Home' Trinidad and Tobago Guardian : December 6th 2015 Contents A7
December 6, 2015 www.guardian.co.tt Sunday Guardian
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RHONDA KRYSTAL RAMBALLY
Minister of Finance Colm Imbert says the Central
Bank has an obligation to inform him of monetary
policies, but he said his ministry did not receive
the contents of Central Bank Governor Jwala Ram-
barran s statement about a recession prior to its
delivery on Friday.
Imbert said the Central Bank Act at Section 49
states, "The Bank shall keep the Minister informed
of the monetary and banking policy pursued or
intended to be pursued by the Bank."
Section 50 of the Act makes it clear that "the Min-
ister may, after consultation with the Governor, issue
to the Bank such written directives of a general nature
as may be necessary to give effect to the monetary
and fiscal policies of the Government."
In other words, Imbert said, the Central Bank was
required to keep the Government properly informed
of its policies and do what was necessary to support
the monetary policies of the Government.
He said he has taken note of a general perception
that has crept in over the years that the Central Bank
can act independently of the Government in all mat-
ters, but said that was not the case.
Imbert said he saw the statement when he returned
home on Friday night after the sitting of Parliament.
"I am advised it was received by email at the min-
istry after midday," he said in response to questions
from the Sunday Guardian.
Rambarran announced that T&T s economy was
in a recession and also named the largest users of
Asked if there was a misalignment between the
Central Bank s monetary policy and the Ministry of
Finance s fiscal policy, Imbert said there should not
be any misalignment and that the Government was
studying the governor s monetary policy statement
carefully to see whether it was in fact aligned with
government s policy.
However, Imbert said he did not want to make
any specific comments on that matter until his eco-
nomic advisers and technocrats did their analysis
and reported to him. Asked if it made sense to increase
interest rates if the economy was in a recession, he
said, "In most countries, interest rates hardly ever
increase during a recession. Actually, the opposite
tends to happen: as the economy contracts, interest
rates fall in tandem.
"Further, central banks use tools to control interest
rates, and during a recession, they usually try to coax
rates downward to stimulate the economy."
The Finance Minister said when a recession
occurred, people became risk averse and conservative,
and were more apt to save what they have, rather
than to borrow for investment purposes.
He added that following the basic demand curve,
low demand for credit pushes the price of credit,
that is, interest rates, downward.
"Accordingly, on the face of it, increased interest
rates in a recessionary period appear to be count-
No plans to move exchange rate
Despite a decline in foreign exchange earnings as
a result of the drop in oil prices, Imbert said the
country s level of foreign reserves was still at 11
months of import cover which was well above the
common standard that said that reserves that could
cover three months worth of imports were adequate.
He said, however, "there are several countries that
maintain six to 12 months of import cover, so the
theory is not cast in stone. At this stage we have no
plans to move the exchange rate, but we are keeping
the situation under constant review."
Asked if he found it appropriate for Rambarran to
name the largest forex users, the minister said there
was a strong view that it was not but he was seeking
advice on the matter before making a definitive state-
ment. He said concerns had been expressed to him
by several stakeholders, including the business com-
munity, about that matter.
Finance Minister Colm Imbert has
revealed that the former People s Part-
nership (PP) government "squandered
almost $400 billion" during its five
years in office.
Imbert made the disclosure during
his contribution in the Increase of Loan
Ceiling Under the Development Loans
Act on Friday night in the House of
In giving a breakdown of the figures,
Imbert said from 2010 to 2015 the PP
had incurred an accumulative deficit of
$27 billion. Of the five years, the highest
deficit recorded was in 2015, which stood
at $7 billion.
"Every single budget was unbalanced
under their stewardship. The former
administration left the exchequer export
account in 2015 overdrawn by $34.5 bil-
The acting Prime Minister said the
PP pawned "the Green Fund, the Unem-
ployment Fund, the treasury deposits
from the Ministry of Energy...they
pawned every single cash deposit and
hid it from the population."
He said the PP also squandered in
cash $14 billion from the National Gas
Company and $15 billion from the Cen-
tral Bank "taking our cash balances from
$4.56 billion to minus $9 billion...but
they entering into contracts."
Imbert said the PP also obtained $28
billion under the Development Loans,
External Loans and Guarantee of Loans
(Companies) Acts, while they secretly
borrowed a further $11 billion, taking
the figure to $69 billion.
"That is in addition to revenue of
$300 billion during that period. Almost
$400 billion they have squandered."
Imbert said the PP never came to the
Parliament to report to the population
about their borrowing limits.
"People need to know this because
it was hidden in the dark of the night."
Imbert read out several contracts val-
ued billions of dollars which were exe-
cuted based on cabinet decisions "with
no loans financing in place" which the
PNM must pay and deal with.
"They have saddled us with over $20
billion in unfinanced projects and unpaid
bills. Where were they when all of this
was going on? They are the ones who
put this country in debt. It s a shame
that a government could be so irrespon-
sible. They left the cupboard empty."
Following Imbert s statement, deputy
Speaker Esmond Forde told members
that "for the sake of protection of the
public interest that no new procurement
would be facilitated until a more trans-
parent procurement law is fully in effect,
which members agreed upon."
PP govt wasted money
Central Bank must inform
me of monetary policies
Prime Minister Dr
Keith Rowley chats
with Malabar South
Calliste at Friday's
Arima. The by-
election takes place
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