| October 1, 2007 issue
Trinidad & Tobago
Concern rising over climbing inflation
Govt spending grows with $10 billion 2009 budget
By Sandra Chouthi
Special to Indo Caribbean World
Port-of-Spain - On September 22, Finance Minister Karen Nunez-Tesheira delivered a (Can) $10 billion budget for 2009.
On September 26, the Central Bank reported that headline inflation for August 2008 was 13.5 percent, up from 11.9 percent a month earlier.
Last year October, headline inflation stood at 7.3 percent.
The Central Bank’s September report stated: “The latest information released by the Central Statistical Office indicates that headline inflation, measured by the 12-month increase in the Index of Retail Prices, rose to 13.5 percent in August 2008 from 11.9 percent in the previous month.”
The Central Bank has been warning government of increasing inflation for the last year.
Central Bank Governor Ewart Williams said in September that he was worried about inflation and sounded another warning.
Williams said measures should have been taken more quickly to deal with the present inflation dilemma since as he was “not sure if this country can wait on government’s budgetary medium-term fix.”
Noting that government has stated its objective was to reduce inflation to five to six percent over the medium-term, Williams said: “I am not too sure if we can wait for the medium-term, in the sense that inflation is close to 12 percent now is far too high.”
Additionally, “We would have liked to see it being done a bit faster.”
Williams said his experience suggested that unless inflation was reversed quickly, it tended to become embedded in the economy because people come to expect inflation.
“Inflation expectations increase and people tend to protect themselves by adjusting their prices, unions tend to understandably increase their wage demands, and in many cases introduce indexation methods,” Williams said.
The Central Bank has spent much of the last 18 months trying to curb inflation.
It sold foreign exchange to remove (Can) $1.01 billion of excess liquidity from the financial system to stem inflationary pressure. The bank also increased commercial banks’ reserve requirement from 11 percent to 15 percent.
Despite these efforts, the bank said inflation risks are likely to increase in coming months because of inflationary expectations, high global food and energy prices and mounting pressures for wage settlements.
“The 2009 budget package, which provides for an increase in government expenditure, is likely to further boost liquidity,” the Central Bank noted.
In successive reports, the Central Bank recorded high food inflation.
In its most recent report, the bank stated: “On a monthly basis, food prices increased by 5.6 percent - the largest monthly increase since December 2000.”
“The sharp jump in food inflation reflected significant increases in the prices of bread and cereal (62.6 percent compared with 60.3 percent last month), meat (16.5 percent compared with 11 percent) and vegetables (38 percent compared with 23.1 percent).”
Senior government ministers spent much of last year downplaying inflation as a national problem or blaming it on external forces.
Speaking to the Institute of Chartered Accountants of Trinidad and Tobago in December, Nunez-Tesheira spoke of inflation as the result of 15 consecutive years of what she called “above-trend, energy-sector-led economic expansion capacity constraints” feeding through to greater inflation pressures.
She acknowledged that inflationary pressures were occurring in Trinidad and Tobago while there were convulsions in international financial markets associated with the fallout from the sub-prime market in the United States.
Speaking to concerns over the role of the government’s own spending on its mega projects, which has been linked to inflation, Mariano Browne, Minister in the Ministry of Finance, said after the 2009 budget was delivered that government could not abruptly halt its initiatives.
Browne defended the government’s (Can) $10 billion budget and the fiscal moves presented in the package, saying the economy depended on the government spending.
He was speaking at the Caribbean Money Market Brokers’ 2008/2009 budget review seminar at the Hyatt Regency Trinidad.
“If government were to significantly reduce expenditure, the country would immediately go into a recession. Reducing expenditure immediately is not feasible. It has to happen over time.”
Browne said the government still strongly believed there was need for infrastructural development and development of the country’s human resource and, therefore, a need to spend.
Two of its biggest projects still to be completed are the Government Campus, a series of high-rise buildings to house such government departments as Customs and Excise, the Ministry of Education and the Ministry of Legal Affairs.
Then there’s the billion-dollar Waterfront Project, which includes the Hyatt Regency Trinidad hotel in Port-of-Spain.
Add government’s 2009 spending of (Can) $50 million to host the Summit of the Americas and the Commonwealth Heads of Government meeting.
Government’s 2008 budget of (Can) $8.4 billion, was pegged at (Can) $10 a barrel of oil.
