Confidence is arguably the single-most factor which influences economic growth in a country. And the task of creating and maintaining an enabling environment for such growth to occur always falls to Government authorities through the choices they make in determining the kind of policy framework to be adopted.
When the level of confidence in an economy is high, robust business activity takes place and it ultimately translates into strong economic performance. Such growth occurs because the private sector enthusiastically takes on the important role of “engine of growth” which it is assigned in the free market economic model that is dominant across the world today.
When the level of confidence in an economy is high, businesses take on a higher level of risk and invest in ventures which contribute to meeting market demand for goods and services, create much-needed jobs, earn foreign exchange which goes to pay for vital imports, and generate increased tax revenues so that Government can meet its various obligations, such as debt servicing and providing social services, such as health care and education.
Where the level of confidence is low, however, economies struggle to achieve growth and, more often than not, either stagnate or go into decline. Considering the disappointing performance of the Barbados economy over the last eight years, it is fair to say that a drop in confidence has been a major contributor to the various challenges which this island has experienced.
With welcomed signs last year of a pick-up in economic growth that was forecast to continue this year, it is indeed unfortunate that turmoil has surfaced at the top level of a key institution –– namely the Central Bank –– which plays a critical role in the management of the economy. Late last week, news surfaced that certain members of the Central Bank’s Board of Directors had asked Minister of Finance and Economic Affairs Chris Sinckler to remove the Governor Dr Delisle Worrell from office.
The matter came to a head last evening when the High Court held a rare Sunday sitting to hear an urgent application from Dr Worrell for an injunction to block an attempt by Mr Sinckler to fire him. Dr Worrell was reportedly given an option to resign or be fired. The injunction was granted and it means that, at least for the next two days or until the issue is resolved, a situation will exist where, it can be argued, that the Central Bank is headed by someone who no longer enjoys the confidence of the Minister of Finance and the Government by extension.
This is obviously bad news, especially at this critical juncture for Barbados’ faltering image within the international financial community, and represents a potential setback for the economy. It is unclear whether the move to get rid of Dr Worrell is in direct response to the request from the particular members of the Central Bank’s Board, or Dr Worrell’s recent public criticism of the fact that Government was continuing to rely on the printing of money by the Central Bank to finance the huge fiscal deficit, or if it is a combination of both.
We believe the public has a right to know and a statement on the matter is required from Mr Sinckler. A question which obviously arises is whether anyone has already been identified as a replacement and, if so, who that person is. The fallout with Dr Worrell definitely comes as a shock because while the Opposition Barbados Labour Party was saying all along that it had no confidence in him, the Freundel Stuart Government was his staunchest defender.
Indeed, as a reaffirmation of the administration’s confidence, Dr Worrell’s contract was renewed for a second straight term just over two years ago. The decision generated some controversy as Dr Worrell, who is in his 70s, is well past the official retirement age. Dr Worrell was also at the forefront defending the Stuart Government’s controversial economic policies, especially during the past three years, when there was quite often deafening silence from the administration.
In public office, people come and people go because no one is indispensable. However, what matters most is the national interest. In handling this obviously delicate issue, we believe every effort should be made to ensure that the national interest is safeguarded, instead of jeopardized. The days ahead promise to be quite interesting as the island watches with bated breath to see how this latest drama will be played out. We hope for a speedy resolution in the national interest. Regaining any lost confidence, however, is not something that can be fixed overnight. Achieving such an outcome always takes some time.