The contract of the last Executive Director of the CCMF, the retired President of the Caribbean Development Bank, Professor Compton Bourne, who was there on a one year renewable contract as a caretaker to stabilise things, expired last December.
Professor Bourne said the regional central banks decided to restructure the CCMF because of concerns “about some of the financing implications.” They set up a committee under the chairmanship of the Governor of the Barbados Central Bank, Dr DeLisle Worrell and including Professor Bourne and the Governor of the Central Bank of Suriname, Gillmore Hoefdraad.
Professor Bourne said, “We prepared a report which suggested a leaner structure with fewer full time staff members but relied heavily on associates based in various institutions.” The proposal would have allowed the centre to maintain its current suite of products: research, a journal, a newsletter, the continued production of the Caribbean Economic Performance Report and its data bank services. “And that proposal was accepted, in principle at least, at a meeting in Belize and a new budget was prepared on that basis. But subsequently there was a rethink by the governors and they decided they wanted a different structure, one in which there would be no staff members employed by The UWI but researchers seconded from the central banks and the administrative services would be outsourced.” Professor Bourne said a budget and a new work plan was supposed to be prepared on the basis of this new proposal but only two central banks indicated that they were prepared to second any staff to the centre “and so that particular restructuring proposal was stillborn - it never really got off the ground.”
He said that in the meantime the governors in April 2015 acted on the previous proposal that the centre should not have any research staff - most of the staff was fired and some were transferred to other departments. That left the centre with one junior researcher whose contract was due to expire at the end of June 2015, one secretary and an administrative officer. “It is in effect the end of the centre,” Professor Bourne told Business Day. He said there would not be any staff at the CCMF after the end of June unless the governors when they have a scheduled meeting in Guyana take a different decision. He lamented that the decisions keep changing. Although he said there was a chance that the governors at that meeting might change their minds, he was not optimistic.
Professor Bourne said the CCMF was a valuable regional institution and he had tried to make that point to the central bank governors. “The Caribbean Economic Performance Report, the newsletter and the data collection are used quite extensively, and these are electronic products so we are able to track the number of times they were consulted, and they are used quite extensively, including by staff in the central banks across the region and people in the International Monetary Fund (IMF) and the World Bank and in the universities. They use it. They use the data. So it is a very valuable service.” He added, “I think part of the thinking of the central banks is that they have their own research departments and so they don’t need as much of a research help as was needed originally and that is true - a valid view - organisations change and the nature of their products change to suit the new environment and what has happened to the centre is that it evolved into more a service for entities other than the central banks themselves, but that’s the value and that to me is a credit to the central banks.”
Professor Bourne said that the CCMF was conceptualised as a Caribbean think tank in which a set of independent researchers would work on subjects the central banks wanted studied but which they, themselves, might not have the time to do on a long term basis. And also to work on matters that cut across the region and didn’t deal purely with one country, which is usually the mandate of the central bank’s own research departments, “they focus on their situation and I think that that remains a valid purpose.”
Former Governor of the Trinidad and Tobago Central Bank, Ewart Williams said, “The whole rationale of the centre was to service the central banks of the various territories by collecting statistical information, by doing research and by providing technical assistance. When Caricom was moving robustly toward the single market and economy (CSME) they used to do something called a convergence exercise, which entailed looking at certain indicators to see whether they were converging to levels which would have set the platform for a common market.”
According to Professor Bourne, the CCMF began in 1968 as a research programme financed by the central banks when they were new or some of them did not yet exist and they felt the need to know more about how the financial system worked. He said it was always a collaboration between the central banks and The UWI. The staff was selected and appointed by the university but the money to pay them and meet the centre’s running costs came from the central banks.
He added that many central bank governors were “very strong” in support of the centre, including the current Governor of the Trinidad and Tobago Central Bank, Jwala Rambarran. However, there were some governors who were lukewarm and some who didn’t care about it at all. He said Rambarran tried to put into effect the restructuring timeframe which was approved “and I think he did his best in that respect, but the poles got shifted and he’s just one governor among many others.”
