Time to reign in spendthrift state organizations: CB Governor

The Governor of the Trinidad and Tobago Central Bank is concerned over the level of debt by state enterprises and is urging the government to introduce stronger regulations to deal with the problem.

"Several important government institutions, most notably the statutory corporations, remain beyond the purview of regular regulatory oversight," Ewart Williams told stakeholders when he launched the bank's Financial stability report this week.

Williams said a major problem is that the financial system is plagued with outdated legislation.

"The dominance of mixed conglomerates with sizable intragroup exposures tends to reduce transparency, and outdated financial legislation does not provide for adequate consolidated supervision to deal with complex conglomerate structures," he said.

The governor said he bank is determined to fix the problem.

David Abdullah, President of the Federation of Independent Trade Unions (Fitun), supported the point made by Williams.

"The government’s policy establishing special purpose companies, such as UDeCOTT, which are not being properly regulated, has caused T&T to enter into a situation where these bodies are amassing very large debt which will have to be paid by the taxpayer, and this borrowing can have implications for the stability of the financial sector, in particular the exchange rate," Abdullah said.

Opposition Leader, Basdeo Panday agreed. “For a long time the Government has been promising that regulations would be put in place. They have failed to do so, and the governor is correct when he said there was need for more predictable regulation and stronger oversight."

He suggested that "suitable individuals" should be appointed to enforce the statutory regulations.

"The people to oversee the process should be chosen on the basis of meritocracy, so there would be proper enforcement of the regulations," Panday added.

Michael Annisette, president of the Seamen and Waterfront Workers Trade Union, said people who are given responsibility are not always accountable. "Accountability demands a responsibility if you don’t account you pay the price. There must be a deterrent mechanism in place,” Annisette noted.

He observed that there are reporting mechanisms and a process and procedures for managing state enterprises, including the parliamentary committees which are in place. The state enterprises are simply ignoring these regulations and no one is following up to ensure compliance, he said.