IMF warns about dangers to T&T economy

A new staff report from the International Monetary Fund (IMF) states that the collapse of large financial conglomerates and continued exposure to plunging oil and gas prices make Trinidad and Tobago's economy vulnerable.

It's based on consultations and meetings IMF officials had during with T&T Government officials in Port of Spain last November. The report, dated march 3, 2009, notes that there is the potential for large financial conglomerates to pose a threat to the financial system.

It does not make reference to any specific group but its analysis notes that the local financial system is dominated by large conglomerates involved in banking, insurance and investment banking, adding that there was a high level of cross shareholding and related lending at several subsidiaries, as well as considerable leverage at the group level.

Its warning became real in January with the CL Financial fiasco when CL went to Government and the Central Bank for help after admitting that its subsidiaries, CLICO and CLICO Investment Bank, could not repay depositors funds and monthly pensions.

The IMF report warned that a financial shock of a conglomerate in one country could be rapidly transmitted across the region.

And that is happening already in the Bahamas, Guyana and Barbados where the governments have had to take action to protect their citizens from the fallout from the collapse of CL subsidiaries.