Through­out the In­ter­na­tion­al Mon­e­tary Fund an­nu­al meet­ing in Wash­ing­ton over the past week, it was large­ly not­ed that cen­tral bank gov­er­nors around the world have been placed in an un­en­vi­able po­si­tion.

They are tasked with man­ag­ing mon­e­tary poli­cies while at­tempt­ing to coun­ter­bal­ance any pos­si­ble rip­ple ef­fects from a ris­ing num­ber of ex­ter­nal shocks.

T&T’s Cen­tral Bank Gov­er­nor Dr. Alvin Hi­laire, who was present at the IMF meet­ing, spoke ex­clu­sive­ly to the Busi­ness Guardian about this chal­lenge.

“That’s a crit­i­cal point that is at the heart of what cen­tral banks do to try to keep the val­ue of the mon­ey pre­served by keep­ing low in­fla­tion. Let me start with the world econ­o­my. The world econ­o­my start­ed in a po­si­tion where in­fla­tion was fair­ly low, tepid, be­fore the pan­dem­ic. Then it stayed so for a while be­cause peo­ple weren’t buy­ing, peo­ple weren’t go­ing any­where, there were re­stric­tions on move­ment, and then it shot up. Why? Be­cause you had some sup­ply shocks, as you talked about, you had en­er­gy prices go­ing through the roof,” said Hi­laire.

He ex­plained that the Cen­tral Bank of T&T has done its best to keep in­fla­tion low, par­tic­u­lar­ly in light of high in­ter­est rates in the Unit­ed States but un­for­tu­nate­ly geopo­lit­i­cal is­sues and ten­sions glob­al­ly have im­pact­ed the prices the av­er­age man faces in stores.

“Our ac­com­moda­tive mon­e­tary pol­i­cy re­mained as it was, and our in­fla­tion is down to less than 1 per cent of course. This is cold com­fort to the com­mon man who has to face prices that are high­er. This is a sit­u­a­tion where, de­pend­ing on where you im­port from, and what ex­act­ly you are buy­ing, then your prices may be high­er,” said Hi­laire.

“The prices that you face will be high­er than what the over­all price lev­el sug­gests from the in­fla­tion num­bers be­cause the in­fla­tion num­bers are re­al­ly a re­flec­tion of av­er­age prices of a cer­tain set of com­modi­ties. But an in­di­vid­ual, de­pend­ing on their bas­ket of goods, could face high prices, and then you will have to deal with that and ad­just the sit­u­a­tion to be able to deal with your high­er prices. Just the fact of life.”

He was al­so high­ly aware that many of the po­ten­tial shocks linger or could be trig­gered in the not-too-dis­tant fu­ture as many ques­tions were raised about the po­ten­tial im­pact the re­sult of the US Pres­i­den­tial elec­tion could have on many economies around the world.

Hi­laire stressed there were oth­er sit­u­a­tions for which the Cen­tral Bank had to be mind­ful.

“Now the in­fla­tion num­bers are al­so very good, and this means that in­ter­est rates are tend­ing to de­cline in the in­ter­na­tion­al mar­kets, which could al­so be help­ful for a num­ber of coun­tries, in­clud­ing Trinidad and To­ba­go. Of course, we do have a bur­geon­ing debt prob­lem, be­cause many coun­tries have in­creased their debt in the wake of the pan­dem­ic, to deal with vac­cines, to deal with pub­lic health is­sues, to deal with so­cial sup­port, and so their debt has gone up and in a con­text where in­ter­est rates were very high. So good news all over. But I think with the geopol­i­tics that we have in the Mid­dle East, with Ukraine, with all elec­tions, we have to be very, very care­ful and vig­i­lant, “ he said.

An­oth­er con­cern raised by the IMF is that glob­al frag­men­ta­tion with re­gard to trade could emerge as a re­sult of those ten­sions.

“De­pend­ing on the out­come of many elec­tions, it could get worse, and the world could find it­self be­ing par­ti­tioned in­to dif­fer­ent blocks with ei­ther geopo­lit­i­cal in­ter­ests or eco­nom­ic in­ter­ests and so forth. So this could be very wor­ri­some. If you have trade bar­ri­ers go­ing up, if you have re­stric­tions on move­ment and so forth, it could re­al­ly be put the world back.

