Last week was not good for ei­ther the Fi­nance Min­is­ter or the Cen­tral Bank. The forex is­sue dom­i­nat­ed news­pa­per front pages. Af­ter a few ob­fus­cat­ing press re­leas­es and so­cial me­dia posts, Min­is­ter Im­bert was forced to re­in­state the spe­cial Ex­im­Bank forex fa­cil­i­ty al­beit at a re­duced quan­tum, down to US$25 mil­lion from $30 mil­lion.

Next, the Privy Coun­cil’s ap­peal to re­verse the Au­di­tor Gen­er­al’s right to ju­di­cial re­view was sum­mar­i­ly dis­missed. The Privy Coun­cil did not find it nec­es­sary to lis­ten to op­pos­ing ar­gu­ments. One Law Lord asked why Mr Im­bert was not him­self sub­ject to the same in­quiry.

These mat­ters re­flect poor­ly on the Fi­nance Min­is­ter’s judge­ment. He shares cul­pa­bil­i­ty for the Privy Coun­cil de­ba­cle with the At­tor­ney Gen­er­al who ought to have known that this case stood lit­tle chance of suc­cess. The ap­peal was a waste­ful abuse of pub­lic funds. It does not in­spire pub­lic con­fi­dence that the af­fairs of the state are be­ing well man­aged or that the pub­lic in­ter­est is up­per­most.

Both mat­ters raise un­com­fort­able ques­tions. Com­plaints about re­strict­ed ac­cess to forex have been per­sis­tent and are on­ly like­ly to get worse if the cur­rent pol­i­cy is main­tained. How­ev­er slow­ly, the of­fi­cial for­eign ex­change re­serves have been in per­sis­tent de­cline over the last ten years. Through­out the pe­ri­od gov­ern­ment has run fis­cal deficits that fu­el the de­mand for for­eign ex­change. Fur­ther, by in­creas­ing its for­eign bor­row­ings, the gov­ern­ment is in­creas­ing its for­eign ex­change debt ser­vice re­quire­ment which ex­ac­er­bates the forex out­flow.

The re­duc­tion in cred­it card lim­its has con­tin­ued re­in­forc­ing the point that ac­cess to forex is in­creas­ing­ly prob­lem­at­ic. At­tempt­ing to solve the prob­lem with bu­reau­crat­ic de­vices or by in­ves­ti­gat­ing com­mer­cial banks are not mar­ket-dri­ven so­lu­tions. De­mand for forex is greater than the sup­ply and the short­age re­quires a mar­ket ad­just­ment, ei­ther by in­creas­ing the sup­ply or by let­ting the float­ing rate mech­a­nism work.

The Cen­tral Bank has been silent on this mat­ter and has giv­en Min­is­ter Im­bert am­ple time to recog­nise the fu­til­i­ty of his ap­proach. A fixed peg is in­com­pat­i­ble with a float­ing rate mech­a­nism. In­stead, we are wit­ness­ing the re-im­po­si­tion of for­eign ex­change con­trol by the com­mer­cial banks with the tac­it com­pli­ance of the reg­u­la­tor, the Cen­tral Bank.

Like the forex is­sue, the Au­di­tor Gen­er­al’s re­port on the $2.6 bil­lion rev­enue short­fall is cause for con­cern. The mat­ter will not go away and can­not be swept un­der the car­pet. The Au­di­tor Gen­er­al is the coun­try’s of­fi­cial whis­tle-blow­er. S116 (2) re­quires the Au­di­tor Gen­er­al to give an opin­ion on the pub­lic ac­counts of the GORTT an­nu­al­ly and ac­cess to all ac­count­ing records. S 116(3) am­pli­fies that right and S116(6) en­shrines the in­de­pen­dence of the of­fice in­di­cat­ing that it “shall not be sub­ject to the di­rec­tion of any oth­er per­son or au­thor­i­ty.”

Yet the Au­di­tor Gen­er­al was de­nied ac­cess to a re­view of the Cen­tral Bank’s ac­count­ing sys­tem to de­ter­mine whether the $2.6 bil­lion dis­crep­an­cy has been sat­is­fac­to­ri­ly re­solved. The Cen­tral Bank claimed “con­fi­den­tial­i­ty”. How could the gov­ern­ment’s bank ac­counts at the Cen­tral Bank be con­fi­den­tial if the high­est law, the Con­sti­tu­tion gives the Au­di­tor Gen­er­al the un­tram­melled right to ex­am­ine all pub­lic ac­counts?

The stew­ard­ship of the Min­is­ter of Fi­nance and the Cen­tral Bank links these two mat­ters. There are ques­tions which must be an­swered.