Port Of Spain – The Trinidad and Tobago government Tuesday defended its decision to seek a multi-million dollar loan from China, rather than from the International Monetary Fund (IMF), saying Beijing was not imposing any stringent conditionalities on the oil rich twin island republic.
Minister of Finance Colm Imbert told a news conference that the Chinese overall loan of US$204 million was being provided at two per cent, while the IMF is providing the assistance at just over one per cent.
“The Chinese loan is at a very attractive interest rate of two per cent. The IMF is 1.05 per cent. S there isn’t much to choose between them and therefore if one has to make a judgement call, you [are] getting a loan at two per cent and you [are] getting a loan at one per cent.
“One loan no structural adjustment, you don’t have to retrench people, you don’t have to devalue your currency etc etc . . . and another loan at one per cent you have to do all kinds of terrible things, punish your population, that a no brainer,” Imbert said.
“Obviously you go with the one that doesn’t have any structural adjustment conditionalities associated with it, especially since the interest rates are very, very close.”
Imbert insisted that the Keith Rowley administration would do what is most beneficial for the country.
“Option B is do what you can, try and manage your debt service as best as you can and try your best to help as many people as you can,” Imbert said.
He added that “all the countries in the world, if you look, the UK debt to GDP (gross domestic product) ratio crossed 100 per cent in 2020”.
He said London had taken a “conscious decision” to borrow hundreds of billions of pounds to implement that policy and that even the United States had taken a decision to access four trillion US dollars.
“Every country in the world has done it and it is recognised that it is necessary to maintain economic momentum and to try and help the most vulnerable. So whether or not our debt to GDP ratio is in the 80 per cent range, we are going to continue to help people and that’s the point the Prime Minister made over the weekend.”
Imbert insisted that going to China for assistance “is better than having to go cap in hand to the IMF and retrench 25 000 people”.
Imbert said he wanted to debunk suggestions that the Chinese loan was not coming with conditions. He sais Beijing had made it clear that “as part of their outreach programme, as part of their foreign policy as part of the development of their own institutions that they are lending money to Trinidad and Tobago and therefore 15 per cent of the money they are lending us must be spent on things called Chinese elements and that could be anything” ranging from equipment, vaccines, medical supplies once it is manufactured in China.
In terms of foreign reserves, the country has eight months of import cover with reserves in the vicinity of US$6.8 billion with the Heritage and Stabilisation Fund, notwithstanding a series of drawdowns to finance the shortfalls between revenue and expenditure, as of the end of the first week in June US$5.67 billion, Imbert told reporters.
(CMC)
