Outgoing Central Bank Governor Ewart Williams's advice yesterday to his replacement at the bank was to be careful to maintain independence.
Williams was speaking to reporters yesterday, hours before his successor, economist Jwala Rambarran, was announced as the country's new Central Bank Governor.
"Be careful of your independence. The Central Bank's success is highly correlated with the degree of independence you are prepared to exercise. This independence is important in order to have effective monetary policy," Williams said during the ceremonial sod-turning for the construction of a new residence for future governors at Ellerslie Park, Maraval. "Sometimes there is going to be conflict and differences of views between the bank and the Finance Ministry because one is responsible for monetary policy and the other for fiscal.
"A healthy coordination of these two policies is critical for the management of the country, and any Governor needs to be able to maintain that respect and distance in order to provide the kind of support for Government's policy," he said.
Williams demits office officially on Monday after serving in the post since 2002.
Williams also gave his opinion on what he thought of the country's fiscal direction.
"(Finance Minister Larry Howai) already indicated that the projections are for a deficit budget this year. But don't forget what's the background for the deficit. It could be justified simply because private-sector activity continues to be slow and at least having some government impulse is going to maintain demand in the economy and maintain employment and some element of growth at least to prevent another year of no growth.
"I think what's important is (Howai) has indicted that you can't run a deficit for too long, and his medium-term strategy involves moving towards fiscal balance over the next three or four years. I think that's the right policy to provide the necessary confidence for private-sector activity," he said.
Williams added that a finance minister's success was based on how he handled the rate of economic growth, inflation and unemployment. He added a new category: the extent to which the country has achieved diversification to ensure medium-term sustainability.
"If he can deliver on these indicators, he will be extremely successful; he has the mindset and drive," said Williams.