UNC: government addicted to borrowing

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Davendranath Tancoo –

Oropouche West UNC MP Davendranath Tancoo said the government has demonstrated reliance on borrowing money and has depleted the resources of the Heritage and Stabilization Fund (HSF) as well as the Consolidated Fund .

Tancoo was speaking at the UNC weekly press conference on Sunday.

The HSF is a sovereign wealth fund and its main objectives are to save and invest excess revenues from oil production to support government spending during periods of declining revenues.

Tancoo said Central Bank Governor Dr Alvin Hillaire recently launched his Financial Stability Report, which said the economy is very strong and resilient.

“The point is, Trinidad and Tobago is in an economic crisis,” he said. “We have a government that depends entirely on the HSF for its foreign currency holdings (FX)

He said this was problematic as the government has yet to find ways to repay the borrowed money in foreign currency. “

He said the government had increased net public debt by 62%, from $ 77.3 billion to $ 125.3 billion in six years.

Tancoo added that “what is even worse than excessive borrowing is that it is largely foreign borrowing.” He said that did not include the $ 1.4 billion loan the government signed in May.

Tancoo said that with all the money borrowed, there had been no significant flow of income. “Having borrowed billions, this government has nothing to show for how it spent them.”

He said Finance Minister Colm Imbert said he took HSF because the covid19 pandemic affected income streams, but in 2015 he said Imbert withdrew more than $ 600 million .

“It’s not a bottomless pit,” he said, adding that the rating of global rating firm Standard and Poor’s (S&P) was based on TT’s confidence that the HSF has a nest egg. “It is ironic that this is the same nest egg that is being reduced by government borrowing.”

He said S&P has also looked at the Consolidated Fund where all government revenue goes.

“The HSF is basically our fixed deposit. The Consolidated Fund is our savings account. The minister has drawn on the consolidated fund as the fund is in crisis.

Tancoo said the government was borrowing to pay off recurring debt.

Also on Sunday, Tancoo accused Imbert of letting TT’s global credit rating drop significantly.

“We are here today in an economy which collapsed under Minister Colm Imbert”,

“It is this confidence in the economy that (attracts) investors. They use S&P to determine if they want to invest… Within three months (after Imbert took office), Standard and Poor’s went from an A rating to a negative outlook for TT.

“Since then, we have fallen every year from 2015 to June. S&P gave TT a fail rating.

Opposition leader Kamla Persad-Bissessar on Saturday accused Central Bank Governor Dr Alvin Hilaire of mismanagement of the bank.

She said at the launch of the Central Bank’s 2020 Financial Stability Report on Thursday, Hilaire said she was optimistic about the state of the economy.

However, she believes that TT’s current economic situation does not reflect this optimism.

“Given the severity of our economic crisis, one wonders what inspires this ‘optimism’ expressed by the governor of the Central Bank. He clearly does not read how his own reports or wishful thinking have replaced monetary policy based on data to the Central Bank “. she said.

According to the Central Bank’s May 2021 Monetary Policy Report, Persad-Bissessar noted that “domestic economic activity contracted in the fourth quarter of 2020 mainly due to sharp declines in the energy sector and indicators point to continued low activity at the start of 2021 “.

In a tweet on Sunday, Imbert said: “The opposition leader recklessly criticized the Central Bank (CBTT) for being too close to the PNM. The CBTT is responsible for managing interest rates, reserves, money supply, inflation, etc. She does it well. What does she want instead – Devaluation, a UNC Governor or Mayhem? “

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