TRINIDAD AND TOBAGO-POLITICS: Leaders at Odds Over Debt Write-Off

By IPS Correspondents Reprint | | Print |

George John

PORT OF SPAIN, Jun 11 1996 (IPS) - The Guyana government is hailing it as the kind of example which other regional leaders should follow, but the opposition party in Trinidad and Tobago is taking the government to task for agreeing to allow a substantial part of the South American Republic’s debt to go unpaid.

Guyana has “picked the pockets of Trinidad and Tobago,” says Keith Rowley, former Minister of Agriculture under the People’s National Movement (PNM) government led by Patrick Manning. The PNM was defeated in general elections in November last year.

Rowley says his party does not support the present government’s decision and would like to see the money owed to Trinidad and Tobago repaid through assets such as forestry land, rice and gold mining interests which he says Guyana has in abundance.

But if the seven-month old government of Basdeo Panday has its way after the dust is settled, just under 70 percent or some 357,478 million U.S. dollars of money owed to Trinidad and Tobago by Guyana will go unpaid. The remainder, 178,713 will be paid off over 23 years.

Trade Minister under the present administration, Mervyn Assam says the debt is uncollectable and the write-off had been recommended by the Trinidad and Tobago Central Bank which holds 75 percent of the debt with the remainder, 25 percent owing to the government.

The Trinidad and Tobago move is also in keeping with the decision reached at the Paris Club meeting last month when representatives of a number of creditor countries agreed to recommend to their governments a debt reduction and reorganisation plan.

The southern Caribbean country found itself the biggest creditor among Canada, Denmark, Norway, France, Germany, The Netherlands, Britain and the United States.

And according to Finance Minister, Brian Kuei Tung “It doesn’t make sense carrying a huge debt in your books if you have no prospect of being able to collect it.”

The borrowing arrangements between Trinidad and Tobago and other Caribbean islands go a long way back.

In 1981 the government of that country loaned 96 million dollars to Guyana, a country in the grip of a serious economic crisis for a number of years. Then President, the late Forbes Burnham, described the act as “an expression by deed in the future of the regional integration movement.”

Trinidad and Tobago at that time was nearing the end of the petroleum boom brought on by the Arab-Israeli war which had sent oil prices skyrocketing from a single digit figure to more than 30 dollars a barrel.

Between 1973 and 1981, Trinidad and Tobago, flush with petro- dollars had transferred resources totalling some 200 million dollars to its Caribbean Community (Caricom) partners to ease their balance of payments problems.

Jamaica, for instance, was loaned some 50 million dollars in 1976. Then Prime Minister, Michael Manley described the trade agreement to which the loan was tied as “a genuine step forward in the integration process.”

However, a further 50 million-dollar loan to Jamaica the following year fell through because of remarks Manley made about the way the Eric Williams government was spending its petro-dollars.

The failure of the loan to materialise was caused also by the collapse of an elaborate Williams proposal whereby Jamaica’s bauxite and Guyana’s alumina were to be processed into aluminium in a proposed Trinidad mill utilising the country’s enormous gas resources on which its energy industries are based today.

In 1980, the Trinidad and Tobago government, led by Williams who died in 1981, set up an Oil, Asphalt and Fertiliser Facility through which soft loans would be made available over a three-year period to Caricom countries to enable them to finance the incremental cost of such imports from the country.

The Guyana loan was agreed to under this facility, as were the smaller loans to Jamaica, Barbados, Dominica and other territories strapped for cash.

With the oil boom over, Trinidad and Tobago moved to collect its debts. But Guyana was not paying and by this year the Guyana debt to Trinidad and Tobago had climbed to some 536 million dollars.