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Thursday, July 24, 2025

First Citizens banker: Business borrowing up 3%

by

20120203

T&T is still in a good po­si­tion de­spite the gloomy glob­al out­look and un­cer­tain­ty, says Sana Rag­bir, as­sis­tant gen­er­al man­ag­er, First Cit­i­zens In­vest­ment Ser­vices Ltd. She out­lined sev­er­al fac­tors that con­tributed to T&T's pos­i­tive po­si­tion, crit­i­cal among them was that busi­ness bor­row­ing is on the rise. "Twen­ty-three months pri­or to Oc­to­ber 2011, busi­ness bor­row­ing was on a con­stant de­cline. But over the last two months, this has changed. It's up to three per cent," she said. "This is a good sign be­cause it shows that busi­ness­es may be ex­press­ing op­ti­mism in the lo­cal econ­o­my and we hope this trend con­tin­ues." Rag­bir said at the end of 2011 the ex­cess liq­uid­i­ty in the banks amount­ed to $6 bil­lion, which re­sult­ed in in­ter­est rates de­clin­ing.

In its Jan­u­ary 27 re­po rate re­port, the Cen­tral Bank stat­ed that ex­cess com­mer­cial bank de­posits av­er­aged more than $5 bil­lion in the months of No­vem­ber and De­cem­ber. Since T&T had been neg­a­tive­ly im­pact­ed by the 2008 glob­al cri­sis, the busi­ness com­mu­ni­ty has adopt­ed a wait-and-see ap­proach to see how Gov­ern­ment would treat with the cri­sis. This re­sult­ed in lit­tle to no in­vest­ments be­ing made by the busi­ness com­mu­ni­ty be­cause of de­clin­ing con­fi­dence in the econ­o­my. The re­po rate re­port stat­ed that busi­ness lend­ing, which record­ed in Oc­to­ber 2011 its first year-on-year in­crease in 23 months, picked up mo­men­tum in No­vem­ber, ris­ing by 2.7 per cent (year-on-year).

Rag­bir, who was speak­ing yes­ter­day at The Glob­al Mar­ket Out­look: What will 2012 Hold for In­vestors Con­fer­ence, gave the busi­ness com­mu­ni­ty and in­vestors hope. The con­fer­ence, which was host­ed by First Cit­i­zens In­vest­ments Ser­vices, was held at the Hy­att Trinidad Re­gency ho­tel, Port-of-Spain. Oth­er pos­i­tive eco­nom­ic fac­tors Rag­bir iden­ti­fied were:

• The prime lend­ing rate is on the de­cline: it's at 7.75 per cent, while the re­po rate is at three per cent "It is our hope that the Cen­tral Bank con­tin­ues to re­duce the re­po rate as it would help in stim­u­lat­ing the econ­o­my;"

• Re­al es­tate bor­row­ing con­tin­ues to be at an av­er­age of 9 per cent. There has been no sig­nif­i­cant dip in this area com­pared to the Unit­ed States

• Con­sumer cred­it is mov­ing from a neg­a­tive po­si­tion to pos­i­tive

• Con­sumers are tak­ing loans to fi­nance oth­er things than house ac­qui­si­tion

2012 pro­jec­tions

Rag­bir said she is op­ti­mistic that there would be some pos­i­tive growth in 2012. "Even though there was some lev­el of con­trac­tion, we ex­pect pos­i­tive growth for 2012." She boast­ed that T&T is an en­vi­able po­si­tion com­pared to its re­gion­al peers be­cause the coun­try has ac­cu­mu­lat­ed close to US$10 bil­lion in for­eign re­serves. "While oth­er coun­tries in the Caribbean have weeks of im­port cov­er, we have about 12 months." Re­gard­ing the nat­ur­al gas prices, she ex­plained that for 2011, T&T was able to sell its nat­ur­al gas at US$3.10, an in­crease from the Hen­ry Hub price of US$2.75. She point­ed out that un­em­ploy­ment is ex­pect­ed to de­cline based on the num­ber of projects the Gov­ern­ment has out­lined for and start­ed in 2012.

The de­cline in un­em­ploy­ment is premised on:

• US$400 mil­lion CariSal project ex­pect­ed to cre­ate 200 jobs

• The methanol AUM 2 plant for melamine pro­duc­tion: US$1.9 bil­lion, to cre­ate close to 3000 jobs

•The $7 bil­lion San Fer­nan­do to Point Fortin high­way

Re­gard­ing T&T ex­change rate, Rag­bir said she ex­pects the rate of de­pre­ci­a­tion to de­cline. Coun­tries' debt to gross do­mes­tic prod­uct (GDP) ra­tio seems to be a ma­jor is­sue. "T&T's debt to GDP ra­tio lev­els are al­so high, roam­ing around 36 per cent and is ex­pect­ed to in­crease to 40 per cent," Rag­bir said.


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