Home' Trinidad and Tobago Guardian : December 30th 2015 Contents Against the backdrop of current low
energy prices and a dismal fiscal projection,
Prime Minister Dr Keith Rowley s first
address to the nation held a few glimmers
In his almost 30 minute delivery, Rowley
touched on the previous government s finan-
cial failings, but quickly moved on to his
Government s intended plan of action.
One of those plans is to split the billion
dollar Heritage and Stabilsation Fund into
two "distinct parts" and utilise one portion
"We intend to leave the bulk of the exist-
ing fund in the Heritage component and
allocate the remainder to the Stabilisation
Fund. We intend to use approximately
US$1.0 billion for stabilisation purposes in
FY 2016 and perhaps another US$0.5 billion
in FY 2017," Rowley said.
While the HSF remained untouched for
years, Rowley said it was being saved for
this rainy day.
"The circumstances we now face are pre-
cisely those which were envisaged for the
use of the Stabilisation Fund and we will
utilise it rather than increase the country s
debt levels unnecessarily," he said.
Another key component of the plan mov-
ing forward is to keep T&T away from the
International Monetary Fund (IMF) and a
promise to ramp up home construction
through a partnership with the private sector.
Rowley outlined a merger between the
Trinidad and Tobago Mortgage Finance and
the Home Mortgage Bank to help provide
financing for new home owners.
"We will encourage housing construction
by the private sector and simultaneously,
we will accelerate the implementation of
the Trinidad and Tobago Mortgage Bank
through the merger of the TTMF and the
Home Mortgage Bank to provide the financ-
ing for the mortgages for those new home-
owners," he said.
Rowley said access to the private sector
in the construction industry would save
Government initial capital investment in
the housing sector.
"The objective here is to quickly move
private capital into the housing market to
service a sector which forms the HDC client
base without initial state cash outlay. The
private developers should be motivated to
get into the programme bringing finance in
the expectation of a better return on capital
than is easily available elsewhere and the
state would get the job done whilst stim-
ulating the economy without too much up-
front capital coming from the state," Rowley
It will also help with job creation.
"New home construction and building
maintenance will sustain employment of
plumbers, carpenters, masons and electri-
cians," he said.
He said unemployment relief programmes,
like CEPEP, were expected to continue, but
with an expanded range. He said those pro-
grammes would have to be examined to
eliminate corruption and make them more
efficient and effective.
"The Ministries of Local Government
and Rural Development, Urban Develop-
ment, Works and Agriculture will have a
determining role in some of the projects to
which this expenditure can be targeted with
a decent ratio between material and labour,"
Those ministries will have to accomplish
that with a seven per cent adjustment to
their respective operating expenses.
"The Minister of Finance will direct the
management of every state enterprise, statu-
tory body and each Ministry and the Tobago
House of Assembly to review their operations
and make identifiable adjustments of seven
per cent reduction in proposed operating
expenses, eliminating waste and/or ineffi-
ciencies, not relating to job cuts at this
instance," Rowley said.
more belt tightening
New initiatives in HSF, avoiding IMF and housing
Prime Minister Dr Keith Rowley during his address to the nation last evening.
PHOTO: COURTESY THE OFFICE OF THE PRIME MINISTER
for 29TH DECEMBER, 2015
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Wednesday, December 30, 2015 www.guardian.co.tt Guardian
ANALYSIS BY EDITOR-IN-CHIEF, ORIN GORDON
The Prime Minister s speech contained a clever
mix of sobering analysis and bullish solutions. It
was designed to sober up but not alarm.
The portents hadn t been promising. Finance Min-
ister Colm Imbert had said a few days before Christmas
that the Prime Minister would be delivering a "reality
check." And when the PM himself announced that he
would deliver his address after Christmas, the suspicion
was that he wanted us to be able to digest our pastelles.
The seven per cent cut in spending at state entities
and ministries needs more detail. Is it a uniform seven
per cent or are there variations in there? How is it
going to be accomplished without job losses, something
that Dr Rowley was very firm about being off the
table? Will some entities have to cut deeper than
The bigger question, of course, is whether the depth
of the cuts is enough. Given that the state spends a
staggering 35 per cent of what the country earns, and
that the price of oil is less than half of what is projected,
does seven per cent go deep enough?
At one tower in Port-of-Spain that houses a number
of ministries, I once counted 16 people in the lobby,
security and reception/counter staff who keep visitors
logs. Everyone with knowledge of T&T s income and
expenditure knows that the public sector is too fat.
The Rowley administration may have to come back
for deeper cuts there, and many of those affected will
be the people who habitually vote for the governing
It would be an act of political courage. It may be
unavoidable down the road.
There s much to digest on HSF, housing and the
social safety net, which Dr Rowley went to great
pains to say that he d be strenthening.
The D-word, devaluation, was absent from the
Opposition Leader Kamla Persad-Bissessar, in
charge of the economy for the five years leading up
to September but showing epic chutzpah in dis-
claiming all responsibility for the current state of
things, had warned her successor not to go there.
Its effect can be devastating, regardless of the size
of the adjustment of a country s currency.
In the 80s the Guyana dollar went from $4.30 to
$1US, to $10 to $1US. It was the equivalent of having
your savings halved without touching your money.
One relative saw the chance of a US college education
disappear, just so. Still, he had it better, much better,
than many poorer people in the country.
Such a big adjustment was never on the cards in
T&T, of course, but devaluation changes the cost of
absolutely everything, from bread, to flour, to doubles,
to gas, to rent, to getting to Barbados.
No matter how modest the numerical adjustment,
it can be a big blow to consumer confidence and can
deepen economic gloom.
So, devaluation dodged. The threat can t have gone
away and we will be asking the economists if it s a
question of when rather than if in the coming months.
Dr Rowley spent much time laying out the context:
How the country came to be where it is. Much of this
we heard before from Finance Minister Colm Imbert
in his budget and subsequently, but less politically
combatively presented than Mr Imbert. But Mr Imbert
was right. It was a reality check.
The Prime Minister is also urging the
nation to conserve its use of foreign
He said the Government planned to
continue making investments and even
projected an increase in that
"Especially where there is greater
incentive to earn foreign exchange. Our
exporters of manufactures and
services should continue to do as well
or better during the period of
adjustment, and some of those
businesses may even increase
employment," he said.
Rowley said T&T has "already used
up almost US$2 billion of our foreign
exchange reserves in 2015" and laid
most of that responsibility at the door
of the Central Bank.
"Unfortunately, the Central Bank saw
it fit to make foreign exchange cheaper
in the face of falling export earnings
and reduced inflows of foreign
exchange and also opened up new
channels for outflows of foreign
exchange other than the traditional
channels through the commercial
banks," he said.
Rowley said that in addition to that,
"Government expenditure continued
unabated and even accelerated in the
run up to the General Election, thus
fueling even greater demand for
foreign exchange in a period of
heightened political uncertainty."
GREATER ROLE FOR CENTRAL BANK
SPENDING LESS FOREX
The Prime Minister
outlined a specific
watchdog role for the
Central Bank, in light of its
The Central Bank...will
work closely with the
Ministry of Finance to
ensure that fiscal,
monetary and exchange
rate policies are aligned
collaboration between the
Central Bank and the
Ministry, and will adjust
these policies as they deem
appropriate," he said.
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