Leader of the Opposition, Kamla Persad-Bissessar says the Central Bank Governor must be held to account for what she calls "mismanagement at the Central Bank".
She made the call in the following news release:
"While speaking at the launch of the Central Bank’s Financial Stability Report 2020, Central Bank Governor Alvin Hilaire touted his “optimism” regarding the current state of the economy.
Given the severity of our economic crisis, one wonders what inspires this “optimism” expressed by the Central bank Governor. He either clearly doesn't read his own reports or wishful thinking has replaced data-driven monetary policy at the Central Bank.
According to the Central Bank’s Monetary Policy Report of May 2021, “Domestic economic activity contracted in the fourth quarter of 2020 primarily due to sharp declines in the energy sector, and indicators point to continued weak activity in early 2021.”
Also, according to the Central Bank’s Financial Stability Report “persons retrenched increased to 2,744 in 2020 compared to 1,530 in 2019,” and there was a contraction of Economic activity by a huge 8.8%”.
These are alarming statistics that need to be properly addressed by the Central Bank Governor.
But what is truly bizarre is hearing the Central Bank Governor said he “frowns upon debt” even as the PNM Government continues to borrow billions upon billions with little to no transparency as to how these borrowings are being spent. The Central Bank even boasts that T&T’s official reserves rose marginally to US$ 7 Billion from US$ 6.9 Billion in 2019, which they credit to “external borrowing and withdrawals from the Heritage and Stabilization Fund.”
This is the same as someone patting themselves on the back for taking out a credit card, going on a spending spree, then passing the bill to their children to pay off. It is future generations who will now have the burden of repaying the massive debt the PNM is incurring.
Hilaire predictably adopts the Government’s talking point of blaming the Covid-19 pandemic for this excessive borrowing, conveniently forgetting that the PNM dipped into the HSF multiple times starting as far back as 2016. The Rowley government was borrowing to pay recurrent expenditure well before the Covid 19 pandemic. The economic crisis our nation faces today is a result of the disastrous economic policies of the Rowley regime, all with the tacit approval of the Governor of the Central Bank.
Over the past six years, Hilaire has quietly stood still as the PNM emasculated the role of the Central Bank Governor and eroded the once-proud independence of this critical institution. Hilaire’s abysmal record as a willing accomplice to the Minister of Finance is there for all to see.
Firstly Hilaire massively failed the policyholders of CLICO by allowing the Minister of Finance to sell assets under the purview of the Central Bank such as “No Man’s Land” to the PNM Government in order to facilitate Rowley’s failed Sandals project. No explanation has ever been given as to the current status of this multi-million dollar asset.
Hilaire then sat idly by as the PNM Government amended the Central Bank Act allowing the Minister of Finance to access once confidential information on any employee at the bank. Though every former Governor of the Central Bank publicly voiced their concerns, Hilaire said nothing about this brazen act which effectively stripped the Central Bank of its independence, rendering it a division of the Ministry of Finance.
Then there was the $100 bill Demonetization fiasco in which for reasons still unknown, Hilaire allowed Stuart Young to practically take control of the Central Bank. Thousands of people including senior citizens were forced to line up for hours in a needless exercise that served as nothing more than a publicity stunt for the PNM.
Every democratic nation has an Independent Central Bank for a reason. Monetary policy is too critical to be under the total control of politicians. The role of the Central Bank is to provide economic stability, while the role of the Government is to craft economic policies which promote growth and development. Currently, neither the Central Bank nor the Government is doing their jobs.
It is clear that if Trinidad and Tobago is to emerge from this economic crisis, the Central Bank will first need to be restored as an independent institution."