Leaked bank report says reserves in danger

The Central Bank report referred to by the Leader of the Opposition raises major questions about the government’s economic policies. While the deliberate expansionist thrust of those policies has been clearly enunciated, principally by Budget Minister Ralph Fonseca, they have never before come under attack from a source as credible as the Central Bank itself–or at least a significant faction within the bank. In a press release issued this afternoon, the bank described the document in question as a confidential internal memorandum, one of many produced from time to time to be debated by the Bank’s Board of Governors. The release went on to state that the nation’s finances are in fact in satisfactory condition with increasing foreign reserves and healthy recurrent budget surpluses. What the release did not do, however, is to refute the specific criticisms raised in the report, which, if anything are more inflammatory than described by Dean Barrow in his speech. Essentially what the report says is that the government induced liquidity in the banking system has created a huge demand for foreign exchange, which is draining our hard currency reserves and will soon threaten the stability of the dollar. To address the situation the report recommends an immediate raising of the commercial bank’s reserve requirements by two percentage points and a slowdown in government spending. With Central Bank Governor Keith Arnold and Minister Ralph Fonseca both out of the country, it is not surprising that Barrow’s accusations have for the moment gone unanswered. What is critical is that the issues be debated at a high and public level–sooner rather than later.