THE SUDDEN AND contentious fracture of the previously harmonious relationship between the Minister of Finance and the Governor of the Central Bank which has exploded onto front page headlines within the past fortnight is an unfortunate matter.
It has to be dealt with firmly and without undue delay.
It is bad enough to have such a disagreement reach the public arena and occupy national headlines. It is all the more unfortunate given the immense challenges the economy faces; and confidence in the way in which we manage our national fiscal affairs is suffering as this matter worms its way through the court system.
That this matter has reached the court and was not be dealt with away from the glare of damaging publicity will indicate that the causes of the fracture are deep and go beyond the mere question of management style of the Governor even if that issue is a relevant factor. Harsh Central Bank economic advice may be at odds with the approach of the Ministry of Finance.
Recent public utterances by the Governor spoke of the bank’s views on how to deal with the fiscal deficit and the printing of money and the impact that these may have on the foreign reserves, while Minister Sinckler has said on the floor that he does not have to accept every piece of advice coming from the bank, even though he respects it.
This situation now cries out for a speedy resolution, because the type of decisive action which is required to restore the economy on the road to equilibrium cannot be most effectively carried out in the midst of this imbroglio. In fact, the Governor’s statement that if we continue on the path we are on we will end up with a devaluation suggests that the policy being pursued has failed and that a new strategy must be quickly adopted.
It is not the first time in the Commonwealth that a Central Bank Governor and a Minister of Finance have not seen eye to eye, and given the sensitivities of these positions, disagreements can occur. Both posts carry high public responsibility here, with the Central Bank Act clearly setting out among the purposes of the Bank, the duty to promote monetary stability and financial structure, two critical purposes at this juncture.
The courts will determine the fate of the Governor, but the Minister of Finance and the Government will suffer some political damage if the public accepts that the minister’s policies have failed, now that the court case focuses their minds on the economy.
Given the high profile of the bank and its Governor and the Minister of Finance in our scheme of governance, we feel that the Prime Minister should take charge of this situation and demonstrate the high and positive leadership on the management of the economy which is consistent with his office. He must deal with this problem, which has the potential to become a full- blown crisis; and in so doing he should not exclude a Cabinet reshuffle!
The Prime Minister appears to have a management style in which he allows his ministers to manage their departments and to solve problems that may crop up with input from him on limited occasions.
This dispute has wide implications, not the least of which is the country’s reputation abroad, and it has the capacity to cause untold damage to the people of this country. In our opinion, the Prime Minister must act before that happens.
