In the last few days, the pub­lic de­bate on the dis­tri­b­u­tion of for­eign ex­change has ben­e­fit­ted sig­nif­i­cant­ly from the pub­li­ca­tion of two well-ar­gued, con­se­quen­tial con­tri­bu­tions on the is­sue of whether the Cen­tral Bank should dis­close this coun­try’s top users of for­eign ex­change, as a pre­vi­ous Cen­tral Bank Gov­er­nor, Jwala Ram­bar­ran, did in De­cem­ber 2015...and for which he was fired.

The first con­tri­bu­tion is Cen­tral Bank Con­fi­den­tial­i­ty, Du­ties and the Pub­lic In­ter­est, by UWI St Au­gus­tine Prin­ci­pal Prof Rose-Marie Belle An­toine, who is the pre-em­i­nent le­gal schol­ar in the re­gion, as well as be­ing the au­thor of Con­fi­den­tial­i­ty in Off­shore Fi­nan­cial Law, Ox­ford Uni­ver­si­ty Press, 2013.

The sec­ond es­say is The Cen­tral Bank’s Du­ty to Dis­close by Dr Ter­rence Far­rell, who holds a PhD in eco­nom­ics, and a law de­gree, and is a for­mer deputy Gov­er­nor of the Cen­tral Bank of T&T. He served for 15 years as a di­rec­tor of Re­pub­lic Bank Ltd and its suc­ces­sor com­pa­ny, Re­pub­lic Fi­nan­cial Hold­ings Ltd, which is the re­gion’s largest fi­nan­cial in­sti­tu­tion. I be­lieve he is T&T's fore­most com­men­ta­tor on eco­nom­ic and fi­nan­cial mat­ters.

Prof An­toine as­serts that the Cen­tral Bank Act con­tains pro­vi­sions that clear­ly dic­tate that mon­e­tary pol­i­cy and, by ex­ten­sion, eco­nom­ic pol­i­cy are the pre­serve of the min­is­ter/gov­ern­ment and not the sole dis­cre­tion of the Gov­er­nor.

She then cites, in part, sec­tion 50 of the Act. Sec­tion 50 states, in full, the fol­low­ing: “The Min­is­ter (of Fi­nance) may, af­ter con­sul­ta­tion with the Gov­er­nor, is­sue to the Bank such writ­ten di­rec­tives of a gen­er­al na­ture as may be nec­es­sary to give ef­fect to the mon­e­tary and fis­cal poli­cies of the Gov­ern­ment.”

The ques­tion be­ing raised is: what is the mean­ing of “gen­er­al” di­rec­tives, in the con­text of sec­tion 50. That is be­cause else­where in the Act, (sec­tion 44F (5), it is stat­ed that the Cen­tral Bank “shall com­ply with any gen­er­al or spe­cial di­rec­tions of the Min­is­ter and shall act on­ly af­ter due con­sul­ta­tion with the Min­is­ter.”

Even if we ac­cept that mon­e­tary and fis­cal pol­i­cy, as out­lined in sec­tion 50, in­cludes is­sues of the ex­change rate regime and the for­eign ex­change al­lo­ca­tion pol­i­cy, do we ac­cept that the Min­is­ter of Fi­nance can re­quest the names of the top pur­chasers of for­eign ex­change in ac­cor­dance with the Min­is­ter’s dis­cre­tionary au­thor­i­ty to is­sue to the Cen­tral Bank Gov­er­nor “writ­ten di­rec­tives of a gen­er­al na­ture?”

I am not a lawyer, but would that not re­quire a “spe­cial” di­rec­tion or di­rec­tive?

In her com­men­tary, Prof An­toine asks, “Con­se­quent­ly, can a gov­er­nor refuse to dis­close in­for­ma­tion to the gov­ern­ment, or act con­trary to gov­ern­ment pol­i­cy?”

Far­rell re­sponds, “The an­swer to the first part of the ques­tion is that it de­pends on pre­cise­ly what in­for­ma­tion the gov­ern­ment re­quires.”

