Prime Minister of Barbados Freundel Stuart addresses 40th Anniversary Gala of the Central Bank of Barbados at LESC, Two Mile Hill

{EDITOR’S NOTE – This is a very long and straightforward history of the Central Bank, if you are looking for revelations from ye olde PM, forget it! The captions to the photos of this event will have a more intriguing story…}

I am pleased to share this special occasion with Ministry of Finance, Board of Directors, the Governor and staff, specially invited guests and clients of the Central Bank of Barbados.

The occasion of our being here this evening is the 40th Anniversary Gala to celebrate the Bank’s achievements since its establishment by Act of Parliament in 1972.

Take it from me that the Bank’s best days now lie ahead of it since, just upwards of two decades ago, I satisfied myself that life, in fact begins at 40. When I look around this room I am left in no doubt that I am not without allies in that firmly held conviction.

The Governor advises average Barbadians frugality yet one can only wonder how many thousands of dollars of taxpayers were used to pull off this massive gala? Would it not be better if they just gave everyone a simple pen and $100 then have some BBQ wings & macaroni with Kool Aid? Give staff some shares and free training instead, more profitable all around, no?

When Barbados became independent in November 1966, not everyone believed that a country with a land mass of only 166 square miles, without abundant natural resources, with a population of just over 232,327 (from the 1960 Census), and an economy overwhelmingly dependent on agriculture, could survive and prosper. Indeed many believed that when the “Wind of Change” that fuelled the postwar Independence Movement stopped blowing, several ex-colonies would revert to significant dependence on the Metropolitan powers that had colonized them for decades or that they might even become failed states.

The fact that Barbados proved them wrong could be attributed to several factors. Foremost among these was the enormous investment in its human resources which this country has made – and will continue to make. Within 10 years of the historic watershed decision in 1961 to give every Barbadian child access to free primary and secondary education, Barbados was producing highly competent and well trained personnel in sufficient numbers to manage the major institutions of an Independent country. The turbulent years in the world economy from 1968 to 1972, including the collapse of the original Bretton Woods arrangements, were a kind of baptism of fire for a new nation.

By 1972 it was abundantly clear that if our economy was to grow and meet the diverse employment, consumption and investment needs of a better educated population, Barbados had to acquire greater control over its financial and economic affairs. During his first term as Prime Minister of Independent Barbados, the Right Excellent Errol Walton Barrow realized that his vision of a diversified economy that could sustain a higher standard of living for Barbadians would be frustrated by the limitations of membership of the Eastern Caribbean Currency Authority (ECCA).

APOCRYPHAL - "Mr Bourne, I said I would NOT be entertaining any questions, why do you persist in going on about the proverbial sounding of the clapper of a bell?"

To begin with, the ECCA, was established in 1965 to serve the colonies that remained after the collapse of the West Indies Federation. It did not, however, have the full powers of supervision and control of a Central Bank. It was incredibly difficult to co-ordinate the operations of the large, powerful international banks in eight widely dispersed countries at different stages of development.

In addition, as Prime Minister and Minister of Finance, he found it time-consuming to personally sign off on every transaction of the nation’s nascent Exchange Control Authority. In any case, Jamaica (1960), Trinidad & Tobago (1964), and Guyana (1965) had demonstrated by then how essential it was to have a Central Bank in place to pursue the unique, national goals of an independent jurisdiction, and to encourage the development process.

Established by an Act of Parliament on the 2nd May, 1972 this new institution, the Central Bank of Barbados, now has its ideals reflected in the following Mission Statement, namely … “to foster a sound economic and financial environment which promotes the development of its stakeholders and encourages a culture of excellence and leadership“.

The next project CBB can embark on is to teach their staff how to pose for a Media shot when trophies are presented.

Confidence in Barbadian leadership of the fledgling institution was demonstrated, in the appointment of the first native Governor, Dr. Courtney Blackman who took up his appointment in June 1972. During the next 15 years, with the help of the IMF and other international financial institutions, he carefully laid the foundations for the success of the Central Bank of Barbados. Successive Barbadian Governors of the Central Bank, all beneficiaries of our education system, have relentlessly pursued the mission of sustainable economic growth and development.

Today that mission is being fuelled by the Vision of the Central Bank of Barbados …..”to create and maintain a caring, happy, dynamic world class organization within a co-operative culture“.

Kester Guy was the recipient of the 2012 E.I. (Emotional Intelligence) Award and he actually got the Governor to give a rare belly-laugh as seen in this picture...

As we celebrate its 40th Anniversary we may ask, with justification, has the Bank lived up to its Mission and Vision as above articulated?