This year’s budget is pegged at Cdn$14 a barrel.
Given that government has this year gone to Parliament to make two requests for supplemental funding during the financial year, the budget is likely to run way beyond (Can) $10 billion by next year September.
A key feature of its 2009 budget was the increase in the price of premium gasoline from (Can) $0.60 cents a litre to (Can) $0.80 cents a litre.
Speaking at a budget forum that the Ministry of Finance hosted on September 23, Nunez-Tesheira said the cars that use premium fuel “are very limited” with “a vast majority” of cars falling below the required octane level for premium fuel.
“The consumer has tremendous power and we must be more participatory in that regard. I don’t think we in Trinidad and Tobago recognise the tremendous power we have.”
She added: “The government had said very clearly it is looking at removing the subsidy on premium fuel. No maxi taxi can, in my view, use the removal of the subsidy of premium to raise the fare because maxi taxis use diesel.”
Kamla Persad-Bissessar, United National Congress-Alliance Member of Parliament for Siparia, delivered the Opposition’s reply to the 2009 budget in Parliament on September 26 in the absence of Opposition Leader Basdeo Panday, whom House Speaker Barry Sinanan suspended from Parliament for the better part of 2008 for use of a laptop while the house was in session.
In her reply, Persad-Bissessar noted that expenditure for Prime Minister Patrick Manning and his wife, Hazel, who is Minister of Local Government, for 2009 will be (Can) $7.38 million to “maintain their jet-setting lifestyle.”
Allocation for their entertainment for 2009 is (Can) $2.2 million “while regular citizens cannot afford to buy food.”
Persad-Bissessar said Manning “and his Government” in 2007 made at least ten trips on private jets costing taxpayers more than (Can) $3,600 an hour.
“Estimates for the ten trips put the expenditure in the vicinity of over (Can) $0.8 million,” she added.
Persad-Bissessar questioned the financial prudence of Manning’s attendance at a dinner at UWI in Jamaica in February.
“The Prime Minister was not there for a meeting or to conduct official business. He was there to enjoy the champagne and caviar, then flew home in the wee hours of the morning, not on a commercial flight, but on private aircraft. This excursion cost taxpayers over (Can) $50,000,” Persad-Bissessar said, holding up the giant Frequent Flyer card for Manning.
She said the government had given pensioners a paltry (Can) $60 - about (Can) $2 a day extra - while the government would spend (Can) $61.86 million in 2009 for public relations, according to expenditure documents.
“That is (Can) $169,452 a day on PR to look good while government says the elderly must live on (Can) $12.40 a day,” Persad-Bissessar said.
She noted that the ruling People’s National Movement had spent (Can) $40 billion in the last seven years it had been in office.
Pain, anguish as HCU shareholders meeting
Deosarran Bisnauth, CRMG public relations officer
|Port-of-Spain - Emotions ran high Monday, causing an uproar at a meeting of the Hindu Credit Union shareholders at Gaston Courts, Lange Park. The pain, the anguish and the frustration of the shareholders came out as they argued among themselves in an attempt to move forward.
The Credit Union Members Group (CRMG) organised the meeting with shareholders to discuss and put forward proposals to the Commissioner of Co-operatives for a plan to get their money from the HCU.
Last Friday the Commissioner, in a newspaper advertisement, urged shareholders to submit proposals.
Soon after the meeting started there was chaos in the auditorium: anger was vented, insults hurled and threats flew.
There was a strong police presence and two army officials, but it was HCU shareholders who physically restrained one man who kept interrupting the meeting by shouting and aggressively walking toward the podium.
The meeting, which was scheduled for 3 p.m., did not start until an hour later. More than 100 shareholders attended, the majority were elderly. Many went home in tears.Jenny Gobin, a shareholder and secretary of the CRMG, opened the meeting with her story and gained the crowd's support. "The one purpose we have in common is that we all want our money back," she said to the approval of everyone .
"My parents died a day apart from each other leaving me with four younger sisters to care for. I worked for 25 years in the UK, seven days a week, came back to this country built a business and had to sell it. I invested every penny in the HCU. I depended on the interest of that money to be able to support my younger sisters. That was my promise to my dead parents. And today I stand before you having to seek employment at my point in life to sustain my family," she said.
