflict arising from change of government would not have arisen. With change has come testy relations (which led to Bobb’s resignation) which have now escalated to open conflict. I think the solution lies is reviewing the appointment process to support greater autonomy of the CB and am therefore proposing that the cabinet nominate, not select and that the appointment be approved by Parliament.
      I completely agree with you about the need to widen the discussion. The conflict has opened up a number of issues that go well beyond the two parties, mainly about the banking sector and big business.