In the space of less than a week the Minister of Finance has demonstrated very poor judgment on two occasions. On Thursday October 27th, there was the public announcement by the Unit Trust Corporation (UTC) that a $400 million Bond Issue for the Education Facilities Company Ltd (EFCL), and for which the UTC is the Trustee was going to be in default as of October 30th, 2016. In 2009, the then Government borrowed $400 million for the EFCL via a bond issue. This bond issue which attracted a fixed interest rate of 5.35% had a maturity date of October 30th, 2016 which means on that date bond holders would be paid their principal amount plus interest.
However, the Trustee (UTC) issued a statement dated October 24th but published on October 27th stating that the bond issue was going to be defaulted – that is bond holders would not get paid their principal and interest - on the stipulated date of October 30th. The UTC as Trustee in its statement then advised of a Special Meeting of Bond Holders to be held on November 21st, 2016 at which meeting bond holders would vote on a Resolution that would postpone the date on which they would be paid from October 30th, 2016 to April 30th, 2017.
This development was unprecedented in the history of Trinidad and Tobago Government issued bonds. As an investment instrument, Government issued bonds are understood to be the safest. The interest rate may not be the highest but in return for this bond holders are sure that on the date of maturity they will get their money. After all the Government guarantees it. The EFCL is a special purpose state enterprise and so bond holders would have felt secure when they bought the bonds in 2009.
On Friday October 28th, the Ministry of Finance issued a hastily put together press release informing bond holders and the public that the bonds and interest would be paid immediately and not defaulted on. It is clear to the MSJ that someone therefore had to drop the ball and drop it badly. It is the Minister of Finance’s responsibility to ensure that no bond issue is defaulted on. Since the UTC as Trustee issued a statement dated October 24th and placed as a paid ad in the press on October 27th – that is in advance of the maturity date of October 30th - it suggests that it (the UTC) had information that the Minister of Finance did not or would not make available the funds for the bonds to be paid on October 30th.
The buck on this issue stops with the Minister of Finance. He dropped the ball. Dropped catches lose cricket matches. In this case the financial implications are very significant. Defaults adversely affect a country’s credit rating. Interest rates on existing and new borrowings on the international market can go up thus placing greater pressure on debt servicing. New borrowings could be jeopardized as lenders will not want to risk the possibility of their loans not being repaid when due. The Minister must tell the country what happened and why.
The second example of poor judgment and bad governance is the statement by the Minister earlier today at the “Caribbean High Level Forum” organized by the International Monetary Fund (IMF) and the Government of Trinidad and Tobago. It is reported that at that Forum Minister Imbert stated that “there will be no salary increases for public employees for the period 2017- 2010”. The first thing wrong with this is that public employees are represented by trade unions and industrial relations and the law require decisions on salary/wage increases and other terms and conditions of work to be determined through the process of collective bargaining. There can be absolutely no unilateral decision by the employer. Mr. Imbert cannot make that decision. It is not his alone to make and by stating this he is showing total disregard for the law, proper industrial relations and the process of collective bargaining.
The second thing wrong with Mr. Imbert’s statement is that it is contrary to the Tripartite Process (The National Tripartite Advisory Council) that his Government established with great fanfare earlier this year. Given the country’s difficult economic circumstances the NTAC is the forum for a proper discussion on incomes in Trinidad and Tobago. That discussion must not only be focused on wages and salaries of workers, it must also address prices, profits of companies and the salaries and perks of executive management. Anything less than such a discussion and with the arrogant statement by the Minister of Finance means that the Government is not serious about tripartism, is mamaguying workers and is intent on creating more and more inequality in Trinidad and Tobago.
The third thing wrong with Mr. Imbert’s statement is that it was made at a Forum organized by the IMF. It appears that Mr. Imbert is trying his best to please the IMF and to say to them that his Government will be pursuing IMF type structural adjustment policies which place the burden of economic adjustment on the backs of working people and the poor.
The MSJ says we reject such neo-liberal policies and we will be informing and educating the burgesses in Arima and Point Fortin about the implications of the Government’s actions so that they can “Send Them A Message” come November 28th.