"We thought we would get together today to try and put some sense into the situation. Nobody here is to bully anybody, nobody here is to force anybody to do anything. We all have minds of our own and let me re-emphasise we are here for one purpose and one purpose only and that is to get our money back" she continued.
The man, who incited the uproar, started the confusion, asking, "How much money you have in the HCU? I have (TT) $17 million!" he shouted. He kept interrupting the meeting, shouting how much money (which changed at every interjection) he had invested in the HCU.
Organiser of the meeting, Deosaran Bisnath, CRMG public relations officer, told shareholders if they did not accept the proposals, then they did not have to lend their support as it was a consultative process.
He also warned that any threat made to his life was recorded and a list of names and numbers will be sent to the police.
As Bisnath put forward the first proposal, that there not be a liquidation of the HCU, everyone agreed. But there was chaos when he moved on to the other proposals.
Several men kept pulling Ajodha back to his seat as he argued with Bisnath. One frustrated elderly man got up and angrily pleaded for peace. A woman covered her face and wept.
Some of the women became angry and asked Bisnath what was his intention. Others vented their disagreement with the proposals and walked out.
It was only a week and a half ago that there was also an uproar at an HCU meeting when the Commissioner of Cooperatives had attempted to disclose the contents of a report from accounting firm Ernst and Young.
The meeting Monday ended with nothing achieved and scores of people in sadness.
Murder toll hits highest ever total
Port-of-Spain - The murder toll Sunday reached the 401 mark with two murders in South that pushed the toll to the highest ever in this country's history. The total homicide figure for 2007 was 392. Figures from the Homicide Bureau last Friday put the murder figure at 395.
Of the 401 people listed as murdered for the year, 31 were female, including two children - Hope Arismandez, eight, of Lime Head Road, Chaguanas, whose battered body was found in a canefield on the outskirts of Felicity; and Roshini Ramdial, three, of Asaraff Road, Charlieville, who died after being beaten about the body on July 5. Twenty-eight females were murdered last year.
Twelve taxi-drivers plying their trade were also found dead, also one kidnap victim, as well as seven State witnesses and four law enforcement officers who were attached to the Defence Force, Fire, Prison and Police Services.
So far, only 50 murders have been detected, with the highest detection rate being in the Eastern Division. Statistics from Homicide further showed Port-of-Spain as having recorded 115 murders - the highest in a division for the year thus far, with a detection number of ten.
Thirty-nine murders have been recorded for September with three days to go before the end of the month. May has been the bloodiest month thus far, with a record 56 murders, while June recorded the second highest number of homicides at 55.
Twenty eight murders were recorded for February, while January, March, April and August accounted for 42, 41, 40 and 49 murders, respectively.
The homicide figure of 401 does not include two cases of manslaughter recorded in Tobago and ten inquests ordered by the office of the Director of Public Prosecutions -these are also not recorded in Homicide figures of murders for the year.
Three shootings, two stabbings and a beating resulting in death are still under investigation and yet to be classified by Homicide. Killings are only classified as murders when an autopsy is done or when an investigation is completed, homicide officials said.
The murder toll continues to rise unabated despite two retreats held by various heads of Trinidad and Tobago national security in a bid to combat crime, moreso the homicide rate. The runaway murder toll is blamed on gang violence, illegal guns and the illegal drug trade.
On January 3, National Security Minister Martin Joseph said crime measures have failed to curb crime.
Following this declaration, various heads of national security-former commissioner of police Trevor Paul, acting CoP James Philbert, DCPs Glen Roach and Gilbert Reyes, Brig Roland Maundy, head of the Regiment, Coast Guard and Special Anti-Crime Unit of Trinidad and Tobago director Peter Joseph -held a three-day retreat at Salybia resort.
On September 5, Philbert and his senior officers also went on a three-day retreat to Grafton Beach Resort in Tobago.
On Friday, Joseph (Martin) announced during a Senate debate that SAUTT had been mandated to deal with gang-related crimes.
Rowley slams govt on Sunway deal
Port-of-Spain - Former Minister Keith Rowley is calling on the government to come clean on details of a memorandum of understanding with Malaysian company Sunway, in which Sunway is to construct highways, hotels and other infrastructural projects in Trinidad and Tobago.
Rowley made the call Monday, during his first contribution in the Parliament since being fired by Prime Minister Patrick Manning in April.