I believe that in order to fully appreciate the achievements of the Central Bank of Barbados over the past 40 years, it is necessary to understand the nature and seriousness of the tasks it undertook in 1972. Its purposes, as set out under Section 5 of the 1972 Act are:

(a) to regulate the issue, supply, availability and international exchange of money;

(b) to promote monetary stability;

(c) to promote a sound financial structure;

(d) to foster the development of money and capital markets in Barbados;

(e) to foster credit and exchange conditions conducive to the orderly and sustained economic development of Barbados.

As such, the Bank is also the chief depository of Government funds, with the related responsibilities of fiscal agent, advisor and banker to Government; manager of public debt; banker to commercial banks; supervisor of the operations of commercial banks and other financial institutions; administrator of foreign exchange control; formulator of monetary and credit policy; custodian of the external reserves of Barbados; and monitor of financial and economic conditions in Barbados, the Caribbean Community and the world beyond.

Sadie Dixon was the evening's compere for the function; however on another area, too many events in Barbados now are attempting to seek International standards, which may not always be so translatable across the waters - when I did News on tv there was hullaballoo, be it a producer screaming in my earpiece or a floor manager gesturing at the side of my view or a flash of a camera from a visiting journalist, yet I cannot enter while a performer is singing at a banking fete? Please! Once I entered they were saying I'd have to sit in the back, my name is not Rosa Parks, I looked for a Videographer and asked where the Media table was and sauntered up front and sat with the other reporters and GIS personnel despite CBB staff calling for me to return and go and hunker down in the back? I think NOT!

With these legal guidelines and powers, the Central Bank of Barbados has systematically pursued its objectives. Starting with a Secretariat, and an Accounts and Public Debt Department in 1972, it evolved over the years with the establishment of Departments and Divisions that specialize, inter alia, in:

• Research and Economic Analysis
• Banking and Currency
• Foreign Exchange and Export Credits
• Management Information Systems
• Internal Audit
• Bank Supervision
• Human Resource Development
• Facilities Management, and
• Financial Stability Reporting.

In the process the Central Bank of Barbados has become an effective institution that has won the respect of Governments, International Financial Agencies, commercial banks and other financial institutions across the world including the other one hundred and eighty-five central banks. The Central Bank of Barbados, therefore, has every reason to celebrate its major achievements over the last 40 years.

(At the podium) Michael West of De La Rue, the minting firm who prepares Barbados' paper currency is probably one of the few men who can look either Alexander Skarsgard and/or Anthony Wood in the eye - see where the mic reaches? Just above his sternum! See how Dr Worrell compares in vertical atmosphere...

That an institution is only as good as its staff none will want to deny. One of the most outstanding achievements of the Central Bank of Barbados has been its ability to attract, train and keep high quality staff. Small wonder, then, that amongst the awardees here this evening are members of staff who boast as many as 38 years association with this institution.

I should like, therefore, to congratulate the entire staff of the Bank for the strength of character, the commitment to excellence and the embrace of loyalty of which their stewardship at the Bank is so impressive an example. The number of staff has increased from a complement of 5 in 1972 to more than 270 today.

There's going to be a new $20 bill to observe the Central Bank's four decades, but it was very interesting how Michael West from De La Rue told Dr Worrell the commemorative plates being consigned to the CBB's treasure trove were not to be used to start issuing tender, which seems to hint at how some folk wonder if the CBB is printing funds for Qualitative Easing which can devalue currency in the long run?

Every Governor, from Dr. Courtney Blackman to Dr. DeLisle Worrell, has relentlessly pursued the vision of the organization, and from the inception supported efforts to involve all staff in decision making; offered performance-based incentives; encouraged employee training and development, and strengthened industrial relations. Credit must also be given to the work of the CBB Staff Association (founded in 1975), and the Sports and Social Club which succeeded it in 1987, for helping to enrich the culture of the Bank.

Enlightened and creative approaches to staff development such as an Human Resource Business Partnership Initiative, Talent Management, Career Streaming and Emotional Intelligence have raised the gaze of members of staff to new and hitherto unimagined horizons.

Not unrelated to this is the reputation for scholarship which the Bank has built. I feel obliged, therefore to pay tribute to the restless curiosity and indefatigable intellectual energy of Dr. DeLisle Worrell. He has contributed much to the building of this reputation.

PM Stuart claims Dr Worrell is noted for his 'telling it like it is' yet considering the Governor has never contradicted the PM nor Finance Minister Sinckler, when Dr Worrell "tells it as it is" what is he saying, and who said it first?

It is clear that Dr.Worrell endorses and lives what the renowned economist John Maynard Keynes had to say on the importance and power of ideas. Said Keynes: “…Indeed the world is ruled by little else. Practical men who believe themselves to be quite exempt from any intellectual influence are usually the slaves of some defunct economist….Soon or late, it is ideas, not vested interests, which are for good or evil.”

