Chief Executive Officer of the T&T Chamber of Commerce Catherine Kumar wants local banks to do more to stimulate the economy.She said they had become more "risk averse.""You would think because of the high liquidity, they would want to give loans. Real credit for real business in the economy is not really happening," she said.
"The banks want to protect the statistics they have now on performing loans and there is discussion on if they should set aside more of their capital for loans for more risky business. There are a lot of SMEs who want to go further but they can not get loans from the banks to go further."Kumar said SMEs are negatively affected when they do not get credit for their businesses: "The banks are saying they have to protect their capital and Central Bank guidelines and in some cases, as long as the proposal is bankable, they would give the loan.
"Of course that would depend on the definition of bankable but from the business community point of view there really needs to be an approach where you try to help the SMEs in particular."She said it has reached the stage where banks are saying they cannot take more deposits.
"Having $8 billion in liquidity is not good for the country. The banks now have to find a place to invest it. If they want to give a return to someone they have to invest the funds. They cannot find a way for their funds either. We have situations where banks are telling you they cannot take any more deposits. A country cannot reach that stage with all that idle liquidity," she warned.
Kumar called on the Government to create an environment that would attract more investors into the economy. "What we need to do is for the Government to find some way to get local and foreign investors to want to invest in T&T," she said. "We as individuals and the business community have to see what we can do. The crime situation is one deterrent for sure, the cost of doing business in T&T is very high because of the security measures you have to put in place. The cost of life also is a big cost."
She expressed concern that people are not spending enough money this Christmas season. "Some companies are seeing increase in sales. The place is busy, the traffic is there on the road, you are seeing the activity at the malls but it is not as though it is actually converting into actual purchases.It comes back to the whole question of why businesses are not investing. There is a greater move in the world now where there is a move away from consumer spending to investing," she said.
Kumar is predicting economic growth for T&T in 2014."We have heard the Minister of Finance project growth for 2014. No matter what we say we still rely on the energy sector as our main contributor to the GDP. There will be more growth in the energy sector which will propel us," she said.