Williams said a few years ago Jamaica pulled out of the centre because they were not happy with the output. “They couldn’t justify making such a contribution when they didn’t think the output was serving their interest. They thought they could get the same kind of research and statistical work done within their Central Bank and at a cheaper cost. Now that was unfortunate because this was a regional institution and clearly there were certain costs of maintaining regionality and like all regional institutions, contributions are based on size and Jamaica was perhaps the largest contributor when Trinidad and Tobago and the countries of the Organisation of Eastern Caribbean States (OECS) were smaller contributors.”
Williams admitted that most of the work being done at the CCMF was focused on the OECS which had less technical resources “and therefore they looked forward to the statistics and so on that the CCMF used to do.”
He said when he began his term the bank tried “very, very hard to get Jamaica back” and eventually the Bank of Jamaica did resume its support of the institution. Meanwhile, there were difficulties in getting someone to take on the position of Executive Director of the centre. .
Professor Bourne added that the CCMF organised an annual monetary conference, which was an important training ground for young economists in the field of money and finance. He said that many of the central bank governors of the past and some of the present cut their teeth in that conference. “So the centre had a very important role in terms of the information services it provided, analysis and data; in terms of the research it did; in terms of the forum it provided; in terms of the development of professional skills among younger economists, and I think overall enhanced the reputation of our central banks.”
He said he did not think that the operation of the centre was so costly as to represent such a burden on the regional central banks as would justify its closure. “I think at one point the centre found itself with some fairly substantial deficits because of some salary changes that took place at The UWI, St Augustine because of trade union negotiations, but we had found a way to handle that. And the idea of streamlining the staff was really to ensure that that would not happen again. But I don’t think that in terms of the size of the budget that it was financially onerous. I have to say that I think it was relatively small change in the context of central bank budgets.”
Professor Bourne observed that the sums allocated were very much less than what the regional central banks spent on hosting their annual sports day. “I don’t think that if one looked at it objectively one could say that it was a large sum of money being committed by each central bank. I think the doubt in their own minds was whether the thing was still valuable to them. When we think of institutions in the region and we build institutions we must not think only in terms of what is valuable to the people who finance it themselves but what is valuable to the community in which they operate - the region and the country - and that’s how a lot of research organisations and think tanks are justified in the countries that we look up to.”
He said that as an example, the Bank of England - the Central bank of the United Kingdom - has a bigger research department than any university’s research department in the UK. He added that the Federal Reserve System in the US has many more research economists than any single university in the US, but they still support independent research in the universities “because there is a value in having a capacity outside of the government agencies or outside of the central banks.”
In addition, the region is acknowledged to be very poor in producing statistics. Professor Bourne pointed out that the Caribbean used to be very good at statistics, adding that “there were some fine pioneers” but “suddenly this region began to pay less attention to statistics and you see it when you look at international data and publications. You will see a lot of gaps where there used to be numbers for the Caribbean countries. You see gaps and we really need to put a lot of resources into rebuilding that capacity.”
Professor Bourne agreed that because of the regional deficiency in the production of statistics the Caribbean finds itself too often quoting US statistics “and being too reliant on what agencies like the World Bank and so on have produced and they fill the gaps in our statistical services by guesstimates. They cannot go beyond what we give them unless they do surveys and that is not the case, so they tend to extrapolate and do things that you do in the absence of hard data.”
He said that about 15-30 years ago this was not the case and the region could have taken great pride in its ability to produce statistics, including the population statistics “Which one has to have a lot of doubt about now.”
Williams said the closure of the CCMF will be a significant loss to the region, adding that over the years it has done some good work. “I certainly think it was an institution worth keeping.”
Professor Bourne said that what happens in Trinidad and Tobago is replicated in several countries in the region where they fail to devote sufficient public resources to the generation of statistical data to assist in the management of many, many aspects of an economy and society. “I mean, how do you plan development of geographical areas in a country if you don’t know how many people are living there? You have to know, you have to know movement and all kinds of things. And then, of course, because of our tendency in the region to be secretive with data, people don’t get access to other’s information and therefore the value of the information is not fully appreciated by the controllers of the information.”