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‘Govt has space to pay everyone’
The issue isn’t one of confidence in the economy, it’s one of confidence in Minister of Finance Winston Dookeran. That’s the view of deputy chairman of the Clico Policyholders Group, Peter Permell, who produced a Standard and Poor’s (S&P) report on T&T yesterday which gave the country a stable outlook.
Permell said this report, which affirmed its “A” foreign currency and “A+” local currency long-term sovereign credit ratings on T&T, was in contrast to the “doom and gloom that the Minister of Finance has been meticulously painting of the economy since he came into office.” This situation, said Permell, was “very confusing.”
The S&P report stated: “Including the Government’s latest plan to bail out investors at CL Financial’s life insurance company, Colonial Life Insurance Co (Clico), S&P’s expects net general government debt will rise to 28 per cent of GDP in fiscal 2011 from 15 per cent in fiscal 2010, though it will remain below the 36 per cent median for ‘A’ rated sovereigns. “The stable outlook reflects S&P’s expectation that the Government will be able to muddle through its intervention in the CL Financial bankruptcy without further eroding its balance sheet,” it said. Given this thumbs-up on the economy by a respected rating agency, Permell says there’s room for Dookeran to exercise flexibility in dealing with the policyholders.
This flexibility, he argued, could also be extended to unions and contractors who are owed money by the Government. He said he doesn’t understand why the Government “is squeezing the policyholders,” given the positive picture painted by S&P. While the Clico Policyholders Group is still pursing legal recourse, it remains open to dialogue with the Government. Permell referenced Prime Minister Kamla Persad Bissessar’s New Year’s Day pledge which stated that should “the economic circumstances change, there is all likelihood that the 20-year proposal could also change.”
As far as Permell is concerned, the economic circumstances are wholly different from what the Finance Minister has painted. “Accordingly, there is need for immediate clarity, as sound public policy, whether it is to pay policyholders zero per cent over 20 years or public servants a five per cent salary increase over the next three years or contractor in cash or bonds, should always be supported by sound quantitative and qualitative data and analysis, if only to reduce the perception of policy by vaps, victimisation or favourtism,” he said.
Dookeran on S&P
While he expressed surprise at the report’s release, Dookeran said he was delighted by its contents.
He said S&P’s ratings affirmation showed confidence in the Government’s handling of the Clico situation as well as confidence in the financial management of T&T. He remarked that contrary to Permell’s perception, the affirmation came as a result of the Government’s plan to deal with the policyholders.
Dookeran announced his plan—an initial $75,000 cheque and 20 annual zero-rated bonds—during his budget on September 8.
He met with the rating agencies as well as the International Monetary Fund in November. “Even the rating agencies thought we were too generous in our offer and I told them this was a problem we had to deal with,” he told the Guardian yesterday. “I am particularly happy at the confidence being expressed...This should be considered as a positive step,” he added.
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