CB advises cabinet on many issues

The government has for the past several months sought the advise of the Central Bank (CB) on various cabinet proposals prior to its presentation to the cabinet, officials said.

“This has been happening weekly since January 2007 and I am surprised that no one knew,” Central Bank Governor Nivaard Cabraal told The Sunday Times FT, adding that as far as he was aware this is the first time the CB has been commenting on cabinet papers. He made these remarks when asked to respond to reports that the Central Bank may take over the functions of the Petroleum Resources Development Committee (PRDC) which is spearheading the new oil exploration process.

Recently the Central Bank placed advertisements in several newspapers, seeking expert staff in petroleum exploration and development such as economists, geophysicists, geologists and petroleum risk analysts. But Cabraal denied reports that the Central Bank was taking over the functions of the PRDC saying what the CB was doing was acquiring expertise in a new area of economic activity to advise the government.

“We are there only in an advisory role and for that we need to acquire expertise (in oil issues),” he said adding that this is because there may be times in the future if something goes wrong that, ‘someone could turn around and say why we didn’t advise anyone about it.’ He said, “this advise is like what we provide the government weekly on cabinet proposals.”

Cabinet papers are sent to the CB on a Friday and the bank’s comments are sent by or before the following Tuesday, he said adding that “sometimes our comments may defer the presentation of an issue (essentially related to economic activity) or suggested changes made.”

He said the bank has the authority as it is the advisor to the government under the Monetary Act. Cabraal said the CB has acquired expertise in various fields of economic activity like education, health, infrastructure, highways, etc. “We are constantly training and sending for training overseas our staff to acquire and improve this expertise. We are building a solid data base of information,” he said. Cabraal said the CB is pro active rather than being reactive as in the past. “We want to point flaws and weaknesses before it happens unlike in the past where our annual reports referred to flaws in the system. We don’t want to have a post reporting process – we want to point out (potential) issues before it happens.”

Last year the CB raised many aspects of the economy in its annual report. The 2007 annual report, earlier due to be released tomorrow but postponed to April 8 as Treasury Secretary Dr P.B. Jayasundera is unavailable, contains 23 box articles that deals with various issues in the economy including EPZs and money printing) in addition to the normal contents of the annual report.

He said the per capital income has gone up to US$1,600 last year against US$1,355 in 2006, and US$1,197.