“...Gov­ern­ment min­is­ters may be “rep­re­sen­ta­tives of the peo­ple”, but they are al­so par­ti­san politi­cians. The pub­lic in­ter­est re­quires that there be safe­guards against par­ti­san po­lit­i­cal use of per­son­al da­ta and in­for­ma­tion, which might be dis­closed un­der the pro­tec­tion of par­lia­men­tary priv­i­lege.”

Far­rell con­tin­ues, “An­toine asks: ‘Is it log­i­cal or rea­son­able to ex­pect con­fi­den­tial­i­ty to pre­clude dis­clo­sure? My an­swer is ‘Yes’ if the re­quest by the gov­ern­ment is un­nec­es­sary, ir­rel­e­vant to pol­i­cy­mak­ing, or in­tend­ed for pure­ly po­lit­i­cal pur­pos­es.”

On the point of a min­is­ter of fi­nance ask­ing for in­for­ma­tion that is “in­tend­ed for pure­ly po­lit­i­cal pur­pos­es,” I would go fur­ther than Dr Far­rell:

1) The Min­is­ter of Fi­nance not on­ly wants the in­for­ma­tion on the top pur­chasers of for­eign ex­change for “pure­ly po­lit­i­cal pur­pos­es,” but, in my view, Prime Min­is­ter Kam­la Per­sad-Bisses­sar has weaponised the al­lo­ca­tion of for­eign ex­change in T&T.

As re­port­ed in this space on May 29, at a post-Cab­i­net news con­fer­ence on May 15, the Prime Min­is­ter man­dat­ed three of her min­is­ters to pro­duce a re­port on for­eign ex­change dis­tri­b­u­tion and leak­age over the past ten years.

The ten-year re­quire­ment of the re­port is not a co­in­ci­dence as it is the pe­ri­od in which the now Op­po­si­tion Peo­ple’s Na­tion­al Move­ment (PNM) had stew­ard­ship over T&T.

“Then this re­port, as I say, will be made pub­lic to iden­ti­fy the main users, the main fa­cil­i­ta­tors of this un­fair dis­tri­b­u­tion, and ex­plain to the pub­lic how this en­tire for­eign ex­change dis­tri­b­u­tion car­tel and con­spir­a­cy be­tween cer­tain op­er­a­tives and busi­ness­es was func­tion­ing,” she said.

T&T’s prime min­is­ter has, in ef­fect, pre­judged the al­lo­ca­tion of for­eign ex­change as be­ing an “un­fair dis­tri­b­u­tion,” de­scrib­ing the main fa­cil­i­ta­tors as be­ing part of “a for­eign ex­change dis­tri­b­u­tion car­tel,” who are in a “con­spir­a­cy” with “cer­tain op­er­a­tives.”

She has both weaponised and crim­i­nalised T&T’s bank­ing sys­tem and the coun­try’s largest users of for­eign ex­change.

Why? I be­lieve she is be­ing lob­bied hard by her par­ty’s large fi­nanciers who ar­gue that the dis­tri­b­u­tion of for­eign ex­change is the rea­son for cer­tain com­pa­nies pros­per­ing more than them. The fi­nanciers of the Unit­ed Na­tion­al Con­gress not on­ly want more ac­cess to for­eign ex­change, but they want to em­bar­rass the cur­rent large pur­chasers of forex by im­ply­ing that these com­pa­nies are fi­nanciers of the PNM;

2) In out­lin­ing its mis­sion, the Cen­tral Bank web­site states the fol­low­ing:

“The (Cen­tral) Bank shall have as its pur­pose the pro­mo­tion of such mon­e­tary, cred­it and ex­change poli­cies as would fos­ter mon­e­tary and fi­nan­cial sta­bil­i­ty and pub­lic con­fi­dence and be favourable to the econ­o­my of Trinidad and To­ba­go.”

