In an interview with economist Dr Dhanayshar Mahabir by reporter Shaliza Hassanali, the Sunday Guardian reported on July 15, 2012, as follows: “Mahabir said Rambarran must guard the independence of the CB. ‘If the Central Bank is seen as an arm of the Ministry of Finance you can get to a situation where it will become a tool of the executive arms of the State and it can put stress on the currency values.”’
Those views expressed by now independent Senator Dr Dhanayshar Mahabir back in July 2012, just after Jwala Rambarran had been appointed Governor of the Central Bank are as valid today as they were in 2012.
The issue of institutional independence is important in examining the relationship between the Central Bank and the Ministry of Finance. The relationship between the Central Bank and the Ministry of Finance must resemble that of the Attorney General and the DPP. The fact that there have been recent tensions between the Central Bank and the ministry is healthy for our democracy.
Whether it was tension over the dismissal of two Clico directors in June this year, or tension over the more recent announcement of a recession and the use of transparency in accounting for the allocation of foreign exchange since 2012, it is apparent that the Central Bank has acted independently regardless of the political directorate in power.
In the case of Clico, the company was successfully turned around and controversial payments were made. However, it is the more recent controversy that has drawn fire from the Prime Minister, the Minister of Finance and certain sectors of corporate T&T.
Jwala Rambarran’s major challenge now is that he has provoked a public debate about whether or not foreign exchange placed into the banking system by the Central Bank is public money subject to the traditional rules of transparency and accountability, or the rules of confidentiality between commercial banks and their customers. Before the foreign currency gets to the commercial banks from the Central Bank, it is public money.
From the time he was appointed governor, Rambarran was on the political hit list of some of the urban corporate elites and their surrogates. Terrence Farrell, a director of Republic Bank since April 2008, writing in the Express on July 16, 2012, had this to say about him: “The appointment of Jwala Rambarran as Governor of the Central Bank of Trinidad and Tobago is the latest instance of the continuing termitic assault on the institutions of State. It is the latest, but it will not be the last. Those of us who were hoping that this appointment would represent a departure from the Reshmi Ramnarine syndrome evident in the SSA, NGC, CAL, T&TEC, UTT and other State institutions were disappointed, but not surprised.”
His scathing comments were not well received by Afra Raymond, then president of the JCC, writing in the Express on July 23, who replied to Farrell and had this to say: “According to para 23 of the April 16, 2010, affidavit by the Inspector of Financial Institutions, Clico Investment Bank (CIB) did not file corporation tax returns for 2007, 2008 and 2009. I am reliably advised that means CIB did not pay corporation tax for those years. Yet CIB was somehow able to retain its banking licence throughout that period, and, upon collapsing, obtain an immediate bailout on most generous terms. Dr Farrell also tells us that the Central Bank needs to be ‘... a decisive actor when action is required ...’ Obviously, that standard did not obtain over the last decade.”
Based on Afra Raymond’s reply to Farrell in July 2012, it is patently obvious that Governor Rambarran has been “a decisive actor when action is required.” The problem for the Governor is that he does not belong to the urban social circles of the corporate elites who control the political economy of the country.
He is an outsider to them who also came from a very different social background from many of them. He does not sit among them socially and his professional status was unfairly attacked by the director of a major bank in this country, in writing, upon assumption of office.
The reality is that Governor Rambarran has been systematically demonised from day one for political purposes and the column by Farrell in the Express days after his appointment titled No Sacred Cows was not the only negative commentary based solely on political bias.
Governor Rambarran’s 2014 alteration of the original formula for the allocation of foreign exchange to financial institutions by bringing new financial institutions into the allocation process may have disturbed a proverbial “old boys club”, but it was never the sin or transgression that it was made out to be.
Governor Rambarran had the fortitude to let the country know that it was in a recession and also to share crucial information about foreign exchange usage in the public interest. There is talk that moves are being made to remove him from office to clear the way for the preferred choice of the new administration. That would be a political mistake.