Central Bank Governor, Ewart Williams has called for stronger regulation of state enterprises as he expressed concern about the growing debt obligations of these public sector agencies. "Several important government institutions, most notably the statutory corporations, remain beyond the purview of regular regulatory oversight," Williams said while addressing stakeholders at the launch of the Financial stability report on Tuesday as he listed the vulnerabilities of the financial system in T&T. Williams identified major vulnerabilities in the system as the outdated legislation governing the financial sector as well as the central government's poor regulatory oversight of state enterprises. "The dominance of mixed conglomerates with sizable intragroup exposures tends to reduce transparency, and outdated financial legislation does not provide for adequate consolidated supervision to deal with complex conglomerate structures.
But Williams provided the assurance that the Central Bank is determined to do all it can to alleviate the vulnerabilities. He also said that the bank has a legislative agenda to deal with some of the potential weaknesses in the system. David Abdullah, President of the Federation of Independent Trade Unions (Fitun), supported the Governor, noting that there was a need for stronger regulation and an urgent review of the policies–particularly those governing the state's special purpose companies. "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 also shared these concerns. "For a longtime 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," Panday noted. He said in the first instance, suitable individuals should be appointed to enforce the statutory regulations. "The regulations must be enforced. Their failure to enact adequate legislation, to provide competent oversight and an adequate regulatory regime, has already resulted in the collapse of a major credit union. "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 if regulation is not followed through on a timely basis government must clamp down on those entities.
"I agree that monitoring must be exercised in a timely fashion. There must be oversight and superintending of the accounts in a sustainable and fundamental way, that's the only way you can have checks and balances on these institutions. "There are cases where action starts after the fact and not before. The action must be preventative and not reactive," Annisette said. He 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 added. He said given the reporting mechanisms and how the system of disbursing funds in the government is done, there is already a process and procedures for managing state enterprises. He also said there is oversight in that system, 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.