The new Central Bank of Barbados Bill, which is to be debated in Parliament this Tuesday, has been described as important legislation, which will improve the governance structure of the institution and ensure it is always well managed.
Minister in the Ministry of Finance, Ryan Straughn, said the Central Bank is going to be a critical institution with regard to how Government reforms and transforms the way that things are done in Barbados over the next few years.
“It is almost as if we are taking fresh guard, to support the doing business environment going forward,” he stated.
Mr. Straughn said Government had to preserve the independence of the Central Bank so it could continue to function effectively.
He added that this administration had already introduced strict conditions for the bank’s use of money to finance government, and they had been further strengthened under the new legislation.
According to him, some of the significant changes in the legislation relate to the appointment of the Governor with regard to the duration of tenure, which is now six years, and that of the board.
He noted that usually when governments change, the directors of boards of institutions would offer their resignation.
“We have a slightly different structure where there will be staggering of appointment of directors, so that every year, a director will be appointed for a term – whether one or two years, as opposed to having all of them appointed at the same time.
“When we came into office in 2018, we didn’t dismiss the entire board of directors across the state owned enterprises, instead we deliberately kept persons appointed to the previous boards to ensure the incoming board of directors would have somebody with some institutional knowledge in order to facilitate better decision-making. We thought that was important because if government is to work properly, then you need a measure of continuity, especially in the context of the Central Bank, because the process of replacement of directors has to be carefully managed,” he stressed.
In the past, Mr. Straughn stated, the Minister of Finance could fire the Governor of the Central Bank. However, he explained, there is now an added provision that if the Minister of Finance wanted to relieve him of his duties, the recommendation must be supported by the Governor General or Head of State.
“That is a critical provision, so there is a double veto mechanism in place, so it is not seen as if the Minister of Finance can just wake up and decide that he will fire the Governor of the Central Bank,” he noted.
He posited that there was a time when the Governor would give advice to the public, which was regarded as trustworthy, for example, whether to save or tighten their belts, and generally speaking, the public would adhere to such advice.
He is of the view that the new Central Bank Bill would assist in restoring the public’s trust and confidence in the institution.