One of the pur­pos­es of the Cen­tral Bank, there­fore, is the pro­mo­tion of ex­change poli­cies “as would fos­ter mon­e­tary and fi­nan­cial sta­bil­i­ty and pub­lic con­fi­dence.” Pub­lic con­fi­dence, as a re­sult, is an im­por­tant part of the Cen­tral Bank’s mis­sion.

Does re­veal­ing the names of largest pur­chasers of for­eign ex­change pro­mote pub­lic con­fi­dence in the Cen­tral Bank or in T&T? I think not, and on this I agree with Dr Far­rell who stat­ed, “Con­fi­den­tial­i­ty is the bedrock prin­ci­ple un­der­ly­ing pub­lic con­fi­dence in fi­nan­cial in­sti­tu­tions, es­pe­cial­ly banks. If peo­ple felt that their banks will give out their pri­vate bank­ing in­for­ma­tion and trans­ac­tions to gov­ern­ments, they would have no con­fi­dence in those in­sti­tu­tions.”

How does the rev­e­la­tion of the main pur­chasers of for­eign ex­change pro­mote such “mon­e­tary, cred­it and ex­change poli­cies as would fos­ter mon­e­tary and fi­nan­cial sta­bil­i­ty and pub­lic con­fi­dence and be favourable to the econ­o­my of Trinidad and To­ba­go?”

3) Prof An­toine ar­gues, “There is no doubt that the mat­ter of forex is an is­sue of vi­tal pub­lic im­por­tance—not on­ly how much is be­ing dis­trib­uted, but whether it is dis­trib­uted ­eq­ui­tably. Pri­vate cit­i­zens have suf­fered be­cause of in­ad­e­quate forex and en­ter­pris­es have gone out of busi­ness, there­by un­der­min­ing the econ­o­my. In my view, such an is­sue re­lates eas­i­ly to the core pur­pose and func­tions of the Cen­tral Bank.”

The rel­e­vant ques­tions here are which en­ter­pris­es have gone out of busi­ness?

• Are the failed en­ter­pris­es small, re­tail out­lets that want ac­cess to more for­eign ex­change in or­der to im­port goods for sale on the lo­cal mar­ket?

• Is it re­al­ly an as­pect of the core pur­pose and func­tion of the Cen­tral Bank to en­sure that every “pri­vate cit­i­zen” can set up a small busi­ness sell­ing for­eign goods and that SME would have ac­cess to for­eign ex­change “eq­ui­tably?”

• Or is it part of the core pur­pose and func­tion of the Cen­tral Bank to en­sure that those com­pa­nies that are us­ing for­eign ex­change as in­puts to earn for­eign ex­change by ex­port­ing, or are im­port­ing es­sen­tial foods and phar­ma­ceu­ti­cals, get favourable ac­cess to for­eign ex­change?

• Is it not ac­tu­al­ly part of the core pur­pose and func­tion of the Cen­tral Bank to pro­mote for­eign ex­change earn­ings above the needs of the re­tail­ers, at a time when T&T’s main for­eign ex­change earn­er, nat­ur­al gas, faces de­clin­ing ouput and volatile prices?

I stand by my be­lief that, at this point, the on­ly “fair” sys­tem of for­eign ex­change al­lo­ca­tion for T&T would be a man­aged float with an auc­tion by au­tho­rised forex deal­ers, which would de­ter­mine the ex­change rate and dis­tri­b­u­tion.

A man­aged float would re­sult in the al­lo­ca­tion of forex to:

1) Those will­ing to pay the high­est price for it;

2) Those who can make a prof­it from the pur­chase of for­eign ex­change at the high­est price;

3) Com­pa­nies that are pur­chas­ing for­eign ex­change to sell goods on the lo­cal mar­ket would on­ly suc­ceed if they op­er­ate in high-mar­gin or high-vol­ume busi­ness­es.

We have a for­eign ex­change regime in which de­mand far out­strips sup­ply at the cur­rent sub­sidised price, but every­one wants ac­cess to an un­limt­ed amount of for­eign ex­change at the sub­sidised price. That is sim­ply not sus­tain­able.