Home' Trinidad and Tobago Guardian : March 29th 2015 Contents From Page SBG3
It is not our intention to con-
tinue to own companies through-
out T&T. It is our intention to get
back the money that we would
have advanced to the CL Financial
group over time.
Q: If that's the case, can it
not be argued that Lawrence
Duprey, the former executive
chairman of CL Financial, comes
out of this arrangement quite
A: What we expect will hap-
pen is that the shareholders them-
selves of CL Financial will enter
into some kind of arrangement
with respect to those particular
shares so that we don't find our-
selves in that kind of a position.
And certainly it is not our expec-
tation---and that part of it still
needs to be worked out in some
detail before we proceed, because
there are still hanging ends that
we need finalise.
For example the shareholders'
agreement which we may continue
to extend while we continue to
fine-tune these aspects to ensure
that what we have is a solution
that is socially and politically
acceptable and palatable to the
people of T&T. We would want
to ensure that we manage that
process very carefully.
Q: But what might be socially
and politically palatable, might
not be legally and constitutionally
correct. Do you not concede that
A: Yes and that therefore is
something...and which is why we
have been taking some time with
the shareholders agreement.
We want to ensure that we
arrive at some kind of solution,
which while recognising the legal
and constitutional requirements,
also gives us a position that I think
the taxpayers of T&T will be com-
fortable with. I don't think the
taxpayers will be comfortable
about assets going back into the
hands of persons who may have
created this debacle in the first
We are seeking to see to what
extent we can find a solution that
allows us to meet these require-
ments, but it has been a challenge
as you have identified.
Q: Is it the Government's
intention to structure an agree-
ment that excludes Mr Duprey?
A: I don't want to dwell on
specific individuals because gov-
ernments don't deal ad hominem.
We deal with classes and I will
deal with the class of related
shareholders in an appropriate
way. It may mean having to hive
things off in a certain way to
achieve that particular end.
Whatever decision we arrive at
will respect the legal and consti-
tutional rights of persons in T&T.
It is not our intention, in any way
whatsoever, to deprive people of
what may be their constitutional
MARCH 29 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COVER STORY | SBG5
Sagewan-Alli: Change negotiation process
Indera Sagewan Alli, economist and Exec-
utive Director of the Caribbean Centre for
Competitiveness agreed that the 14 per cent
increase will generate a degree of economic
"They are not wrong on that point....this
group of people will hardly save that money.
More likely than not, they will spend it. They
will buy new cars. They will go on a holiday,
they will do things. So you will have that mul-
tiplier effect in terms of the economics hap-
pening in the country."
However, her views and those of the other
economist interviewed, Gregory MacGuire,
UWI lecturer and Dr. Lester Henry, lecturer
and PNM Senator, diverge from the trade
unions at this juncture.
Duke credited his success at the negotiating
table to the strength of team's ability to bar-
Referring to the 2008 to 2010 settlement,
where he angered his colleagues in the trade
union movement by settling for 5 per cent,
Duke said the PSA negotiated for housing,
insurance and other benefits, along with the
lower salary increase, something other unions
were not willing to do.
"We will seek to get the best deal. Nego-
tiations are not just about dollars and cents...
We are saying negotiations must be free and
whatever one person attains, that person attains
that based on their skills and their arguments,"
said the trade union leader.
Sagewan-Alli expressed concerns that this
very same negotiation process, where settle-
ments continue to be based on the highest
number unions can get instead of increases
are based on productivity.
"It has nothing to do with hours of pro-
ductivity. It has nothing to do with the impact
on inflation. It has nothing to do with the
impact on your country's ability to remain,
or grow, in its competitiveness."
Sagewan-Alli said she is not saying the 14
per cent increase is not deserved, only that
there is no basis on which to justify it, since
little work has been done on productivity and
wage increases in the country.
The effect, she said, is that a new benchmark
is going to be created in every new negotiation
after the 14 per cent settlement and not just
in the public sector.
Sagewan-Alli said this will create demand-
pull inflation as a relatively large group of con-
sumers receive their lumpsum payments.
She and the other economists questioned
how Government was going to finance the
salary increase, given an already existing deficit
and a drop in oil prices.
"Is it in a position to be able to meet those
payments? If it is not able to not meet these
payments, where is it getting the money from
to meet those payments? If it is in fact bor-
rowing the money, it is a burden that is now
being placed on whoever will come after on
the revenue stream to be able to meet those
payments. So, Government has to be very
conscious of its capacity to pay," said Sage-
Henry said the 14 per cent increase was an
example of Government continuing a demon-
strated tendency toward "fiscal irresponsibility,"
in increasing expenditure while running a
deficit, without having a corresponding revenue
Moreover, all three questioned the timing
of the move to increase public service salaries
months before a general election.
Increase in liquidity, foreign exchange
shortage, tax increases ?
Henry also predicted that the almost $1 bil-
lion backpay injection into the system was
likely to worsen excess liquidity.
He said this was a bad situation for banks,
who would adjust to maintain their spreads,
but would possibly result in even lower interest
rates for deposits, something that does not
bode well for investors.
He added that any other investment oppor-
tunities, promising better returns, would be
inadequate to the level of demand.
"Things like the Phoenix Park IPO, you will
see that oversubscribed to 20 times over," said
With little choice but to spend the money,
Henry suggested that there may be an increase
in the purchase of retail items such as cars.
He also said that there may be some very
small, temporary effects on the real estate
McGuire noted that what was liable to go
up in cost however, were the services connected
to building homes.
"What we do with additional money is that
we import things. The imports satisfy the
additional demand, except for goods that are
non tradable. So for example, if the increased
money leads to people spending more building
houses, that's not a non tradable and the price
of labour for example, the price of construction
material, all that is going to go up."
McGuire also said that the increase in
imports is likely to result in an increase in the
demand for foreign exchange in an environ-
ment where it was already hard to source,
particularly since earnings from T&T's energy
exports were down. The UWI lecturer said
while this did not automatically mean a deval-
uation, it became an option.
Another consequence of the increase may
be an increase in taxation. McGuire said that
with the increase in the deficit and limited
revenue earning opportunities, Government
may be forced to turn to taxation.
"While the government over the past four
years has liked to boast about no new taxes,
I'm afraid it is not going to be a boast that
the new government may be able to make,"
said McGuire, "It is almost unavoidable that
government is going to have to find other ways
to raise money."
McGuire: Rise in taxes a possibility
Continued from Page 4
Gregory McGuire, UWI lecturer and Economist Indera Sagewan Alli, Economist
Dr. Lester Henry, Economist
Ancel Roget, OWTU president
Govt will respect shareholders' rights
I don't want to dwell on
specific individuals because
governments don't deal ad hominem.
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