Nov 2010 Financial News

IMF: Govt inaction inhibiting private sector

Nov 18, 2010

An unpublished report of the International Monetary Fund’s (IMF) Article IV consultation with Trinidad and Tobago, completed earlier this month, has attributed the private sector’s lethargy since the May 24 change of government to concerns about the Government’s actions and its inaction. “A clear finding is that the uncertainty about the Government’s intentions and delays in actions are inhibiting private sector confidence,” states the unpublished November 8 concluding statement from the IMF team, which left the country last week. According to the IMF: “Steps to enhance confidence would include expediting the appointment of key boards that oversee public sector investment and accelerating efforts to implement this year’s Public Sector Investment Programme.”

On the issue of the appointment of key boards, the IMF would have been referring to the failure by the Government to announce boards for the National Insurance Board (NIB), the National Insurance Property Development Company (Nipdec), the Urban Development Corporation or the Education Facilities. The document is a more detailed assessment of the state of the economy than the press release which the team issued, with the consent of the Ministry of Finance, at the end of its visit here. The press release stated: “The 2010/11 budget appropriately adopts an expansionary stance with some additional expenditure and tax incentives to catalyze increased private sector activity and higher domestic and external investments to support a recovery. “The government could enhance confidence by accelerating efforts to implement the public sector investment programme and addressing arrears to contractors and VAT refunds.”

The team is working on an even more detailed analysis of the local economy which is expected to be published in January after it receives the approval of the IMF’s executive committee. Speaking last week Wednesday, the day after the IMF press release was issued, Finance Minister Winston Dookeran cited the IMF to support his contention that “in 2011, we will begin to see the emergence of the recovery process.” In an address to the American Chamber of Commerce for T&T, Dookeran said: “The clouds represent the uncertainties in the financial world. “And those uncertainties reflected themselves in the demands emanating from the Clico situation, from the perceived arrears owed to contractors, from the constant cry of the business sector that value added tax refunds are not paid on time and now they are large. True, these are realities even if at times exaggerated in the press. “We must remove these clouds in order for us to see the blue sky ahead of us. And unless and until those clouds are removed, uncertainty will remain the order of the financial landscape.”


Source:
Trinidad Guardian
Thursday November 18, 2010

http://guardian.co.tt/business/business-guardian/2010/11/18/imf-govt-inaction-inhibiting-private-sector