Home' Trinidad and Tobago Guardian : February 25th 2016 Contents BG4| COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt FEBRUARY 25 • 2016
The TT dollar should be
allowed to depreciate
against the US dollar and
therefore against all other
major currencies. This
is the view of both the
head of the country s
Advisory Board, Terrence Farrell, and former
Minister in the Ministry of Finance Mariano
Browne who both agreed that the country
did not have the ability to defend the currency
Speaking last month at the Hyatt Regency
Hotel during the annual Energy Conference
of the Energy Chamber of Trinidad and Toba-
go, Dr Farrell was asked if he thought the
currency should be allowed to be depreciated
and he simply replied "Yes."
Farrell argued that T&T has to face the real-
ity that its main export earnings have been
significantly impacted by lower prices and
therefore the country simply did not have the
money to support its spending patterns.
He said: "In early 2015 I wrote about this.
I cautioned the last government that they had
to make cuts and that those cuts needed to
be wide and deep or you risked the country
facing a worse recession than if you took
immediate action. But no one listened to me."
Farrell pointed out that the country s balance
of payments position was severely weakened
due to lower inflows of hard currency and
dismissed the notion of any soft landing for
In an interview on Thursday, former gov-
ernment minister, Mariano Browne, supported
Farrell s position suggesting that the TT dollar
was significantly over valued and there was
a need for a correction.
He told the Business Guardian: "It s already
happening. Just look at what the US dollar
is selling for in the cambios. It s now $7.50
to US$1. That should give you an idea of what
the real rate is. But it s easy to determine the
true value of the currency; simply put it out
to auction. "
Browne said the country has lost a signif-
icant amount of the value of its exports and
so cannot continue to operate as if things
were normal. To demonstrate his point on
the need for a devaluation of the currency he
said in 2015 the country lost 15 percent of its
foreign exchange reserves trying to protect
the TT dollar.
"We cannot bury our heads in the sand.
We have to face the reality that there will be
no soft landing. We don t have the resources
to defend the currency for any period of time
and I am not sure we should be trying to do
"I know there is the argument that the
small man will be hurt by a depreciation or
devaluation but what will you do if you lose
half your income? Do you go on living as if
nothing has happened? No you can t. You
have to cut your spending and the government
must do the same," Browne told the Business
He argued that the country s budget should
be no more than $42 billion which he said
was a sustainable figure.
Over the last 18 months T&T has had to
face falling export earnings due to low energy
prices that have affected all aspects of the
country s leading revenue and foreign currency
Farrell was asked at the chamber panel dis-
cussion if he thought Trinidad and Tobago
had the ability to make the hard decisions
necessary to improve its economic fortunes
and he said that he was cautiously optimistic.
He said: "I think we know what needs to
be done. From the economic management
point of view we know what needs to be done.
Whether there is the political will and whether
we can do it in the timeframe, that is another
question. But I think we know what needs to
be done. The Prime Minister has said he wants
to do it in two years and I think that is about
right. He has put himself out there and so I
am hopeful we will get what is needed to be
done and to get it done in the timeframe nec-
For Browne, it is simply a case of the gov-
ernment having no choice but to act in the
country s best interest, which includes allowing
the currency to devalue.
He opined, "I don t think people truly realise
the hole we find ourselves in and the quicker
we act and take serious measures to deal with
it including cuts and allowing the dollar to
find its real value then the better off we will
Since the Energy Chamber meeting last
month the TT dollar has moved from $6.39
to the US$1 to $6.55 to the US dollar or a
depreciation of two percent.
'T&T cannot afford
to protect dollar'
Prime Minister Keith Rowley centre, is assisted by regional president, bpTT Norman Christie in cutting the ribbon to mark the official opening of the 2016 Energy Conference and Tradeshow 2016
at Hyatt Regency on Wrightson Road in Port of Spain on January 18. Also in the photo from left Prof. Jeffrey Sachs,Minister of Trade and Industry Paula Gopee-Scoon,Chairman, Energy Chamber
of Trinidad and Tobago Vincent Pereira, Minister of Finance Colm Imbert, Minister in the Ministry of the Attorney General Stuart Young, President Exploration for BHP Billiton Petroleum, David
Rainey and Chief Executive Officer, The Energy Chamber of Trinidad and Tobago, Thackwray Driver. PHOTO:ABRAHAM DIAZ
Links Archive February 24th 2016 February 26th 2016 Navigation Previous Page Next Page