Imbert: Howai’s ‘gamble’ cost TT hundreds of millions

FINANCE Minister Colm Imbert said a “gamble” by former finance minister Larry Howai on US treasury rates has cost this country hundreds of millions.

He was piloting a motion to adopt the report of the Standing Finance Committee in the House on Monday.

He reported that Cabinet in January 2014 noted that the government issued on December 11, 2013 a US $550 million bond at 4.375 per cent and agreed to grant covering approval for the then finance minister, his predecessor (he never called Howai by name), to enter into a forward starting swap lock with Citibank group. He said a US $250 million forward starting swap lock was entered into on December 11, 2013, when the bond was issued.

“The purpose of entering into this swap lock was to maximise the potential benefits of the law interest rate environment prevailing at that time.” He said at a road show attended by Howai the decision was taken to partially hedge against the rise of US long-term interest rates over a ten year period.

“Essentially what the then finance minister did, with eventual approval of the then government headed by the member for Siparia, was to gamble on interest rates in the US. And to gamble that US treasury rates would increase. This ill-advised gamble, this ill-advised hedge done in 2013 without Cabinet approval, which subsequently received covering approval, has cost this Government hundreds of millions of dollars.”

Imbert said the gamble was that interest rates in the US would rise to 4.83 per cent but those interest rates actually averaged somewhere less than two per cent. “And it has pained me in the last week to have a sign a warrant to unwind TT from that ill-advised forward swap. And we have had to spend an additional $380 million in 2019 as a result of that ill-advised interest rate swap entered into by my predecessor.”

He said he was very careful when he went on the road show to ensure no banker, lobbyist or “foreign carpet bagger” could come to him while in the US “to try and inveigle me into doing this level of foolishness”.

Howai served as finance minister under the UNC administration from 2012-2015 replacing Winston Dookeran.