It is unfortunate that it took two years for the administration to recognise clearly and act against what Prime Minister Bruce Golding has characterised an "unacceptable, embarrassing and repugnant" contract that was enjoyed by former central bank governor, Derick Latibeaudiere, who was fired last weekend.

By Mr Golding's account, it was a brouhaha between Mr Latibeaudiere and some members of the Bank of Jamaica's (BOJ) board over the governor's remuneration, including the resignation of Dr Jeffrey Pyne, that forced the finance minister, Audley Shaw, to intervene.

On the face of it, a salary package of $38 million - nearly two-thirds of which Mr Golding suggested was rent and upkeep for Mr Latibeaudiere to live in his own home - was, in the context of Jamaica, excessive.

No parliament protection

Mr Latibeaudiere, however, has not had his say, and when he speaks, if he does, he will not, unlike Golding, have the absolute protection of Parliament. Nonetheless, we believe that Mr Latibeaudiere, as well as the former finance minister, Dr Omar Davies, who approved the agreement, owe Jamaicans an explanation of the former governor's contract and the basis of its formulation.

We expect, however, that despite what is said by either side, there will be those who will remain sceptical that the contract issue, while it provided an immediate trigger, was the real reason for Mr Latibeaudiere's dismissal in the middle of Jamaica's negotiations with the International Monetary Fund (IMF) for a US$1.2-billion loan. The sceptics will insist that policy issues, particularly Mr Latibeaudiere's failure to move with greater rapidity to bring down interest rates, as well as past tensions between the former governor and the Jamaica Labour Party, contributed to his downfall.

But whatever may be the real cause of Mr Latibeaudiere's firing, two things are important.

First, neither party must do anything to undermine the credibility of the central bank or cause instability in the financial markets. In that regard, while we expect to hear Mr Latibeaudiere's explanation of events, it is important that he be sensitive to the situation and exercise restraint.

Departure contributed to downgrade

We recall, for instance, how several years ago the remarks of an outgoing finance minister triggered uncertainty in the currency markets, causing greater pressure on the Jamaican dollar. It is noteworthy that the mere fact of Mr Latibeaudiere's departure contributed to Jamaica's downgrade by the rating agency, Standard and Poor's.

Second, as we suggested and the prime minister said would happen, the Government should re-open a serious debate on the structure of the central bank and this time implement proposals.

We believe - and the PM says he concurs - there there must be a separation of responsibility for monetary and fiscal policy, which demands a degree of independence for the central bank.

But, as we have suggested before, we believe that the BOJ governor should periodically appear before Parliament to explain the basis of his interest rates policies. Moreover, the minutes of the meetings of the bank's rate-setting team ought to be published within a reasonable time after the deliberations.

Additionally, we believe that serious consideration should be given to separating the positions of chairman of the board and governor of the bank, particularly with regard to internal management issues, to ensure greater accountability at the BOJ.

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