Tim blast government handling of EFCL Bond
The revelation that a $400 million Government Bond under management of the State-owned Education Facilities Company Limited is due to go into default on Monday October 31, 2016 is An tremendously worrying issue indeed, which signals a dire financial reality in our country and a complete mismanagement of the economy by the current PNM administration.
According to a story published today (Friday October 28, 2016) on the front page of the Guardian newspapers, the EFCL is carded to go into this Bond default by Monday, and, after this, the Government will be seeking to have the bondholders agree to a waiver of the default, ultimately signifying that
EFCL and the country is going into default on Monday, October 31, 2016.
This demonstrates an incredible level of irresponsibility, ineptness, amateurism, carelessness and an absence of proper and effective governance on the part of the Board and Management of the EFCL, the Minister of Finance, the Minister of Education, the Ministry of Finance and Government as a whole.
This is a $400M Bond, which is a very significant transaction in the context of our financial system and economy.
For those in positions of authority and governance it demonstrates an abdication of responsibility to bondholders, the financial system and the overall economic standing of Trinidad and Tobago.
Further, for a Government to allow such an embarrassing and costly measure to occur under its watch demonstrates that the most basic level of financial planning and management does not exist within its ranks, which is a frightening and worrying state for citizens of this country.
Such a measure puts the financial system in an extremely precarious position, as it means essentially that any future borrowings in our country, whether undertaken by the Government or private sector, runs the risk of being significantly more costly and more difficult to arrange and conclude.
The country’s private and public sectors therefore stand to lose not just their overall good economic standing, but also, their credibility and respect.
The fact that the current embarrassing and fiscally dangerous bond default has been caused primarily due to the lack of ability by the current board and management of the EFCL and Ministry of Education to properly manage the maturity of a $400M bond is embarrassing to say the least, and at best, demonstrates the height of incompetence of these relevant institutions.
This unprecedented and unacceptable level of mismanagement undoubtedly has the potential to kick-start a major financial crisis in our economic system, as the ramifications of the default go well beyond EFCL and impacts negative confidence in the entire financial system, economy and Government of Trinidad and Tobago, plus all of those who have “responsibility” for managing the affairs of the country.
It is in this context that I call on the Prime Minister to immediately remove from office the Ministers of Finance and Education, as well as the Board of the EFCL, in order to immediately ameliorate this situation, even as he diligently and with urgency informs the public of the plans in place to mitigate this impending economic crisis.