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

236 Treasury Bill requirement for commercial banks was lowered by two percentage points. Moreover, the Bank engineered, through its bidding, a fall in the Treasury Bill rate as another signal of monetary easing. Late in the year, the Bank lifted all controls on credit, the ceiling on interest rates for residential mortgages and the stipulations relating to the hire- purchase of consumer durables. The structural adjustment component During the latter half of 1992, the focus was on the structural reform component of the programme. A study of the direct tax system by the IMF recommended a reduction in the maximum average tax rate to 40 per cent from 60 per cent and the phasing-out of levies, the stabilisation tax and several tax exemptions. The legislation supporting the first phase of the reform of the direct tax system was passed by Parliament on July 10. During the following month the IMF/World Bank-funded study of indirect tax reform was prepared; the IMF was proposing a VAT, with the Customs Department responsible for collections. 117 There was some progress in respect of the preparatory work for the sale of the Barbados National Oil Company (BNOC), Heywoods Hotel and the Arawak Cement Company, but the response to the advertisement inviting the purchase of shares in the Pine Hill Dairy was poor. The terms of reference for the consultant advising on productivity issues were drawn up in July and the Productivity Board established the following month. Some agreement on structural issues was achieved with the IFIs during the IMF/World Bank annual meeting in Washington D.C. late in September 1992. The IDB had accepted in principle the strategy paper on restructuring the BNB and the sugar industry and felt that the proposal for an investment sector loan could be considered by its Board by the following March. On the other hand, the World Bank was still pushing for a greater commitment to trade reform and the IMF for further financial (interest rate) liberalisation. In October a privatisation unit was formed to facilitate the sale of public sector assets. A Protocol for Prices and Incomes