Home' Trinidad and Tobago Guardian : August 27th 2015 Contents BG4 | COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 27 • 2015
Finance Minister Larry Howai is insisting that the
Treasury s cash balances remain adequate and
that the Government is not borrowing money to
fund backpay for public servants, teachers and
other employees of the State, even though the
State is providing a guarantee for a $1.8 billion T&TEC bond.
Asked what was the state of T&T s cash balance, and why
the Government chose to add to its deb, through a T&TEC
bond guarantee, if it had the cash balance to pay backpay to
public servants, Howai said: "Government s cash balances
remain adequate to meet recurrent expenditure with several
billion dollars currently available."
The minister did not respond to requests to clarify what he
meant by "several billion dollars."
The minister was responding to further questions following
the revelations in last Sunday s BG that the Government
intended to fund backpay to thousands of its employees by
extracting US$600 million from Trinidad Generation Unlimited
(TGU), the wholly State-owned, La Brea-based electricity
generator, following a series of complicated transactions.
In an interview on Saturday, Howai said T&TEC, through
Republic Bank, would float a bond for $1.8 billion that would
be used to repay the Commission s bills for the supply of elec-
tricity from TGU.
The minister said the Government then expects TGU to use
the money from T&TEC along with other funds to repay
US$600 million ($3.8 billion) of the US$700 million that the
State lent TGU to construct and equip the generation facility.
Government will then use the US$600 million raised by
TGU---which he disclosed the electricity generator is seeking
to raise in its entirety on the international capital market---
to fund backpay to thousands of public servants, teachers and
other Government workers, the minister confirmed. Howai
denied that the TGU bond would also need a Government
guarantee as he said the servicing commitments would be
met by the power generator s cash flow.
Because T&TEC s revenues do not allow it to pay off all of
its loans in a timely fashion, the T&TEC bond for $1.8 billion
needs a Government guarantee, which means that it is added
to the country s total debt stock.
Questioned on whether it was good fiscal policy to borrow
money to make the recurrent payment of backpay to public
sector employees, Howai said: "In this instance, the Government
is not borrowing to meet its own recurrent expenditure. The
borrowing is being done by T&TEC to enable it to meet its
outstanding commitments to TGU. This is being done as TGU
has requested payment of the outstanding balance and there
is not a specific appropriation in the budget to liquidate the
outstanding amounts due by T&TEC to TGU."
Howai explained that the Government had advanced US$700
million (TT4.5Bn) to complete the TGU project from its
recurrent cash flows.
"As indicated, the Government funded the construction of
TGU out of its recurrent cash flows. Part of this funding rep-
resents the Government s contribution to TGU s startup capital
and they will not be required to repay that amount. This com-
pany is a possible candidate (subject to Cabinet s approval)
for an IPO in the future and perhaps at that time Government s
contribution to the initial startup capital will be received."
Providing further context to his explanation, Howai said:
"There are instances where Government has used loans to
finance recurrent expenditure. For example, the budget deficit
may be financed by borrowing. There are of course several
nuances in relation to this point that can be addressed in a
more comprehensive answer but time does not permit.
"Similarly, there are capital expenditure items that Gov-
ernment has financed out of its recurrent cash flow rather
than from borrowing, such as the TGU project. Another
example is where Government has paid TT$5 billion for work
done to date on the Pt. Fortin Highway of which TT$3.5 billion
has come from Government s recurrent cash flows."
In a statement earlier this month, Howai confirmed that
the total backpay that the Government proposes to pay to its
employees will amount to $4 billion.
That figure arises as the Government---through its wage
negotiator, the Chief Personnel Officer---completed a number
of outstanding salary negotiations this year with Government
employees this year, including public servants, employees of
the Regional Health Authorities and members of the protective
services. Negotiations with teachers were completed late last
Most salary increases, which averaged around 14 per cent
for a three-year period pertained to three-year periods already
past, which is why the public sector employees are entitled
Howai said that some public sector workers would have
received their backpay at the end of July while others will
receive theirs at the end of August. Backpay for the RHA
employees will be paid in November.
T&T's cash balances "adequate"
$4 billion backpay
Workers sharing in the $4 billion backpay include teachers,
the civil service, the protective services, nurses and employees
of Regional Health Authorities and employees of the following:
1) Statutory Boards and Similar Bodies not subject to the
Statutory Authorities Act but in respect of which the Personnel
Department had traditionally exercised or had responsibility for
the classification and compensation of offices:
• Board of Industrial Training
• Caribbean Fisheries Training and Development Institute
• Legal Aid and Advisory Authority
• Mayaro Civic Centre
• Point Fortin Civic Centre
• Sangre Grande Civic Centre
• Tobago Council for Handicapped Children
• Trinidad and Tobago Association of Local Government
• Trinidad and Tobago Association in Aid of the Deaf
• Trinidad and Tobago Association for Retarded Children
2) Public sector entities whose employees have traditionally
enjoyed similar terms and conditions as officers in the Civil
• Naparima Bowl
• Queen's Hall
• Princess Elizabeth Centre
• Trinidad and Tobago Blind Welfare Association/Association
for the Visually Impaired
• Trinidad and Tobago Association Bureau of Standards
• Trinidad and Tobago Association Racing Authority
3) Public Sector entities whose employees were transferred
from the Civil Service or Statutory Authorities and are paid
salaries in accordance with salary ranges outlined in the Civil
Service Classification and Compensation Plan:
• North Central Regional Health Authority
• Eastern Regional Health Authority
• North West Regional Health Authority
• South West Regional Health Authority
• Tobago Regional Health Authority
• National Institute of Higher Education (Research, Science
• National Agricultural Marketing and Development
Backpay coming from TGU loan repayment---Howai
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