Strengthening Capacity Through Safeguards Assessments

Author(s): Central Bank Of Barbados

Created 24 Feb, 2020
Categories General Press Release Speech
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To the Safeguards Assessment team from the International Monetary Fund, other presenters and participants from central banks across the region, I extend a warm welcome to Barbados. 

The Central Bank of Barbados is delighted to collaborate with the Caribbean Regional Technical Assistance Centre (CARTAC) in hosting this seminar at this time. CARTAC’s continued invaluable contribution to the building of technical skills within the region as our economies confront challenges and changing regulatory standards is much appreciated.

To some of you, the concept of the Safeguard Assessments Programme (SAP), on which this seminar is focused, may be novel.  While it is associated with access to IMF (International Monetary Fund) resources, it is of relative recent vintage – 2000. We at the Bank only came face to face with our first assessment in 2018 when we were about to enter our Extended Fund Facility arrangement with the IMF and were required to undergo a Safeguards Assessment exercise.

Our region is familiar with IMF programmes, which are often targeted at strengthening the public finances by altering the behaviour of the central government and the public enterprises. However, the SAP focuses on strengthening the governance and control frameworks at central banks. You may ask why. Our central banks play a major role in the monitoring and execution of national macroeconomic adjustment programmes and are integral to the coordination of monetary and fiscal policies. In addition, it is important to note that in most cases, IMF resources are used by the central bank for balance of payments support and not for budget support. Our central banks therefore assume responsibility for repayment, and this assessment is designed to provide assurances that the resources will be managed in a way that facilitates timely repayment.  

Our experience suggests that as you discuss the wide-ranging topics to be covered this week, you will find that there are benefits for the organisation beyond providing assurances to the Fund. Indeed, you are likely to glean nuggets that help you to manage better some of the operational risks at your respective central banks. 

You will find that the Safeguards Assessment exercise is comprehensive in nature and scope. The information requirements are demanding and, as a first-timer, we found ourselves on a steep learning-curve. However, we welcomed the engagement with the Safeguards Assessment team, as the discussions were fruitful and revealed areas for improvement as we seek to align, as far as reasonably practical, our governance and control frameworks in-line with best practices across central banks. 

We can attest to the fact that the Safeguards process requires focused cross-departmental support by the legal team, internal audit department, operations division and the research team. In order to ensure consistency in the execution of agreed reforms, we have included the critical next steps in the Bank’s Strategic Plan, which is internally monitored and reported to the Board of Directors.

In our context, we have found that collaboration and commitment is required from our Board of Directors, the Ministry of Finance and the Office of the Chief Parliamentary Counsel. Ultimately, internal and external stakeholder engagement, including with the external auditors, in relation to the safeguard assessment cannot be underestimated if it is to effect meaningful change at central banks.

One benefit for us from the process has been the automation of the reporting requirements for the IMF with data now being directly mapped from the Bank’s accounting information system. Aspects related to data automation form part of the Bank’s broader digital transformation strategic objective to enhance business processes, streamline data sharing capabilities and improve data analytics but it was accelerated because of the programme requirements.

Some of the recommendations emanating from the assessment require IMF technical assistance, namely:

  • reform of the governing law of the Central Bank of Barbados, i.e., the Central Bank of Barbados Act, which is one of the structural benchmarks under the programme;
  • the development of a long-term plan to re-capitalise the Bank, which is also a structural benchmark;
  • the implementation of an emergency liquidity assistance facility to enable the Central Bank to provide emergency funding to our regulated financial institutions; and
  • the alignment of the Bank’s compilation of monetary statistics with international standards under the IMF’s Standardized Reporting Form.

Since our consultation with the Safeguards Assessment Team, I can also announce that progress has been made in the following areas:

  • Legal Reforms – A revised Central Bank of Barbados Bill has been prepared and will, inter alia, refine the Bank’s mandate, strengthen the institutional governance framework and set new limits on central bank financing of government. It is anticipated that this bill will be presented to Parliament in a few weeks.
  • Financial Reporting and Transparency – Traditionally, the Bank has not prepared its financial statements with full compliance with IFRS standards because of limitations embedded in the Central Bank Act. However, last year the Central Bank’s audited financial statements were published with increased disclosures related to risks associated with the financial assets, lending to the Government, financing schemes, the terms of the IMF arrangement and the nature and timing of off-balance items. These disclosures are consistent with IFRS requirements and this year the Bank will fully transition to preparing its statements in accordance with IFRS reporting standards. As a result, fully IFRS-compliant financial statements are expected to be published for financial year 2019.
  • Monetary Data – The Bank has resumed publication of its monetary statistics in keeping with the IMF’s Standardized Reporting Form.

Finally, I anticipate that further progress in attaining the structural benchmarks will be made with the support of a technical assistance mission next month by the Money & Capital Markets Department, to aid the development of a plan for the recapitalisation of the Bank.

I have outlined for you some of the gains that we have achieved from participating in the Safeguards Assessment. Your gains may differ according to your own circumstances but I am sure that each of you will find practical relevance to your everyday functions at your central bank and that you will benefit from your exposure to the issues and processes examined over these five days.

Do enjoy your interactions with the team of experts from the Fund and your fellow participants. I wish you all successful deliberations.

Thank you. 



Remarks by CBB Governor Cleviston Haynes at the IMF Safeguards Assessment Conference.pdf (860.64 KB)
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