NHT has to invest funds
THE EDITOR, Sir:
Recently, there has been much discussion about the National Housing Trust (NHT) investing in the Outameni Experience attraction in Trelawny. The NHT has a surplus of cash because cash flows into that organisation at a rate which is greater than its capacity to build houses.
The question, therefore, arises: What should the NHT do with this surplus cash? Should it keep it in a safe at its headquarters, or put it in a savings account in one of the country's commercial banks at an interest rate way below the rate of inflation? Or should it lend it to the Government by buying treasury bills?
Parliament could slow down the inflow of cash to match the Trust's capacity to build houses by either reducing the NHT contribution or suspending it completely for a period of time. Outside of an act of Parliament to do this, the board of the NHT has a fiduciary responsibility to manage these surplus funds. These funds must be invested somewhere.
I do not wish to comment on the efficacy or otherwise of the Outameni investment, since I am not privy to the all the facts surrounding this investment, inclusive of the risk and expected rate of return or the overall portfolio of the NHT. The notion, however, that NHT funds should be used only for building houses and any deviation is a betrayal is misplaced.
Pension funds which collect money for payment of pensions routinely make investments in hotels and other economic activity with money collected to facilitate the payment of pension over time.
It is most unfortunate that three private-sector groups, which presumably understand something about the management of funds, should call for an investigation by the contractor general and the auditor general of the NHT's use of its funds for non-housing development.
The call by many for an investigation by the Parliament is also misplaced.
Dept of Economics,