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Finance Minister: Govt, CDB in talks to prevent CLF repeat
A strategic alert system to quickly detect local companies at risk of failing and to prevent them from doing so is high on the Government’s list of consumer safeguards, Finance Minister Winston Dookeran has said. Dookeran said he wants to widen the safety net, citing the regional pressures felt and lessons learnt from the near collapse of CL Financial.
He said the Government was currently engaged in discussions with the Caribbean Development Bank (CDB) to look at solutions that could hopefully prevent a repeat of a company the size of CL Financial, with as many diverse interests and reach across the region, from folding. Dookeran made it clear that Clico and British American, two major insurance brands under the CL Financial banner, were still viable and that the State was drafting the best business model for continued growth of these companies.
Outlining an immediate strategy for T&T, he said: “We will shortly be putting into place an independent risk committee in order to review the risk that this country might face in the future with respect to financial failures or indeed with respect to stability issues that are before us.” Dookeran was speaking at Monday’s ceremony to rebrand RBTT Bank into RBC Royal Bank at the company’s Caribbean headquarters on St Clair Avenue, St Clair.
Effects of CLF on GDP
He said the People’s Partnership administration’s agenda would also facilitate the reorganising of this country’s balance sheets, while implementing policies to improve the social delivery structures. Dookeran said when the team from the International Monetary Fund (IMF) accepted government’s invitation to visit this country in the early days of the Kamla Persad-Bissessar-led administration, a full examination of the strength, stresses and weaknesses of T&T’s financial sector was done.
“After their assessment, which they reported to the IMF, they said the T&T financial system is stable, can withstand the pressures of the past, notwithstanding the fact that we had to deal with an enormous challenge on the financial landscape with the near collapse of a major financial insurance company. “That incidentally, affected our economy to the extent of ten per cent of our gross domestic product (GDP) and affected the economy of the Caribbean to the extent of 17 per cent,” he said.
“This Government inherited that challenge and we began a very ambitious programme to find a solution. The solution is not yet complete, but I feel comfortable at this point that we have been able to put back into place the necessary statutory reserves that are required for the further growth of Clico and British American. “We are currently engaged in discussions with the CDB in order to look at the problems in the Caribbean, which was also reeling under that particular situation.”
Reigniting T&T’s fortunes
He said the Government had set the foundation for growth since the last budget. He said that beyond that, steps had been taken to ensure there were new opportunities for investment in the energy sector and the non-energy sector. “We, in T&T, are trying to reignite our economic fortunes. Over the last year, we have been attempting to put into place a serious and concerted and well-structured economic programme.
To that end, I believe that we are now engaged in a new thrust and a new confidence that is now emerging in the T&T landscape. “The economic plan that we’ve spoken about is a plan that has been structured and sequenced in order to be able to ensure its durability and also to work towards the goal of major transformation in the years to come.” The Government had a three-prong approach to economic restructuring, said Dookeran, which would see this country’s exposure to international financial turmoil reduced, government’s fiscal priorities re-organised and the upgrade of the social delivery product.
“T&T’s economy must not be exposed to world developments as witnessed in several European economies. Therefore, this country’s financial balance sheet has to be in order, to ensure durability and promote confidence which would see the realignment of government’s priorities on expenditure that would reflect the requirements of the future. “The requirements were to alter the priorities so that the benefits of growth and development will be more equitably shared in the country.”
He said while presenting the Supplemental Appropriations Bill in Parliament last Friday, he was able to point out the changes in the expenditure pattern towards greater emphasis on ensuring the inclusiveness of development to take place in T&T, with a financial blueprint that ensured soundness and safety in the financial world. “That has always been an agenda topic for us, but we have given new emphasis to that in order to be able to ensure that the future vulnerability in T&T can, in fact, be reduced.
Government had been able to deal with the issues of safety and soundness of the banking sector, to some extent, very effectively.” He linked the stability of the Caribbean economy to its banking sector and said the rebranding of RBTT Bank to RBC Royal Bank was significant, citing that the region was under-going major changes. “And the very definition of that community is also under immense stress, at this point in time, from the point of view of banking.
What we are facing, therefore, in this rebranding exercise is the scope for expansion of activities and for placing T&T in a more significant position in global banking in the Caribbean and in the wider Caribbean that is likely to emerge, even more so, in the years to come. “It is against that challenge of being a global company and headquartered in T&T in a growing Caribbean I see this rebranding exercise.” He said RBTT’s transformation to RBC was part of a global order, where multi-national companies were becoming global companies, a development that was more profound in the field of banking.
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