Periodic reviews, especially those marking the 10th, 25th and 30th Anniversaries of the Bank have, not surprisingly, paid tribute to the Bank’s commitment to the values of integrity, transparency, respect, empathy, high performance, innovation, development, inclusiveness and accountability.

Another major achievement of the Central Bank of Barbados has been its outreach to the public, resulting in the raising of the level of financial and economic education among all segments of Barbadian society. In his evaluation of the first decade of the operation of the Central Bank of Barbados, G. Arthur Brown, former Governor of the Central Bank of Jamaica, admitted that: “The Central Banks first had to remove the veil of mystery and secrecy from the large area of money, credit, interest rates, and the other facets of the monetary and credit sectors.”

Other astute observers, including the late Rt. Hon. J.M.G.M. Adams, have publicly acknowledged the enormous contribution which the Central Bank of Barbados has made to strengthening the island’s democracy through the provision of timely and reliable information to the general public. Today, Barbadians are fully informed on economic and financial matters through the Bank’s authoritative Monthly Economic and Financial Statistics, Quarterly Reports, Annual Statistical Digest, Annual Reports, Financial Stability Reports and other periodic publications, which are available in both hard-copy and electronic forms.

In that connection, I digress to commend the Bank for the creative presentation of the Annual Report for 2011. That the emphasis of Barbados on the pursuit of the Green Economy has not escaped the Bank’s attention and has, in fact, qualified for its promotion is evidence, were any needed, of the extent to which the Bank has chosen to reflect the direct relationship between the environment and the overall viability of the Barbadian economy.

Yet another major achievement of which the Bank should be proud is its maintenance of good relationships with successive Government administrations with different political philosophies and world views. Even though the Bank enjoys operational autonomy, it is ultimately accountable to Government. Hence opportunities abound for differences in diagnoses of the country’s economic ailments, and the appropriate remedies for those ailments. Despite this, all the reviews of the performance of the Central Bank of Barbados have shown that no political party has ever felt able to question the integrity of the Central Bank.

Dancing Girls for observing the staff with 38 years of Service, their costumes were fresh & innovative probably when Caesar was a teenager in millennia elapsed far off...

The Central Bank of Barbados has adopted a holistic approach to the overall development of Barbados. The design of the Tom Adams Financial Centre was intended to enable the Bank to make a significant contribution to Barbados’ social and cultural wellbeing. The Frank Collymore Hall, the Grand Salle, and the Cathedral Plaza allow for a range of social, intellectual, cultural, and recreational activities and testify to the Bank’s commitment to meeting the varied needs of the Barbadian society.

The lunchtime lecture series connects the Bank and the University of the West Indies, Cave Hill Campus, and the Schools’ Programme connects the Bank to the secondary schools. The Bank’s promotion and support of the National Independence Festival of Creative Arts (NIFCA) has given a much needed fillip to the arts and has helped to identify the creative arts as a potential growth area for economic development. Its ongoing support for the Frank Collymore Literary Endowment Awards has enabled increasing numbers of talented Barbadians to consider writing as a viable career option. Scholarships to students, and its many contributions to charitable causes, permit the Bank to reach out to individuals and communities across Barbados.

As a small open economy that depends crucially on tourism and financial services, Barbados’ prosperity is vulnerable to changes in the economy of our major trading partners. Every Governor, therefore, has had to face crises not always of our own making, and the Central Bank of Barbados has had to play a key role in providing solid and timely advice on the basis of which critical decisions would be made.

So was it from about 1973 when Barbados was confronted by dramatic increases in the price of oil.

Likewise between 1981-1983 when the Barbadian economy floundered as a result of the worldwide recession.

Rather than bouquets and ceramic globes, did they ASK what the CBB employees would prefer as a prize for their devotion over the years? If it was me, I'd like either a $500 voucher at Pages or a free tune-up & service at a Garage or maybe even a set of tyres, but that's me... yet I am sure CBB workers would have their own ideas if time was taken to learn what they wanted?

Then again in the early 1990’s the country and its Central Bank faced one of our most severe tests. In the depth of the world recession, the foreign reserves of Barbados were almost wiped out, with serious knock-on effects.

One decade later, Barbados was faced with yet another crisis. The events of 9/11 disrupted air travel with a severe consequential impact on the Barbadian economy.

As if this were not enough for a vulnerable small island developing state, in 2007/8 Barbados fell victim to the global financial crisis which ushered in the worst recession the world has experienced in nearly 100 years. It came in the midst of a process of globalization characterized by both trade and capital market liberalization, a cumulative technological revolution and an interconnectedness that facilitated cross border financial flows at an unprecedented speed and in unprecedented volumes.

