Nadaleen Singh

T&T should not adopt aus­ter­i­ty mea­sures, but rather im­ple­ment mea­sures to stim­u­late eco­nom­ic growth, said Ja­son Julien, gen­er­al man­ag­er, First Cit­i­zens In­vest­ment Ser­vices (FCIS). "I think T&T is in a place right now where we could maybe use more stim­u­lus than aus­ter­i­ty be­cause we still have the ca­pac­i­ty to bor­row more," Julien said. "It is a fun­ny bal­anc­ing act. We al­so have to ask our­selves which levers do we pull now and which levers do we pull lat­er." The Cen­tral Bank's April 2012 Mon­e­tary Pol­i­cy Re­port showed the econ­o­my has been de­clin­ing for the last three years. Aus­ter­i­ty mea­sures are of­fi­cial ac­tions tak­en by the Gov­ern­ment to re­duce the amount of mon­ey it spends or the amount peo­ple spend. FCIS was pre­vi­ous­ly Caribbean Mon­ey Mar­ket Bro­kers Ltd, a sub­sidiary of CL Fi­nan­cial (CLF), which First Cit­i­zens took over in 2009 as part of the Gov­ern­ment's bailout agree­ment with CLF.

First Cit­i­zens Web site de­scribes FCIS as "the largest full ser­vice se­cu­ri­ties trad­ing com­pa­ny in the Caribbean." In an in­ter­view on June 18, at FCIS of­fice at Wain­wright Street, St Clair, Julien sub­stan­ti­at­ed his point on why T&T should not adopt aus­ter­i­ty mea­sures. "In our con­text, you might have to ask which one is more re­quired now (aus­ter­i­ty mea­sures or stim­u­lus)?

"You would nor­mal­ly look at aus­ter­i­ty in a sit­u­a­tion where your debt lev­el is get­ting out of hand, where the econ­o­my has oth­er types of chal­lenges. "Where in­fla­tion is at right now, it is still with­in a mod­er­ate lev­el that can be man­aged; where the liq­uid­i­ty is right now: there is so much liq­uid­i­ty. To me, we have a sit­u­a­tion where now might be a good time to find pock­ets of stim­u­lus to stim­u­late cer­tain parts of the econ­o­my and cut back on things which could get out of hand in the fu­ture." Julien said Guyana has al­ways had the po­ten­tial to do well, since its range of nat­ur­al re­sources is wider than T&T's, and it is lo­cat­ed close to Brazil and South Amer­i­ca. He con­tends Guyana's re­sources are un­der­utilised. "Guyana's chal­lenge has al­ways been hav­ing the re­sources, the pol­i­cy and the di­rec­tion, and not hav­ing the for­eign di­rect in­vest­ment to con­vert these things in­to growth.

"For­eign di­rect in­vest­ment is an­oth­er is­sue be­cause the econ­o­my it­self would have need­ed for­eign in­vestors to come in with cap­i­tal, and af­ford­able cap­i­tal, which would then trans­fer these re­sources in­to eco-in­dus­try, and then have some of that wealth from in­dus­try re­side in Guyana." Julien be­lieves that Guyana could be­come the food bas­ket of Cari­com, "if on­ly Cari­com would get its act to­geth­er. "T&T should be­come stronger trade part­ners with Guyana. Trinida­di­an com­pa­nies are al­ready in Guyana and as a trade part­ner, we should be there. "The tra­di­tion­al trade part­ners of T&T have al­ways been North Amer­i­ca, the East­ern Caribbean, Ja­maica, Bar­ba­dos and even the Unit­ed King­dom. Some of those economies are un­der pres­sure. We should ask our­selves where the pock­ets of growth out­side of T&T are, and try to find ways to tie in­to that growth." He sug­gest­ed that T&T can deep­en its foot­print in that ter­ri­to­ry through the man­u­fac­ture of pep­per­sauce, toi­let pa­per, ce­re­al and oth­er prod­ucts for ex­port. T&T can, in turn, im­port Guyana's tim­ber to build hous­es and ag­gre­gate for use in the con­struc­tion sec­tor.

FCIS' Caribbean reach

In the East­ern Caribbean, FCIS has done busi­ness with the gov­ern­ments of St Lu­cia, St Vin­cent, Grena­da, Do­mini­ca, and An­tigua and Bar­bu­da. Of the lot, Julien said the St Vin­cent and St Lu­cia economies are per­form­ing well. The debt lev­els of the two is­lands are "still man­age­able and their economies are still grow­ing." "St Lu­cia re­cent­ly had the In­ter­na­tion­al Mon­e­tary Fund vis­it. The most re­cent growth fore­casts is a one per cent pos­i­tive growth and their tourist ar­rivals are still a bit chal­lenged, but com­ing back. "The gov­ern­ment (St Lu­cia) plans to in­tro­duce val­ue added tax be­cause they don't have it yet," Julien said. "The econ­o­my has seen some de­vel­op­ment in that there have been some con­struc­tion projects that have come off the ground."

Bar­ba­dos

In late May, the Unit­ed States-based rat­ing agency, Moody's In­vestors Ser­vice down­grad­ed the cred­it rat­ing of the Bar­ba­dos-based Caribbean De­vel­op­ment Bank (CDB) by one notch from Aaa to Aa1. Of the in­vest­ment cli­mate in Bar­ba­dos, Julien said, "We view Bar­ba­dos as an econ­o­my that is strate­gic for the long term. Cur­rent­ly, Bar­ba­dos has a lot of chal­lenges, they have a slow­ing econ­o­my, and they re­cent­ly got down­grad­ed due to their in­vest­ment rat­ing from Moody's." By mid-Au­gust, the First Cit­i­zens Group, the par­ent com­pa­ny of FCIS, is ex­pect­ed to com­plete the ac­qui­si­tion of the But­ter­field Bank (Bar­ba­dos) Ltd.

Ex­pand­ing on the rea­sons why Bar­ba­dos has man­aged to main­tain a sta­ble econ­o­my, Julien said, "Bar­ba­dos, un­like T&T, if you look at the labour/gov­ern­ment re­la­tions where there is a ten­sion, Bar­ba­dos is less so. They have a unique arrange­ment where labour and gov­ern­ment work in a part­ner­ship, so that helps some of their eco­nom­ic chal­lenges. "One thing they have that we don't have is a fixed ex­change rate. They are proud of their two-to-one ex­change rate and they guard it. What that means is that in the time of cri­sis, they have one less lever to pull. "Where­as T&T could de­val­ue its dol­lar and our ex­ports be­come cheap­er, Bar­ba­dos does not have that op­tion be­cause they pre­fer to keep that two-to-one ex­change rate," Julien said. "In terms of cri­sis, their cen­tral bank is go­ing to have a lot more dif­fi­cul­ty in terms of man­ag­ing the econ­o­my."