Dookeran hits PM over inflation rate

Describing the finance ministers as “perpetual learners”, UNC MP Winston Dookeran took Prime Minister Patrick Manning to task for setting “as a target” an inflation rate of seven percent. He was speaking in the debate on the Insurance Amendment bill in the House of Representatives on Friday. Dookeran stated that in today’s world of non-inflationary growth, a target of seven percent was being far too permissive in macro-economic management. “It is opening the door to great macro-economic uncertainty,” he said. Manning asked Dookeran to ask what he thought should be the maximum level of inflation.  But Opposition Leader Basdeo Panday was ready with an answer. “Nah, nah. No free consultancy!” the UNC leader said.

Dookeran who argued  that macro-economic policy was a greater contributor to inflation than wages, said there was no doubt that there was a case for an increase in wages in the country. Noting that Government gave its workers a 15 percent increase in wages, Dookeran said: “We are now going to run the economy with a 15 percent increase in wages, a seven percent increase in inflation and a six percent increase in growth”. “No wonder the country is about to see the expressions was discontent rising all over,” he said. When Manning pointed out that the inflation rate for last year was 3.4 and this year four percent, Dookeran said that made Manning’s target of seven percent even more unbelievable. Dookeran slammed Government for looking for creating scapegoats in the business community for the increase in prices, saying that there was an old 1970’s political strategy.

Dookeran, a former Central Bank Governor, also pointed out that the Central Bank was injecting more foreign exchange to support the exchange rate. It moved from US $200 million two years ago to US $505 million at present. Dookeran stated that all the bill did was to change the “locus” of authority from the Supervisor of Insurance to the Central Bank. But it did nothing to facilitate “best practice policies”. Government was once again looking merely at the surface, “preoccupied with the structure of power and not concerned with the use of that power” for effective financial management. Dookeran said Government was still not ready to deal with the critical issues in banking supervision. After two years and a half years in office and after inheriting “major work”, the Ministers were not rising to the responsibilities, he lamented. He added that the bill was a weak response to major issues. Noting that there was the blurring of boundaries between the banking sector and the insurance sector and there were emerging a number of products which did not belong to either category, Dookeran said it was the government’s responsibility to protect the public interest in this changing scenario in the financial world.

It required fundamental changes to both the Insurance and Financial Institutions Act. Dookeran also pointed to the ineffective regulatory systems of the Insurance sector. Noting that information disclosure was now being seen as the substitute for harsh regulatory measures, he said what the country needed was a financial sector that has far more disclosure in order to protect the public interest. He said he was surprised in this regard to see a bill on the Order Paper aimed at exempting the Central Bank from the Freedom of Information Act, which was contrary to the general trend of information disclosure. Saying that there were major changes in the geography of financial institutions, Dookeran also called for cross-border supervision. He said Trinidad and Tobago went down in the standings on macro-economic management according to the Global Competitive Report, from 33rd in the world to 47th within the last year. “And this after you have three ministers of finance and a super-minister of finance,” he said.