By CANA NEWS From Trinidad Express

PORT OF SPAIN, Trinidad, Oct 24, CMC – The Central Bank of Trinidad and Tobago (CBTT) says although a turn-around in the domestic energy sector output is anticipated in 2017, “it is not only likely to take some time for an economy wide recovery to be firmly established”.

The CBTT said that in 2016, the Trinidad and Tobago economy “finds itself in the early phase of adjustment to a major terms of trade shock occasioned by depressed energy prices” and that the “trajectory of energy prices remains very uncertain”.

In a 28 page document outlining its Strategic Plan for the years 2016-17 to 2020-21, the CBTT noted that at minimum it can expect to operate in a “challenging domestic environment over the early part of the five-year span of the Strategic Plan,” noting that its mandate of keeping inflationary pressures in check “will consequently be set in the context of likely severe constraints on economic growth.

”At the same time very close attention will need to be paid to the supervisory front to the extent that the quality of the financial institution’s’ credits is affected by borrowing facing difficulty in servicing loans.”

The CBTT said that the international scene is likely to remain “unsettled for some time” in the wake of continued weakness in European economies, the delayed sustain rise in US interest rates, the fallout from Brexit and nervousness about investments in emerging markets”.

It said the loss of correspondent banking relationships is of particular concern to Caribbean countries.

“The growing integration of Trinidad and Tobago’s financial market with the rest of the world, developments in international payment systems, creation of new financial products, incidence of cross mergers and acquisitions will quickly impact the domestic market,” the CBTT said.

Following their summit in Guyana earlier this year, Caribbean Community (CARICOM) leaders announced that a global conference on the issue will be held in Antigua this week.

Correspondent banks, which are mainly large, international banks based in the United States of America, Europe and Canada, provide Caribbean states with vital access to the international financial system, by offering services to smaller, domestic banks and financial institutions to complete international payments and settlements.

However, many banks, which provide correspondent banking services have been seeking to manage their risks by severing ties with institutions in the region.

“De-risking of correspondent banking services is an existential threat facing the Caribbean region which has the potential to decimate our living standards,” Antigua and Barbuda Prime Minister Browne has said.

The CBTT said that the situation will require “even closer collaboration of financial sector supervisors domestically, regionally and internationally”.

The CBTT also said that the pace of technology “also means that contagion effects could be more immediate and far reaching while cyber risks become larger and potentially more serious.

“Within this broad context over the next five years, the Central Bank will need to be in tune with a more dynamic financial landscape and adapt its policies and communication strategy appropriately,” the CBTT added.

For more on this story go to: http://www.trinidadexpress.com/20161024/business/central-bank-outlines-new-strategic-plan