Delay in naming Governor disturbing

After ten years of sterling service to his country, Ewart Williams demits office next week as the Governor of this country’s Central Bank as he has come to the end of his second five-year term. Up to late yesterday, the Government had issued no statement on the appointment of a successor to Mr Williams and no one at the Central Bank or in the government could or would say for sure who that person would be.

Leaving the appointment of the someone to fill such an important office in the management of the country’s finances to the last minute is unacceptable, is hardly indicative of good governance or transparency, or likely to create confidence that there is adequate management and planning of T&T’s important financial sector.

The role of the Central Bank in the management of the country’s economy has never been as important in the nearly 50 years of T&T’s independence as it is today. During the period of Mr Williams’ stewardship of the Central Bank, the institution was granted additional powers to supervise the country’s insurance companies and pension plans on top of the traditional mandate to provide regulatory oversight of the nation’s commercial banks.

There are also ongoing discussions to bring the nation’s credit unions under the regulatory ambit of the Central Bank, which, if accepted, would mean that a majority of the savings of the population would be supervised by the Central Bank. The institution is important, as well, because its enabling legislation gives it responsibility for “the promotion of such monetary, credit and exchange conditions as are most favourable to the development of the economy” of T&T.

Given the mandate that Prime Minister Kamla Persad-Bissessar has provided to new Finance Minister Larry Howai to stimulate the economy, it is absolutely essential to T&T’s future rate of inflation and exchange rate that the best person be chosen as the next Central Bank Governor.

That’s mainly because the Central Bank Act gives the Governor unusual powers as he (or she) is both the chief executive officer of the bank entrusted with the day-to-day management, administration, direction and control of the business of the bank as well as the chairman of the board who presides over all its meetings.

Given the enormous influence that the Governor of the Central Bank has in determining the quality of life of the population—by the ability to affect the cost of credit, the rate at which prices increase and the amount of TT dollars exchanged for foreign currencies—it is crucial that the choice be someone who immediately inspires confidence by dint of their outstanding academic record or employment history.

Given the Governor’s vast portfolio of responsibilities, it also would have been ideal if the chosen one had been exposed to an adequate period of orientation, which could have been facilitated by an early announcement and appointment. As it is, whoever is chosen will be thrown in at the deep end and will be expected to lead the country safely to shore. It did not have to be that way.

In England, the second five-year term of the Governor of the Bank of England, Mervyn King, is due to expire next June. Yesterday, George Osborne, the Chancellor of the Exchequer (that country’s minister of finance), in a move aimed at scotching speculation about Mr King’s replacement, said: “There will be a proper process for appointing the next Governor. But that has not begun and will not until the autumn.”

That would mean that the process of finding a successor for the next Governor of the Bank of England is due to begin between seven and nine months before the incumbent is due to demit office. In this country, meanwhile, the process has been reduced to between seven and nine days.

Yesterday, as well, the attempt by a Labour MP to give a select committee the power to veto the appointment of the next Bank of England Governor failed at its first hurdle as lengthy speeches by Conservative backbenchers ensured time ran out for its second reading debate. But this at least shows that there are people in Britain who are thinking about improving the method of selection of their top central banker.