Central Bank Governor Ewart Williams has promised to act if wrongdoing is revealed when the auditors complete their review of the operations of the cash-strapped CL Financial Group, leading up to its bailout by government last February. Answering questions about policies to boost confidence in the economy and the financial services sector, during his presentation on the Review of the Economy 2009 and Outlook for 2010 yesterday, Governor Williams said he has become very impatient and often frustrated with the pace at which the review and audit was taking place. He said it was necessary to determine the state of the company and to estimate the value of the assets of the financial services group. This was important in dealing with the disposal of the assets.
Williams said new legislation was being finalised to strengthen the financial services sector, adding that reforms were necessary to add to the confidence the public will have in the economy as well as the sector. "New legislation was introduced to the Parliament to tighten up some of the loopholes when the CL Financial crisis initially occurred. However, no one can really give protection from any institution or individual that is determined to go around the rules and regulations to defraud investors. He said some of the payouts to CL Financial stakeholders were taking longer than the authorities had anticipated because the company was facing a liquidity problem and the pace of disposing of the assets to cover the payouts was going very slowly.
Williams said the ongoing operations of Clico were difficult because the company has been facing problems convincing policyholders to roll over their investments and a decision will soon be taken on the future of the organisation. "The amount of rollovers have been much lower than we had anticipated and we have contracted a team of consultants to review the business model and possibly make adjustments as we move forward." With reference to the performance of the economy last year, Williams said the Bank would adjust its estimates downwards to state that the economy has declined by three per cent rather than the 2.1 per cent that was previously forecast. "Based on the Central Bank's quarterly estimates, during the third quarter of 2009, real GDP declined by 5.6 per cent, compared to the corresponding quarter of 2008, this was the fourth consecutive decline."
He said GDP in the energy sector fell by 3.8 per cent, as the continued reduction in crude oil output offset a modest recovery in production. A survey of the energy services sector conducted by the South Chamber found that the volume of business for 50 per cent of its members had also fallen in 2009. Non-energy GDP also contracted by 6.8 per cent on account of sharp declines in the distribution and manufacturing sectors. "Other indicators also supported the assessment as unemployment rose in the third quarter of 2009, retail sales fell and there was a record fall in bank credit outstanding," he said. "In addition a preliminary survey indicated that there was a further decline in capacity utilisation in the manufacturing sector."