“For Trinidad and To­ba­go, we are an open econ­o­my. We want to keep things open, as I said be­fore, com­pe­ti­tion is cru­cial, and we want to make sure that we boost our own com­pet­i­tive­ness so that we are able to en­gage mean­ing­ful­ly in the world as it is, “ said the Cen­tral Bank Gov­er­nor, who not­ed T&T should con­tin­ue to ad­vo­cate for bet­ter re­sources and more open­ness at the World Trade Or­ga­ni­za­tion and at dif­fer­ent fo­rums.

Dur­ing his time in Wash­ing­ton, Dr Hi­laire and the T&T con­tin­gent met with the IMF’s mon­ey and cap­i­tal mar­kets de­part­ment where dis­cus­sions were held about tech­ni­cal as­sis­tance.

He al­so par­tic­i­pat­ed in a pan­el dis­cus­sion on fin­tech and T&T’s fast pay­ment sys­tem. He was al­so present for an In­ter­gov­ern­men­tal Group 24 meet­ing. Ear­li­er in the week dur­ing a G24 me­dia brief­ing on In­ter­na­tion­al Mon­e­tary Af­fairs and De­vel­op­ment on Tues­day, Nige­ria’s Min­is­ter of Fi­nance and Co­or­di­nat­ing Min­is­ter of the Econ­o­my, Wale Edun spoke on the lim­it­ed avail­abil­i­ty of for­eign ex­change for de­vel­op­ing na­tions. While this has been a chal­lenge for T&T, Hi­laire said his team raised oth­er is­sues.

“We talked about trad­ing in gen­er­al. We al­so talked about Haiti to make sure that the world does not for­get Haiti in this dif­fi­cult se­cu­ri­ty sit­u­a­tion. And we talked about car­bon cred­its and the world, when peo­ple are try­ing to im­prove the cli­mate, that they don’t be dis­pro­por­tion­ate in who shares the ad­just­ments and pays for a bet­ter world.”

He said there were al­so dis­cus­sions at the IMF meet­ings about quo­ta re­form, with some ar­gu­ing that such re­form is im­por­tant be­cause it would be more re­flec­tive of the world to­day.

“But we want to make sure that the small coun­tries do not re­duce their im­por­tance in the IMF,” said Hi­laire.

How­ev­er on the mat­ter of cli­mate change, Ro­dri­go Valdes Di­rec­tor of the West­ern Hemi­sphere de­part­ment of the IMF not­ed the Caribbean re­mained in a dif­fi­cult po­si­tion and it would like­ly have to keep rainy day poli­cies in place.

“It’s very im­por­tant to face re­al­i­ty for the Caribbean, and they are do­ing it. There is a strik­ing num­ber of coun­tries in the Caribbean that lose 2.5 per cent of GDP in cap­i­tal per year. On av­er­age, it doesn’t hap­pen every year, but it means every 10 years you can have a 25 per cent loss. So you have to be pre­pared for that. And that means that fis­cal pol­i­cy has to be geared to­wards that,” said Valdes, when asked about po­ten­tial buffers for the Caribbean in the face of cli­mate change shocks.

Dr Hi­laire how­ev­er felt T&T was still strong­ly placed, both in terms of its cur­rent eco­nom­ic land­scape and its abil­i­ty to ad­vo­cate for oth­ers.

“We have a lot of in­flu­ence. Peo­ple look at us as in­flu­en­tial, as hav­ing a voice. We want to pre­serve that. I think we do have things that we need to work on as an econ­o­my, to keep our com­pet­i­tive­ness go­ing, to do what­ev­er re­forms that would make us strong and even more able to par­tic­i­pate mean­ing­ful­ly in the world econ­o­my. It will be a jour­ney. It will be a chal­lenge, I think, Trinidad and To­ba­go is ready for it we have the ca­pac­i­ty, we have this hu­man cap­i­tal, we have the will and I think we just have to make it hap­pen,” said the Cen­tral Bank Gov­er­nor.

The IMF An­nu­al meet­ing end­ed to­day.