The Government, through its spokesman, Garvin Nicholas, is right when it says that it will not be rushed into making a snap decision on the politically and financially sensitive issues surrounding the bailout of some 25,000 holders of short-term investment products issued the Colonial Life Insurance Company (Clico). As reported in today's edition, Prime Minister Kamla Persad-Bissessar is in possession of a report outlining some options for treating with this issue. That report was prepared by Vasant Bharath, the head of the inter-ministerial committee who had been mandated by the Prime Minister to consult widely on the issue. Given the importance of this matter, no one should expect that Cabinet would rush to make a decision on an issue that involves, on the one hand, thousands of people who ploughed an estimated $12 billion in Clico, and on the other hand, the investment of taxpayers' funds to the tune of $7.3 billion to bail out the three financial subsidiaries of the CL Financial empire.
But neither should the public expect that the Cabinet would defer serious consideration of what is the most pressing issue facing the nation currently as a result of the threat of legal action by a former political friend of those who now hold the reins of power or by the inappropriate deadline issued by representatives of the policyholders' groups. What the country expects is that the Cabinet would give mature and timely consideration to this issue of the possible revisions to the plan outlined by Finance Minister Winston Dookeran in the 2011 budget on September 8. Those who are pressing the Government to take precipitate action should realise that a decision in the Clico matter will have long-term legal, financial, economic and political ramifications for the country and for the coalition of parties that forms the current administration. In a matter of such wide-ranging importance as this, the Cabinet should be ensure that it receives the best legal, financial, economic and political advice that the country has available to it–even if this means that the Government seeks to enlist the assistance of professionals in these fields to help it arrive at what should be the best decision for all concerned. Choosing an option, or a combination of options, from among those presented by the inter-ministerial committee, would require the administration to carry out a careful balancing act.
At the end of the day, the Government will be required to weigh the pecuniary interests of those who have invested, in many cases, the savings from a lifetime of work, versus the interests of a larger body of taxpayers, who are looking to the administration to continue the provision of what the Prime Minister referred to in a different context as the common wealth of the nation: healthcare, education, improved roads–not to mention higher salaries for public servants. All of this is being requested in the context of a macro-economic environment which remains much less propitious today than it was two years ago. In its weighing of the various interests, the Government should also be aware that its decision in this matter will be closely scruntised both by those who are sympathetic to the plight of the Clico policyholders and those who feel that they are just a bunch of greedy rich people who are looking to live off the fat of the land. Finally, the reason it is so important that the Government get the Clico decision absolutely right is because the wrong decision could have a devastating and permanent impact on investor confidence in the economy. More than anything, the decision on Clico requires fairness and equity as well as transparency and the proper communication of nuances of what is a technical issue.