(Trinidad Express) More than US$1 billion from the Heritage and Stabilisation Fund (HSF) is now in jeopardy as a result of the severe turbulence being experienced in financial markets and the recent downgrade of the US credit rating.
Governor of the Central Bank, Ewart Williams, made the disclosure while speaking at the launch of the Economic Bulletin report for July 2011 at the bank’s conference room in Port of Spain yesterday.
“We are now trying to calculate what has been the impact of the recent market turbulence on our HSF. You would recall that around 35 per cent of our strategic assets allocation is held in equities both global and US equities.
“Equity markets have declined for eight or nine consecutive days and therefore the HSF would have received a hit. We will make a statement on that in the next few days,” Williams said.
The HSF, which currently stands at 3.7 billion USD, was established to save and invest surplus petroleum revenues derived from production business in order to cushion the impact on or sustain public expenditure capacity during periods of revenue downturn.
Former minister in the Ministry of Finance, Mariano Browne, said yesterday that the current volatility in the market should force the country to reconsider whether the fund should be held solely in US denomination.
“The problem with the fund is that it is weighted in favour of the US so that whatever happens to the US dollar, treasury, market, stocks, we will be hit. The important point as of today’s date is that all markets are facing a decline. So even if you weren’t in US you would have had a decline any how,” Browne said.
“So a portfolio allocation of 35 per cent spread between risks does not sound like a bad portfolio allocation it’s just at the moment, unfortunately the market volatility … but to date the fund has managed to avoid any large losses,” he said.
