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Trinidad finance minister blasts central bank governor over recession statement

Published:Wednesday | December 9, 2015 | 12:00 AM
Governor of the Central Bank of Trinidad & Tobago, Jwala Rambarran.

Finance Minister Colm Imbert has described as "discourteous" the decision by the governor of the Central Bank of Trinidad and Tobago (CBTT) to announce that the twin-island republic was "officially in a recession" without first informing the government.

CBTT Governor Jwala Rambarran, while addressing the Fifth Monetary Policy Forum organised by the Downtown Owners and Merchants last Friday, December 4, said Trinidad was "facing austere economic circumstances.

"The economic priorities in 2016 must be aimed at supporting a firm enough recovery through appropriate monetary and fiscal policies, setting forth a medium-term framework which balances consuming, saving and investing energy wealth," he said.

Rambarran said that the grim reality is Trinidad &Tobago is in a recession, stuck in a low-growth cycle, and was vulnerable to further declines in energy prices and production.

"Four consecutive quarters of decline in real GDP in 2015 means Trinidad and Tobago is now officially in a recession," he said, adding "what brought on this 2015 recession ... should not come as a major surprise to many of us".

However, speaking on a radio programme, Imbert, who was appointed finance minister when the People's National Movement won the September 7 general election, told listeners "it was a bit discourteous of the governor not to inform the minister of finance" of what he was going to say.

"My understanding is that it has not been the practice in the past. You know, governors have always had a close working relationship with ministers of finance and have always kept ministers of finance abreast. As a matter of fact, it is a legal requirement," Imbert said. "I was a bit taken aback that the governor would make these statements without consulting me."

In his remarks, Rambarran said the central bank's short-term outlook for 2016 is for continued contraction of the Trinidad economy, on the back of a further decline in the energy sector, which will compound sluggishness of the non-energy sector. The central government's fiscal deficit is also expanded to expand beyond the budgeted target, and public debt to rise as a result of more government borrowing to finance projects.

The central banker said that the appropriate monetary and fiscal policies can only come from CBTT and the Ministry of Finance working together.

"We have no choice, we can and should work together to ensure we get the policies right for the country's recovery. We will all be double damned if spite, vindictiveness and ego keep us from working together to help our country," added Rambarran.

Imbert, speaking on Citadel radio network, said he got the impression that "there is a lack of acceptance on the part of certain individuals that the government has changed".

Rambarran was appointed under the tenure of the People's Partnership government of Kamla Persad-Bissessar.

"In addition, there's a lot of misconception that have cropped up over the last several years. There is this view, I don't know how it has emerged, that the central bank is completely independent of the government; that is entirely untrue," said Imbert, who is one of Trinidad's longest-serving legislators.

He said the relevant legislation in Section 50 "makes it very clear that the minister is entitled to give the central bank policy directives and the central bank must follow these policy directives and also give effect to these monetary policies".

- CMC