The vital part played by the Central Bank of Barbados in providing the employers, trade unions and the government in the Social Partnership with timely, reliable information and advice, and its further role in taking the appropriate regulatory action, allowed Barbados to absorb these shocks and to steer clear of social dislocation. Since the pegging of the Barbados dollar to the U.S. dollar in July, 1975, the Bank has assiduously protected the Barbados currency. With equal fervor, the Bank, by carefully drafted guidelines, has protected Barbados from the threat of money laundering and the financing of terrorism, and has let slip no opportunity to defend and promote the International Business and Financial Services Sector.

The CBB “Economic Review” of December 2011, quoted an assessment of the devastating effect of the current recession as follows:

The current global financial crisis has been described by Aisen and Franken (2008) as unique, owing to the level of wealth destruction which it precipitated (estimated at US$50 trillion or one year’s world GDP), its unparalleled global scale, and its overall severity – in that it hindered credit access to businesses, households and banks and choked off economic activity worldwide. Undoubtedly, the impact was felt in the Caribbean, a region that was already at risk in the context of global change. The Caribbean is at risk due to its economic vulnerability as a result of trade dependency along with the fragile nature of the export economy and exposure to natural disasters such as hurricanes, storms etc.

The Report further explained that while our major tourist markets remained in recession and while the price of oil imports (which accounted for 25% of total imports) and food imports (17%) remained high, the prospects of rapid recovery would remain poor.

In January 2012, on the other hand, in the Central Bank’s “Financial Stability Report, 2011“, the highly respected current Governor of the Central Bank of Barbados, Dr. DeLisle Worrell was still able to say that: “Despite weak global and domestic environments, the Barbados financial system remains robust…. Banks remained highly liquid, well-capitalized and profitable….. No bank is at risk of insolvency unless the economy contracts by more than 20%.

The very timely and frank assessment of the economy, in the Central Bank’s latest review of the Barbados economy up to the end of March 2012 carefully examined key economic indicators, and reached certain conclusions. I thank the Governor of the Central Bank, Dr. DeLisle Worrell, for being honest with us and “telling it like it is“. On the positive side, he reported that:

• The Central Bank’s foreign exchange reserves increased by $3.8 million.

• Real output increased by an estimated 1.5%, stimulated in part by a 2.4% growth in tourist arrivals.

• The fiscal deficit was reduced from 9.1% of GDP in fiscal 2010/2011 to an estimated 5.4% in the fiscal year ended last month.

• This outturn is on target with the Government’s Medium Term Fiscal Strategy (MTFS), which aims to reduce the ratio of Government debt to GDP from fiscal year 2013/14 onwards.

On the negative side he observed that:

• The rate of unemployment averaged 11.2% for 2011, and the inflation rate for 2011 was 9.4%, driven mainly by rising oil and food prices.

• Government debt increased to the equivalent of 74% of GDP at the end of March 2012, compared to 72% a year earlier.

However, his overall assessment was that: “The Barbados economy remains stable, and we may be witnessing the beginnings of a slow recovery, but there is some distance further to the resumption of sustained economic growth.”

The Government, with the support of the Central Bank, has not only been vigilant, but also proactive. The Medium Term Fiscal Strategy, 2010-2014, in direct response to the worsening of the fiscal position in 2009, and the Medium Term Development Strategy, (MTDS) which set out a broad framework of policies and programmes to be pursued over the period 2010 – 2014, were designed to guide the country towards recovery from the current global recession, with the assistance of the Central Bank.

Tourism, Agriculture (with emphasis on agro-processing), Alternative Sources of Energy, the Cultural Industries, Sports and Information and Communication Technologies were targeted as potential growth areas. The Bank has launched a website dedicated to alternative energy issues. A Green Economy Scoping Study for Barbados is now available. The onus is now on the better educated and enterprising Barbadians to take advantage of the opportunities presented, to network with investors at home and abroad, and to take advantage of the increasing number of niches identified for the creation of both employment and wealth.

In response to the question which I raised earlier, I am sure that you will agree with me when I say that over the past 40 years the Central Bank of Barbados, as the fiscal agent of Government, provided the highest quality advice on policy and action.

My own view, as Prime Minister of Barbados, is that the Central Bank of Barbados has always acted cautiously on the strength of its profound understanding of the complexity of economic affairs, and has had the wisdom to realize that impulsive, poorly though out action can have negative unintended consequences. Basically it has taught us over the years that there are no quick fixes, and no magical solutions to the modern challenges of economies operating in an interconnected global market place.

I salute the Board of Directors and the Governor and Staff of the Central Bank of Barbados on the Bank’s 40th Anniversary. You have every reason to celebrate your achievements and the attainment of a highly valued, well-nigh indispensable role in the Barbadian economy and society, in the region and indeed, in the world.

You can indeed say that you have lived up to your Mission of fostering in Barbados a sound economic and financial environment which has promoted the development of its stakeholders and has encouraged a culture of excellence and leadership over the last 40 years.

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