IT IS NOT a good sign when the head of a big public organisation cannot be trusted to speak responsibly in public and subordinates have to clean up the mess subsequently. It betrays a poor understanding of the job which is unlikely to earn the respect of staff, let alone that of the outside world which has certain basic demands of public officials.
Central Bank Governor Chrystalla Georghadji, who seems to be regularly in the news for the wrong reasons, is a case in point. On Tuesday she appeared before the House ethics committee and implied that bank interest rates would come down. She did not spell this out but she told the committee that “in the CBC’s efforts to come up with solutions in lowering interest rates and improving the rate of loan restructurings, the board has instructed a team of technocrats to study various options and present proposals.”
Asked when the proposals would be ready she said in 15 days. This was taken to mean that interest rates would be lowered in 15 days as Ms Georghadji did not deem it necessary to elaborate. She preferred to leave everyone at the meeting thinking that in 15 days the CBC would announce the lowering interest rates. She had behaved like a politician, telling her audience what they wanted to hear and avoided giving the bad news.
She should have informed the committee that, regardless of the technocrats’ proposals the CBC did not have the power to lower interest rates by decree. This was mentioned the following day by the director of the bank’s supervision department Yiangos Demetriou who said that even if such a decision was taken, it would require the approval of the European Central Bank before it was implemented. Demetriou claimed the governor’s comments had been misinterpreted.
This may have been the case, but it was a direct consequence of Georghadji’s penchant for speaking like a politician and pandering to the public. An alternative explanation, that she was unaware the CBC could not lower interest rates, would be much more worrying. Demetriou had to sort out the misunderstanding, but the governor’s failure to talk clearly allowed the political parties to up their rhetoric about the need for the CBC to significantly lower interest rates and reduce the gap between deposit and lending rates.
Had the governor spoken more honestly at the meeting, explaining that interest rates would remain high as long as almost half the bank loans were non-performing and banks were reluctant to give loans because of the situation, false hopes would not have been raised and the political parties would not have been able to exploit the issue as they have done.