Feb 2006 Financial News

Capital flight worries Central Bank Gov

Feb 07, 2006

In addition to rapidly increasing consumer imports, millions of dollars of unidentified capital outflows have started worrying Central Bank Governor Ewart Wiilliams.
In addition to rapidly increasing consumer imports, millions of dollars of unidentified capital outflows have started worrying Central Bank Governor Ewart Williams.

He revealed this during his address to ninth South Trinidad Chamber of Industry and Commerce Petroleum Conference at the Hilton hotel yesterday.

“We need to find a way to deal with all legitimate trade and capital transactions, but at the same time coax the market, as best we can, so that capital flight (a word I don’t like to use) is controlled,” he said.

He said that during the normally slow month of January, the Central Bank normally would sell between US$25 million and US$30 million to commercial banks but the institution sold US$110 million last month.

Consumer imports, over the last five years, have been increasing at the rate of 25 to 30 per cent every year.

He said there was no shortage of foreign exchange but there was an issue of how to allocate it efficiently to satisfy everybody.

Williams said that the intense focus on education and training, the planned broadening of the industrial sector through new cluster estates, initial steps to put in place a more efficient tax regime, and the formalising of the Revenue Stabilisation Fund were among the positive steps being taken to develop a strong, viable and sustainable onshore economy.

“Given some of the social and infrastructural deficiencies that we face in Trinidad and Tobago,” he said, “some increase in Government expenditures to correct income inequalities and to facilitate rapid diversification is clearly justified.”

But the challenge, he said, was arriving at the correct balance between spending and saving the energy windfall.

The non-energy fiscal deficit, at its current level of 13 per cent of GDP, was unsustainable and should be reduced, he said.

“With our other endowments and our oil and gas resources,” he said, “T&T is clearly blessed. With good planning and economic management we could almost have our cake and eat it too.”

Ian Gooding
The Trinidad Guardian
Tuesday, 7th February, 2006.
http://www.guardian.co.tt/business1.html