DA­REECE PO­LO

Se­nior Re­porter

da­reece.po­lo@guardian.co.tt

For­mer fi­nance min­is­ter Vish­nu Dhan­paul has pushed back against claims by his suc­ces­sor, Dav­en­dranath Tan­coo, that a new­ly se­cured US$1 bil­lion loan sig­nals strong in­ter­na­tion­al con­fi­dence in Trinidad and To­ba­go’s econ­o­my.

Speak­ing with Guardian Me­dia on the side­lines of the Peo­ple’s Na­tion­al Move­ment’s 70th an­niver­sary cel­e­bra­tions, Dhan­paul ac­cused the Unit­ed Na­tion­al Con­gress ad­min­is­tra­tion of sad­dling the coun­try with long-term debt at an ex­ces­sive cost.

“A lot of peo­ple think that 6.5 per cent coupon rate is ex­ceed­ing­ly high. I’ll give you an ex­am­ple: the last time we went out to the mar­ket in 2016, the coupon was 4.5 per cent and it was three times over­sub­scribed. Be­fore that, in 2013 un­der Min­is­ter Howai, the coupon was sim­i­lar, around 4.54 per cent, and it was 11 times over­sub­scribed,” he said.

He dis­missed the gov­ern­ment’s char­ac­ter­i­sa­tion of in­vestor in­ter­est as a “vote of con­fi­dence,” ar­gu­ing that de­mand at such a high rate was un­re­mark­able.

“For the min­is­ter to say that 6.5 per cent at 2.5 times over­sub­scribed is a vote of con­fi­dence is ridicu­lous. At 6.5 per cent, it should be about ten times over­sub­scribed. Peo­ple should be thrilled to get that rate. It is a ridicu­lous rate,” Dhan­paul said.

Ear­li­er this week, Tan­coo an­nounced that the loan, joint­ly arranged by JP Mor­gan and Bank of Amer­i­ca, had at­tract­ed of­fers of up to two-and-a-half times the re­quest­ed amount, de­scrib­ing the re­sponse as ev­i­dence of in­vestor faith in the gov­ern­ment’s fis­cal man­age­ment.

But Dhan­paul warned that the in­ter­est bur­den alone would weigh heav­i­ly on pub­lic fi­nances.

“The an­nu­al in­ter­est pay­ment alone is US$65 mil­lion—that’s over TT$1 bil­lion in in­ter­est each year. Then the min­is­ter talks about ways to re­pay it, in­creas­ing rev­enue streams, and the re­vi­tal­i­sa­tion plan. When? What he’s do­ing is mort­gag­ing the en­tire coun­try for the next ten years,” he said.

He said the pro­ject­ed cost of about US$650 mil­lion in in­ter­est over the life of the loan should have raised alarms with­in the Min­istry of Fi­nance.

“At 6.5 per cent? Ask any­one in the in­dus­try. 6.5 per cent is al­most bor­der­ing on in­san­i­ty. I can’t be­lieve his ad­vis­ers al­lowed that. As I said, the min­is­ter of fi­nance lit­er­al­ly mort­gaged the next gen­er­a­tion,” Dhan­paul said.

Dhan­paul al­so weighed in on re­ports that the Chief Per­son­nel Of­fi­cer made a for­mal of­fer of a ten per cent salary in­crease to the Na­tion­al Union of Gov­ern­ment and Fed­er­at­ed Work­ers, warn­ing of knock-on ef­fects across the pub­lic sec­tor.

“All the oth­er unions will be com­ing for the same thing. There’s no es­cap­ing that. There will be ten per cent is­land-wide,” he said.

He cau­tioned that high­er wage bills would fur­ther strain an al­ready stretched bud­get.

“It takes about TT$4.5 bil­lion to run the coun­try every month, and this just adds to re­cur­rent ex­pen­di­ture. I hope the min­is­ter has a plan, but right now, they can’t even meet the TT$4.5 bil­lion month­ly. To add more is just more bur­den on the ex­che­quer,” Dhan­paul said.