The Colo­nial Life In­sur­ance Com­pa­ny Ltd (Cli­co) has re­paid ap­prox­i­mate­ly TT$16.9 bil­lion of the TT$18 bil­lion ad­vanced by the Gov­ern­ment.

As at Sep­tem­ber 30, 2022, the debt stands at TT$1.1 bil­lion.

The Cen­tral Bank gave an up­date on Cli­co and the British Amer­i­can In­sur­ance Com­pa­ny’s (Trinidad) (BAT) res­o­lu­tion plan in its an­nu­al re­port which was re­leased on Mon­day.

Ac­cord­ing to the re­port, the funds re­paid by BAT to the Gov­ern­ment in­creased to TT$80 mil­lion leav­ing an out­stand­ing bal­ance of TT$1.6 bil­lion as of Sep­tem­ber 30, 2022.

The re­port said the res­o­lu­tion plan, in­clud­ing the sale of the tra­di­tion­al in­sur­ance port­fo­lio for both Cli­co and BAT, is cur­rent­ly halt­ed.

“The threat posed by Cli­co and BAT to the fi­nan­cial sys­tem has re­ced­ed over the years. The Cen­tral Bank is prepar­ing to ex­it its emer­gency con­trol over these in­sti­tu­tions,” the bank added. In De­cem­ber 2022, the Cen­tral Bank ex­it­ed its emer­gency con­trol over both com­pa­nies.

The re­port al­so high­light­ed mon­e­tary pol­i­cy and eco­nom­ic de­vel­op­ments as it re­viewed ac­tiv­i­ties for its 2022 fi­nan­cial year, which was from Oc­to­ber 1, 2021 to Sep­tem­ber 30, 2022.

It not­ed that the do­mes­tic labour mar­ket im­proved some­what over the fi­nan­cial year.

The un­em­ploy­ment rate dipped to an av­er­age of 4.8 per cent dur­ing the nine months to June 2022, down from 6.1 per cent dur­ing the same pe­ri­od the year be­fore.

The Cen­tral Bank said head­line in­fla­tion gained mo­men­tum dur­ing the first nine months of 2022 on ac­count of sup­ply-side fac­tors, most no­tably a surge in in­ter­na­tion­al food prices.

“This led to ac­cel­er­at­ing food in­fla­tion over the first nine months of the year, while core in­fla­tion in­creased on the back of ris­ing fu­el prices and re­sul­tant in­creas­es in taxi and maxi taxi fares across sev­er­al routes,” the re­port stat­ed.

It added that over the fi­nan­cial year, mon­e­tary pol­i­cy cen­tred on man­ag­ing ex­ter­nal­ly gen­er­at­ed in­fla­tion risks, while sup­port­ing re­cov­ery of the do­mes­tic econ­o­my fol­low­ing the COVID-19 pan­dem­ic.

The Cen­tral Bank al­so not­ed that it kept the re­po rate fixed at 3.50 per cent through­out the pe­ri­od, while man­ag­ing open mar­ket op­er­a­tions to en­sure am­ple liq­uid­i­ty to meet the re­quire­ments of the do­mes­tic mar­ket.

It al­so said that av­er­age ex­cess liq­uid­i­ty in the fi­nan­cial sys­tem de­clined to $5.2 bil­lion dur­ing the 2022 fi­nan­cial year from $9.7 bil­lion in the pre­vi­ous year.

The re­port fur­ther dis­closed that am­ple liq­uid­i­ty, cou­pled with low in­ter­est rates, and a re­bound in ac­tiv­i­ty in the non-en­er­gy sec­tor, saw strong growth in pri­vate sec­tor cred­it over the fi­nan­cial year, par­tic­u­lar­ly cred­it to the busi­ness sec­tor.

Ac­cord­ing to the re­port, at the end of Sep­tem­ber 2022, gross of­fi­cial re­serves amount­ed to US$6.76 bil­lion, US$110.6 mil­lion low­er when com­pared to the end of De­cem­ber 2021.

This, the re­port stat­ed, sug­gest­ed that the ex­ter­nal ac­counts reg­is­tered an over­all deficit over the first nine months of 2022, as it al­so not­ed that the stock of re­serves at the end of Sep­tem­ber 2022 rep­re­sent­ed 8.5 months of prospec­tive im­ports of goods and ser­vices.

Re­gard­ing cur­ren­cy in cir­cu­la­tion, the re­port not­ed that as at Sep­tem­ber 30, 2022, the $100 de­nom­i­na­tion con­tin­ued to rep­re­sent the largest val­ue of all notes in cir­cu­la­tion, ac­count­ing for 90 per cent of to­tal val­ue.

On the oth­er hand, the $1 de­nom­i­na­tion ac­count­ed for the largest vol­ume of notes in cir­cu­la­tion at 42 per cent, while the $100 de­nom­i­na­tion ac­count­ed for 35 per cent.

To im­prove ef­fi­cien­cy in the cir­cu­la­tion of notes, the re­port said the Cen­tral Bank im­ple­ment­ed a fee for the pro­cess­ing of fit bank notes with ef­fect from Ju­ly 1, 2022, not­ing that this fee is cal­cu­lat­ed based on the to­tal vol­ume of fit ban­knotes re­deemed by each com­mer­cial bank in the re­spec­tive quar­ter.

