Finance Minister Winston Dookeran's plan to deal with Clico policyholders-involving 20-year bonds-could increase T&T's foreign debt, according to PNM senator Dr Lester Henry. peaking in the Senate's debate of the Finance Bill, Henry noted that Dookeran had not spoken about the Clico issue "at all" in piloting the bill. He said the Clico plan would have consequences.
Henry accused Dookeran of "jawboning"-asserting positions without confirmation-that banks would pay 90 cents on the dollar on the 20-year bonds to be issued to policyholders. Henry said there was no real negotiation with the banks on this matter. Noting that investors might get 90 cents up to the fifth year, Henry asked what would happen after the fifth year. "And you will see a different picture emerging...Are you going to command the banks to give a particular rate in a market economy?" he asked.
"Also, the more pertinent question: How is the payout being financed for this 20-year bond? "From my understanding, it is heading in the direction of increasing our sovereign debt further because of the plan that involves taking some US from the domestic economy and investing it in an American instrument and leveraging it upwards several times over. "There is the expectation that once that instrument is profitable we can pay off policyholders," he said.
"The problem is if the investment goes sour, we'll be left with a very huge addition to our foreign debt-and that doesn't seem to be something that worries the minister." He also said Dookeran's statement about paying contractors was "wishy-washy hodgepodge." Noting that Works Minister Jack Warner had spoken initially of paying contractors in bonds, Henry noted Dookeran's subsequent statement about paying in cash.Henry said such situations were what caused problems for the Government when "you speak with several tongues and sometimes in several tongues..." (GA)