According to Rowley, the announcement of Sunway’s future projects with Trinidad and Tobago was made on the Internet through a top Sunway official. He lamented, however, that the government did not reveal the information. Rowley said:
“I had to go on the Internet to find out that Mr Yow and Sunway have an MOU to construct highways and other infrastructural projects. Question No 1: Which highways, which hotels, which resorts? And how come Mr Yow has this MOU and Mr Yang doesn’t have it and Mr Ling doesn’t have it, or I don’t have it?
“What procurement procedure gave Mr Yow this inside track that he could be telling the world that he has an MOU? Today, I am calling on the government to make that MOU public, so we could say what Mr Yow has or doesn’t have.”
Rowley said Sunway spoke of the “wonderful business” the company had attracted in Trinidad and Tobago, and that business was expected to get better.
He said the document referred to a quarrying contract in Trinidad and Tobago, where Sunway would produce a million tonnes and the government would purchase the full amount.
Rowley, however, dismissed statements from Opposition Chief Whip Ramesh Lawrence Maharaj that local contractors were not allowed to bid — though, his defence of the government in that respect did not stop him from taking it to task on the issue.
“My question to government — the terms and conditions that were offered to the local people when they bid, are they the same terms and conditions that Sunway ended up with?
“If they were not, why is it that local people were put at a disadvantage? When you look at what is being said, local persons were told you had to build a plant with the capacity of a million tonnes. The government in the first three years will guarantee to take 400,000 from you — in year four they will take 100,000 — so you will have to go to the market and sell 600,000 or 900,000 along the way.
“Is that the same thing that Sunway is saying here on the Internet that they have a contract to sell to the government a million tonnes a year?”
Look to markets outside the US says Financial Analyst
Port-of-Spain - Manufacturers in Trinidad have been advised to look to other markets outside the US as they brace for the eventual hit from the global financial crisis.
Financial analyst Ram Ramesh, speaking at the Trinidad and Tobago Manufacturers Association's and Scotiabank's panel discussion on the Crisis in the Global Financial market and its implications for Trinidad and Tobago at the Hilton Trinidad Hotel and Conference Centre, St Ann's, said although the impact on the local economy would not be felt until about a year from now there was need to diversify away from the US market.
"We are going to feel the pinch here eventually because the US is the most important trading partner for Trinidad and Tobago; 58 percent of our exports go there," Ramesh said.
"So I think that we should make a concerted effort to seek new markets in the east, and Middle East and Far East as well and I think that is where we will see growth."
He explained that because the US market was set to shrink and with no other economy big enough to take its place everyone who was dependent on that economy would have some impact down the line.
However, Ramesh said there was the likelihood of a shift of the financial capital from New York to perhaps Hong Kong or even the Middle East.
"That is a significant shift that we need to watch out and see how we are going to align ourselves with the respect."
Ramesh added that credit had virtually dried up in the US and no one was lending anybody any more therefore, even when the crisis is over there is going to be a significant number of higher grade credits that will first get to the market. Therefore, companies in the Caribbean will take sometime before they reach there." He also suggested that they conserve as much as they could now.
Sugar factory sold to workers
Port-of-Spain - More than a year after government agreed to sell the sugar factory at Usine Ste Madeleine, farmers will finally be able to take possession of it.
A delegation from the Sugarcane Farmers Cooperative Society Ltd handed over a cheque to a team from the Divestment Secretariat of the Planning Ministry for (TT) $7 million earlier this week. The ceremony was held at Brechin Castle.
Caroni (1975) Ltd chief executive officer Deosaran Jagroo confirmed the transaction. He said that SFCS will be allowed immediate access to the factory which remained closed following the harvest of the 2007 sugarcane crop.
The cooperative began negotiations with Caroni, the Sugar Manufacturing Company Ltd and Pricewaterhouse Coopers, the management consultant firm charged with the sale of Caroni's assets more than a year ago.
However, their hopes of harvesting a crop this year were dashed when they failed to acquire the sugar mill and the crops were later destroyed by wild fires.
Farmers had been looking at SFCS to begin its joint venture with CIVM following the closure of the sugarcane industry when government withdrew its support in 2007.
Officials of CIVM, a French company, visited farmers in April 2006 outlining a plan to produce paper from bagasse and a number of other products from sugarcane.
The visiting officials held talks with farmers organisations and trade union groups at SMCL's headquarters, Usine Ste Madeleine and a business proposal was outlined urging farmers to form the cooperative.
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