The first fees were col­lect­ed in Oc­to­ber 2022 and to­talled $175,000.

In his fore­word, Cen­tral Bank Gov­er­nor Dr Alvin Hi­laire not­ed that the 2022 fi­nan­cial year saw a steady re­vival of the T&T econ­o­my as busi­ness ac­tiv­i­ty con­tin­ued to re­open fol­low­ing pan­dem­ic-in­duced lock­downs.

At the same time, he not­ed that the glob­al eco­nom­ic sit­u­a­tion was com­pli­cat­ed by the com­bi­na­tion of geopo­lit­i­cal ten­sions, high in­fla­tion that led to wide­spread mon­e­tary tight­en­ing, and volatil­i­ty in fi­nan­cial mar­kets.

The pe­ri­od al­so marked the first year of the Cen­tral Bank’s 2022 to 2026 strate­gic plan, a suc­ces­sor to an ear­li­er five-year plan.

“Good progress was made on all three of the plan’s pil­lars — mon­e­tary pol­i­cy, fi­nan­cial sta­bil­i­ty and in­ter­nal op­er­a­tions dur­ing the fi­nan­cial year and an am­bi­tious set of ob­jec­tives has been es­tab­lished for the year ahead,” Hi­laire said.

He added that there are good signs of a mea­sured, broad-based re­cov­ery do­mes­ti­cal­ly, not­ing that a re­vival of busi­ness cred­it has pro­vid­ed sup­port to man­u­fac­tur­ing, con­struc­tion and dis­tri­b­u­tion ac­tiv­i­ties.

“The en­er­gy sec­tor, as well as Gov­ern­ment rev­enues, ben­e­fit­ed from the rise in glob­al en­er­gy prices. The open­ness of the do­mes­tic econ­o­my al­so meant that the es­ca­la­tion in in­ter­na­tion­al com­mod­i­ty prices was passed on lo­cal­ly,” the Cen­tral Bank Gov­er­nor said.

With re­spect to in­ter­nal op­er­a­tions at the Cen­tral Bank, the re­port said good progress was made in for­ti­fy­ing the in­for­ma­tion tech­nol­o­gy (IT) sys­tems, mov­ing to­wards en­er­gy ef­fi­cien­cy, and sim­pli­fy­ing com­mu­ni­ca­tion with the pub­lic on fi­nan­cial mat­ters.

Projects in­clud­ed the re­lo­ca­tion of an IT hot site to a bet­ter-suit­ed and more se­cure fa­cil­i­ty and com­plet­ing an in­de­pen­dent re­port which as­sessed en­er­gy use and pro­vid­ed rec­om­men­da­tions for en­er­gy con­ser­va­tion.

On the fi­nan­cial sta­bil­i­ty front, Hi­laire stat­ed that ad­vances were made in strength­en­ing in­tra-re­gion­al su­per­vi­so­ry col­lab­o­ra­tion and ad­vanc­ing the fin­tech agen­da.

He added that a re­gion­al fi­nan­cial sta­bil­i­ty re­port was fi­nalised dur­ing the fi­nan­cial year, while in­sur­ance in­sti­tu­tions re­ceived guid­ance in con­form­ing to In­ter­na­tion­al Fi­nan­cial Re­port­ing Stan­dards (IFRS) stan­dards.

In ad­di­tion, the Cen­tral Bank Gov­er­nor not­ed that the new pay­ments and mar­ket in­fra­struc­ture de­part­ment made sig­nif­i­cant strides in mov­ing for­ward the reg­u­la­to­ry ap­pa­ra­tus for fin­tech so­lu­tions.

Fur­ther, he said the bank al­so col­lab­o­rat­ed close­ly with the Of­fice of the Com­mis­sion­er of Co­op­er­a­tive De­vel­op­ment to bol­ster su­per­vi­sion of cred­it unions.

As re­gards mon­e­tary op­er­a­tions, Hi­laire ex­plained that steps were made to­wards im­ple­ment­ing an elec­tron­ic cheque clear­ing sys­tem, while fees on the re­demp­tion of notes by com­mer­cial banks were in­tro­duced to help stream­line cur­ren­cy man­age­ment.

“As one as­pect of im­prov­ing the op­er­a­tions of the for­eign ex­change mar­ket, the for­eign ex­change liq­uid­i­ty guar­an­tee fa­cil­i­ty was ex­tend­ed in­to 2023. The bank al­so en­gaged in joint re­search with the In­ter-Amer­i­can De­vel­op­ment Bank and oth­er agen­cies,” he added.

Look­ing for­ward, the Cen­tral Bank Gov­er­nor as­sured that the bank re­mains well poised to con­front what promis­es to be an­oth­er chal­leng­ing year ahead.

Stat­ing that the glob­al back­drop is ex­pect­ed to cen­tre around the like­li­hood of weak growth in many re­gions in­duced by pol­i­cy re­spons­es to high in­fla­tion.

“Un­der­ly­ing risks as­so­ci­at­ed with cy­ber­se­cu­ri­ty, cli­mate change and an in­ten­si­fi­ca­tion of in­ter­na­tion­al com­pe­ti­tion al­so re­main part of the equa­tion. I am con­fi­dent that the Cen­tral Bank staff, with its demon­strat­ed track record of per­for­mance, will once again rise to the chal­lenge,” Hi­laire main­tained.