An­tho­ny Wil­son

In an­nounc­ing what she de­scribed as the "re­con­fig­u­ra­tion" of the Cab­i­net of The Re­pub­lic of Trinidad and To­ba­go, Prime Min­is­ter Kam­la Per­sad-Bisses­sar said that her gov­ern­ment had been elect­ed on the wings of huge ex­pec­ta­tions from a pop­u­la­tion that had al­ready wait­ed too long for far too much. The Prime Min­is­ter then said: "We as­sumed of­fice af­ter a pe­ri­od of ex­ces­sive spend­ing that had not ad­dressed crit­i­cal so­cial and peo­ple cen­tered needs. The re­sult was a de­plet­ed Trea­sury and a na­tion in ur­gent need of help in so many ar­eas. "It be­came our great­est chal­lenge to sta­bilise the econ­o­my while in­vest­ing heav­i­ly in ad­dress­ing these needs, from broad­en­ing the so­cial as­sis­tance pro­grammes, fix­ing the Cli­co is­sue, set­tling some 36 wage ne­go­ti­a­tions and broad­en­ing the de­vel­op­ment of the coun­try for the first time in­to ar­eas that had been ne­glect­ed for decades. And we had to do it while pro­tect­ing our­selves from the ef­fects of a glob­al econ­o­my that is reel­ing un­der the weight of a re­ces­sion. But it is a rough road that leads to the heights of great­ness."

In re­fer­ring to fix­ing to the sta­b­li­sa­tion of the econ­o­my, the res­o­lu­tion of the Cli­co is­sue and set­tling the wage ne­go­ti­a­tions, the Prime Min­is­ter was mak­ing the case that the change of Min­is­ter of Fi­nance from Win­ston Dook­er­an to Lar­ry Howai "should not be seen for any one as an in­dict­ment on per­for­mance."

In the speech, she al­so said that the re­con­fig­u­ra­tion en­com­passed "ma­jor shifts in re­spon­si­bil­i­ties and port­fo­lios as I sought to get the most out of the best fit pos­si­ble," and that na­tion was en­ter­ing a "new phase of its de­vel­op­ment." In de­cid­ing to change the Min­is­ter of Fi­nance, it could be that sta­bil­is­ing the econ­o­my is not what the Prime Min­is­ter has in mind for T&T at this point-it is dif­fi­cult to fath­om that she could have a prob­lem with Mr Dook­er­an's "fix­ing" the Cli­co is­sue and set­tling the wage ne­go­ti­a­tions. It is quite pos­si­ble that the Prime Min­is­ter did not per­ceive Mr Dook­er­an as hav­ing the right per­son­al­i­ty and skills set to get the T&T econ­o­my rolling in­to growth mode. If Mr Howai is to be a "growth" Min­is­ter of Fi­nance, rather than a sta­b­li­sa­tion one, what are the prospects that the in­ter­na­tion­al econ­o­my will al­low him some lat­i­tude? In a pre­sen­ta­tion on Tues­day at a Work­shop on So­cial Di­a­logue Process at­tend­ed by gov­ern­ment, labour and em­ploy­ees, the new Min­is­ter of Fi­nance gave a hint at his dis­po­si­tion. He said: "Rev­enue pro­jec­tions are chal­lenged. There is the pro­ject­ed de­ple­tion of oil and nat­ur­al gas re­serves and there has been lim­it­ed ex­plo­ration and in­vest­ment ac­tiv­i­ty in re­cent years. We are fac­ing ma­jor chal­lenges as we seek to keep an in­creas­ing debt to GDP ra­tio un­der con­trol while stim­u­lat­ing eco­nom­ic de­mand. A key strate­gic de­ci­sion fac­ing the coun­try, there­fore, is de­ter­min­ing the ap­pro­pri­ate strat­e­gy for con­sum­ing, sav­ing and in­vest­ing the en­er­gy wealth."

