Tue | Aug 22, 2017

Trinidad won’t seek IMF bailout

Published:Wednesday | April 27, 2016 | 4:00 AM
The Point-a-Pierre harbour with the Point Lisas industrial estate in the background in Trinidad and Tobago. The oil-producer is now crafting a new fiscal programme with the assistance of the World Bank and IMF, but says it is not a formal structural agreement.

The Trinidad & Tobago government says it will not enter into any structural adjustment programme with the International Monetary Fund (IMF), but defended its decision to have advisers from the IMF and the World Bank assist with reviving the oil-dependent economy.

"We are not in any standby arrangement and under this PNM (People's National Movement) administration, under the leadership of Dr Keith Christopher Rowley, there will be no standby arrangement with the IMF," said Finance Minister Colm Imbert in Parliament on Monday.

Opposition legislators have charged that the eight-month-old Rowley administration was seeking to hoodwink Trinidadians and had entered into an agreement with the IMF as the country deals with a significant decline in revenue due to falling world oil prices.

Last weekend, the leader of the Movement for Social Justice (MSJ), David Abdula, described as "an amazing indication of the abject failure" the decision of the government to seek the assistance of the two financial institutions in dealing with the sluggish local economy.

"It's an indication that he's (Imbert) unsure of what he's doing and if that is an indication of that, then that contributes to the lack of confidence generally in the economy," Abdulah said.

Last week, Imbert announced that teams from the two multilateral agencies were in Trinidad assisting the government saying: "We have made arrangements for experts, primarily from the World Bank, but also from the IMF, to give us advice on a number of pressing matters. The first one would be an appropriate oil and gas fiscal regime in the current environment of low oil prices and declining production in our oil and gasfields."

BOOST REVENUE

It would look at ways to boost revenue in a low oil price environment as well as "provide incentives to oil companies" goals that Imbert himself said would appear contradictory.

The finance minister defended the new plan, telling legislators that "multinational companies charge expenses in their head office, which are unreasonable and thereby deprive Trinidad & Tobago of revenue. So this much reviled and hated IMF ... will help this country to design a competitive oil and tax regime which will boost revenue for Trinidad & Tobago and assist us with transfer pricing, which will allow us to earn as much revenue as we can from the multinationals."

He said the IMF assist countries all over the world and accused the opposition of wanting to "frighten people for absolutely no reason".

As for the Economic Advisory Board, Imbert defended its composition as all-inclusive.

"We made sure to bring as many diverse views as possible ... we have people on the right, people on the left, people in the middle, we have trade unionists, we have businessmen, we have academics all together in one creative beautiful mixture," he said.

Earlier this month, the Central Bank of Trinidad and Tobago (CBTT) said the effects of depressed oil prices and global growth uncertainties would continue to weigh on the economy in 2016.

In its latest economic bulletin, the central bank said GDP is projected to contract by close to two per cent, based on forecasts for both the energy and non-energy sectors.

Annual inflation is expected to settle around its 10-year average of six per cent given the impact of the widening of the VAT base on food prices; while the unemployment rate is expected to rise marginally to 4.1 per cent.

Meanwhile, dismissed CBTT governor Jwala Rambarran said on Tuesday that he expects there to be more layoffs as the country deals with the downturn in economic growth.

"We see every week, layoffs, further retrenchment ... strange enough that is happening in a period where you have had significant slack in the labour market," he said on television.

"Our labour market is an area that needs significant reform," Rambarran said.

Rambarran was replaced as central bank governor last December by Dr Alvin Hilaire, after he ran afoul of the Rowley administration with a public declaration that Trinidad was in recession.

- CMC