Both Sides of The Coin: The Story of The Central Bank of Barbados 1972-2017

147 a “creature” of the minister was essentially a declaration that the governor had little option but to comply with the minister’s directions. The minister’s comments at a farewell function for King soon after provided little comfort for those who wanted to change the status quo. THE FINANCES The Bank maintained its operational autonomy, in part, because of the strength of its finances, which ensured that it was not a drain on the public purse. Its first loss was recorded in 1989, a year in which income was sluggish and expenditure was boosted significantly by a higher wages bill and increased outlays on interest as a result of additional borrowing. Generally, profits were at their highest during the 1990s, which included seven of the Bank’s 10 most profitable years. Income in the early 1990s was influenced to a large degree by the high level of advances to Government and the commercial banks. Between 1990 and 1992, when profit peaked at $30.3 million, this item contributed, on average, about 36 per cent of the Bank’s income. Thereafter, advances dwindled as the economy picked up and the combination of tighter fiscal policy and foreign borrowing reduced the Government’s need for financing from the Bank. Profitability during the 1990s was also helped by the steady growth in the net international reserves (NIR); as the foreign position improved the Bank was able to increase its holdings of high-yielding foreign securities. Annual profit averaged $12.3 million between 2000 and 2002 but thereafter was quite modest until 2008 when it was $4.5 million. After 2008 the Bank registered losses for most years, mainly indicative of the impact of low foreign interest rates on its income stream. By 2013, the accumulated deficit was $14.8 million. However, up to that year, the Bank had transferred, on net, about $216 million to the Consolidated Fund. During 2014, accumulated losses exhausted the Bank’s capital and, in line with the provisions of the Central Bank Act, the capital was sustained by a transfer Chapter 4: Maturity, Modernisation and Issues of Governance: 1987 and Beyond