Home' Trinidad and Tobago Guardian : December 5th 2015 Contents GML ENTERPRISE DESK
"Recession is not doomsday, it is normal
in cycles of boom and bust economies," says
Winston Dookeran, a former Central Bank
governor and the man who served in the cab-
inet of Arthur NR Robinson when T&T went
through its worst recession.
He was reacting to yesterday s announcement
by Central Bank Governor Jwala Rambarran
that the country is in a recession and the effects
will be felt next year.
Dookeran says the 1980s recession differed
from the present one in that the reserves are
comfortable and the fiscal situation is in the
balance. In the 1986-1989 period when the
country went into severe recession, Dookeran
said, Government had a major fiscal challenge
and its revenues were "not enough to meet
recurrent expenditure and that led to pressure
in the economy."
The then National Alliance for Reconstruction
(NAR) administration needed "external support
in order to bring equilibrium to the economic
situation and that is when we went to the Inter-
national Monetary Fund (IMF) to get the external
support to bolster the foreign exchange reserves
and provide the necessary cash flow for the
In 1986 the energy sector was also on the
decline, production was falling and as "the
prospect of growth resumption got dimmer,
the government introduced a fiscal reform
regime for the energy sector in order to generate
more investment," he said.
The NAR, which had come into power on
a wave of popularity winning 33 of the 36 seats
in the 1986 general election, was forced to
make drastic fiscal adjustments.
Dookeran recalled, "Wages had to be
frozen and back pay that was due to work-
ers in the public service was forfeited. There
was a very negative impact on workers."
That negative impact included a ten per
cent cut in public sector wages and a sus-
pension of the Cost of Living Allowance---
decisions that prompted trade unions to stage
protests across the country.
Dookeran said the current situation was dif-
"There is no need to be alarmist, but we
must be vigilant about taking long- and short-
term measures to prevent it escalating," he said
He recommended that the Government gen-
erate the climate to restore local confidence in
investment and continue to provide opportu-
nities for foreign investment.
Asked how T&T got to this point, Dookeran
said in the first two years of the People s Part-
nership administration the country s finances
had been stabilised. He said that had been
"successfully done especially in dealing with
the 2011 world recession and the Clico fiasco."
The 2012 to 2015 period was used to restore
growth on a sustained basis and that was begin-
ning to happen, but the elements were just not
flowing and then energy prices started to fall.
For business leaders looking on at the evolving
scenario the recession was only a matter of
time. CEO of the T&T Chamber of Industry
and Commerce Catherine Kumar said they had
been expecting it with the continuing economic
"We were preparing our members, telling
they have to
do things differ-
ently in the coming year
and years to come, to become more efficient
in the way we operate, to get a return on expen-
diture and an increase in productivity," she said.
Kumar said the country could not afford a
return to the 1980 s and the IMF and the much
touted diversification programme must be fast-
tracked since "it is clear that we can no longer
rely on the energy sector."
The Chamber CEO also advised citizens to
think about how they spent their dollar. She
expects food prices to increase despite the
reduction in Value Added Tax from 15 per cent
to 12.5 per cent, salaries will be frozen and some
people may even lose their jobs. Consumers
must spend wisely, she said.
"We have to go back to the days when we
see what we can produce ourselves, start making
bread at home, go back to buying smaller TVs,
cut the consumerism and the spending for the
sake of spending."
Kumar admitted her advice would have a
negative impact on business but said everyone
needed to do
"As businesses we
have to see how we can
focus more on sales and
services that add value rather than
consumer spending on retail items that are for
our pleasure," she said.
Kumar said the Government would also have
to look at infrastructural projects.
"They must be handled as efficiently as pos-
sible, no corruption, proper procurement leg-
islation must be put in place, so that we do
not pay more for projects than is necessary."
Keston Nancoo of the Employers Consul-
tative Association (ECA) admitted he was
shocked by the governor s announcement. He
said the ECA has to meet to discuss the impli-
cations and chart a way forward.
Like Kumar, Nancoo fears there will be job
losses and a freeze in wages. He recalled that
in the last recession things went wrong in terms
of the social fabric of the society. If there was
a lesson from that, he said, it was that Gov-
ernment must keep the population in the know.
"We get a move on diversification. There is
no other way out for T&T. Diversification,
retraining, retooling, holds the key," he said.
Guardian www.guardian.co.tt Saturday, December 5, 2015
T&T s retail and distribution sector is
the "most voracious consumer of foreign
exchange," says Central Bank Governor
That sector alone gobbled up US$4.5 bil-
lion or nearly one third of the total foreign
exchange sold over the past three years.
In his address at the Fifth Monetary Policy
Forum at the Hyatt Regency, Port-of-Spain,
Rambarran identified the top users of foreign
exchange in the country over the last three
years. They are as follows:
T&T's top forex consumers
DOOKERAN WEIGHS IN ON CB ANNOUNCEMENT
Top five users in retail and distribution
• PriceSmart - US$507m
• Courts - US$198m
• Smith Robertson & Company - US$169m
• AS Bryden - US$153m
• Massy Distribution - US$136m
Top five users in manufacturing
• Nestle - US$194m
• Witco - US$129m
• Carib - US$107m
• National Flour Mills - US$102m
• Caribbean Bottlers (Coca Cola) - US$94m
Top five users in automobile
• Southern Sales - US$275m
• Massy Motors - US$251m
• Toyota - US$245m
• Diamond Motors - US$59m
• Lifestyle Motors - US$36m
Top three users in
• TSTT - US$294m
• Digicel - US$263m
• Columbus Communications - US$250m
...business leaders warn
of job cuts, wage freeze
Sum of $USD
Jean Pierre Coudray, managing director of
The West Indian Tobacco Company Limited
(Witco), says the company is self-sufficient
when it comes to foreign exchange.
"This is because 70 per cent of our volumes
are exported so we generate our own source
of foreign exchange. When we collect the invoic-
es, ship to our customers in the Caribbean,
they pay in US dollars and we use that US to
pay our suppliers. We in fact have not been
borrowing any money from the banks," he said.
Witco was one of the local manufacturers
identified by Central Bank Governor Jwala
Rambarran as a heavy consumer of foreign
exchange. He said it has used up US$129 million
in the last three years.
The top user of foreign exchange is US retailer
PriceSmart which used US$507m in the last
Coudray said Witco used the US$129 million
to buy tobacco, wrapping materials/packaging
"One or two times when it got a bit close
to going to the banks for foreign exchange, we
negotiated with our suppliers to receive pay-
ments in Euros and they were okay with that,"
Errol Le Blanc, director of Unicomer, parent
company of furniture chain Courts, another
company identified as a top user of foreign
exchange, using up US$198 million in three
years, explained that the level of consumption
was due to the fact that the company imports
a large number of items.
Given the damp economic situation in the
country, he said, Courts foreign exchange
requests would depend on how business went.
"If business is reduced then our demand for
foreign currency would be reduced. I do not
expect that if the country is in a recession we
will need the same amount of foreign exchange,"
Companies explain high forex demand
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