It is note­wor­thy that the IMF sup­ports the no­tion that the Gov­ern­ment should "sus­tain the stim­u­lus" by en­sur­ing that the cap­i­tal ex­pen­di­ture al­lo­ca­tion dur­ing the cur­rent fis­cal year is spent. Ac­cord­ing to the Key Is­sues seg­ment of the June 1 Ar­ti­cle IV con­sul­ta­tion doc­u­ment on the T&T econ­o­my: "Notwith­stand­ing an over­all bal­ance in 2010/11, the de­te­ri­o­ra­tion in the non-en­er­gy bal­ance im­plied a sub­stan­tial fis­cal stim­u­lus. The near-term pri­or­i­ty is to sus­tain the stim­u­lus by im­ple­ment­ing the in­vest­ment pro­gram in the 2011/12 bud­get and de­vel­op­ing new state en­ter­prise in­vest­ment plans." But the IMF went on to add: "In the medi­um term, a ma­jor shift in the fis­cal tra­jec­to­ry is need­ed to re­sume net sav­ing for fu­ture gen­er­a­tions in view of the coun­try's di­min­ish­ing en­er­gy re­serves while main­tain­ing pub­lic in­vest­ment to sup­port growth." In oth­er words, the con­cept that the Gov­ern­ment should em­bark on three years of in­creased ex­pen­di­ture in or­der to win the next gen­er­al elec­tions would be anath­e­ma to the con­ven­tion­al ap­proach to eco­nom­ic man­age­ment and dan­ger­ous to the long-term eco­nom­ic sus­tain­abil­i­ty of the T&T econ­o­my. What Mr Howai needs to do is kick-start the econ­o­my, but then en­sure that in the 2013 bud­get the ta­ble is set for all of us to eat less food by im­pos­ing some dis­ci­pline in the ex­pen­di­ture pro­file of the Gov­ern­ment.

Such dis­ci­pline is es­pe­cial­ly rel­e­vant giv­en the soft­en­ing of the in­ter­na­tion­al com­mod­i­ty prices, in par­tic­u­lar the price of oil and nat­ur­al gas, which are two of this coun­try's biggest rev­enue earn­ers. If T&T's rev­enue is de­clin­ing be­cause of the in­ter­na­tion­al con­vul­sions in Eu­rope, Brazil and cer­tain parts of Asia, now may not be the best time for the Gov­ern­ment to em­bark on a new round of so­cial spend­ing which will be dif­fi­cult to un­wind if in the fu­ture com­mod­i­ty prices fall be­low the bench­marks set by the pre­vi­ous Min­is­ter of Fi­nance in the 2012 bud­get.

'Fair and bal­anced'

For what it is worth, Lar­ry Howai is some­one for whom I tremen­dous re­spect-both be­cause he is a fair and bal­anced per­son and be­cause he is ob­vi­ous­ly a shrewd and in­sight­ful busi­ness ex­ec­u­tive. In choos­ing Mr Howai-who brings decades of ex­pe­ri­ence of work­ing in the com­pet­i­tive field of lo­cal bank­ing for a state-owned en­ti­ty-the Prime Min­is­ter has found some­one who has the dri­ve of a pri­vate sec­tor ex­ec­u­tive but a deep knowl­edge of the state sys­tem. There is lit­tle doubt that un­der Howai, the state-owned First Cit­i­zens has grown from strength to strength. First Cit­i­zens record­ed prof­it af­ter tax of $291 mil­lion in the 2005 fi­nan­cial year and in 2011 the bank record­ed af­ter-tax prof­it of $718 mil­lion-which is a 147 per cent im­prove­ment in prof­itabil­i­ty in six years lat­er, ac­cord­ing to the bank's Web site. Re­pub­lic Bank, on the oth­er hand, de­clared af­ter tax prof­its of $860 mil­lion in the year end­ing Sep­tem­ber 30 2005 and $1.12 bil­lion for the com­pa­ra­ble pe­ri­od in 2011, which means that it in­creased its prof­its by 30 per cent in the six year pe­ri­od. The to­tal as­sets of First Cit­i­zens in­creased from $11.6 bil­lion in 2005 to 31.2 bil­lion in 2011, which is and in­crease of near­ly 170 per cent. Re­pub­lic Banks to­tal as­sets in­creased from $31.6 bil­lion in 2005 to $47.2 bil­lion in 2011-an in­crease of about 50 per cent. From a per­for­mance stand point, it is clear that First Cit­i­zens un­der the new Min­is­ter of Fi­nance was T&T's best-per­form­ing bank. The ex­tent to which the bank's per­for­mance since Jan­u­ary 2009 is linked to the ac­qui­si­tion of CMMB for $1 and the arrange­ment that was ne­go­ti­at­ed for the as­sets and li­a­bil­i­ties of Cli­co In­vest­ment Bank is still con­tro­ver­sial and is a sub­ject that we will re­turn to in the near fu­ture.