Prime Minister Keith Rowley yesterday gave the assurance that T&T is not bankrupt, even as he acknowledged that the Government has a problem in paying its debts to public servants and contractors/suppliers on time.
“It is not a simple matter of if you can’t pay, you are bankrupt. The Government does not go bankrupt,” said the Prime Minister, referencing his uncle who worked at the port who always said his money can’t finish, it will only run low because he has a monthly pension.
“The Government is in that situation where it might not be able to pay today, but its ability tomorrow is there because the Government has a revenue stream and different pockets and it is an accepted structure of public accounting and management that the Government has many pockets and you are not allowed to empty all at once.”
Asked if the inability to pay its debts as they became due meant T&T was bankrupt, Rowley said, “Certainly not, certainly not. It has a cash flow problem.”
The Government owes employees of the country’s regional health authorities and members of the protective services an estimated $5 billion as a result of the 14 per cent wage settlements agreed to by the previous administration last year.
All of the money was due to the public officers last year.
At a news conference at the end of the six-month-old administration’s first retreat, which was held at the Magdalena Grand Beach Resort at Lowlands in Tobago, the Prime Minister was asked about the payment to the public servants, in the context of the perception that the Government was slow to deliver.
Rowley said, “In every instance that you may be able to point out, that delivery requires a fiscal consideration and you have to see each of those considerations against the background of the ability to pay.
“I don’t want the country to go away from that mooring: the ability to pay for what has been done is the challenge.”
He said the first few months of the life of the Government had to be about finding out what was the true state of the country’s situation and even though the People’s National Movement anticipated difficult situations, “in fact, the real numbers and the Minister of Finance Colm Imbert’s ability to pay has been worse than we anticipated.”
He said citizens must understand that there is a limit to what the Government can do without money and that the Government could not go “barreling along with oil at US$29 a barrel and the overdraft at its limit and no money in the current account. There is only so much you could have delivered in that situation.”
He said what the Government was doing now was attempting to rectify its ability to access the cash to fund its debts.
Questioned whether the government’s inability to pay its debts when they become due does not constitute bankruptcy, the Prime Minister said T&T’s system of governance acknowledges that the Government has a series of pockets of money, some of which it cannot dip into.
He referred to money in blocked accounts in the Central Bank and the country’s US$9.7 billion in foreign reserves.
He said Imbert would be able to indicate when he would be in a position to settle the backpay owed to public officers when he delivers the mid-year review in three to four weeks time.
On the issue of the payment of debt owed to contractors and suppliers, the Prime Minister said that one of the decisions taken at the retreat was that the Minister of Finance would issue instructions to state-owned enterprises and statutory companies improving the financial oversight by Corporation Sole, line ministers and the Cabinet.
“We have seen, in recent times, a great deal of state exposure outside the knowledge or oversight of the minister or ministry. That is a serious deterioration in good governance and opens the door to all kind of problems,” said Rowley.
The Prime Minister had revealed at the post-Cabinet news conference last week that some state enterprises entered into contracts without having money in their accounts.
He also emphasized that some of the debt owed to contractors and suppliers would need to be audited.
The Prime Minister denied reports, attributed to him, that he told the post-Cabinet news conference on Thursday that the building of a breakwater that could lead to the creation of a beach at the Magdalena Grand Beach Resort would cost $1 billion.