JavaScript is disabled in your web browser or browser is too old to support JavaScript. Today almost all web pages contain JavaScript, a scripting programming language that runs on visitor's web browser. It makes web pages functional for specific purposes and if disabled for some reason, the content or the functionality of the web page can be limited or unavailable.

Tuesday, July 8, 2025

Can T&T afford more than 5 per cent?

by

20110324

On March 1, Min­is­ter of Fi­nance, Win­ston Dook­er­an, pre­sent­ed the fi­nal of­fer of a five per cent in­crease for the pe­ri­od 2008 to 2010 to the 33,000 pub­lic ser­vants rep­re­sent­ed by the Pub­lic Ser­vices As­so­ci­a­tion. Ac­cord­ing to Mr Dook­er­an: "The new of­fer was made tak­ing in­to con­sid­er­a­tion the cur­rent eco­nom­ic re­al­i­ties which face Trinidad and To­ba­go and the need to sta­bilise the econ­o­my and en­cour­age growth." Ten days lat­er, the Min­is­ter of Fi­nance re­in­forced his point about the in­abil­i­ty of the Gov­ern­ment to af­ford more than a five per cent retroac­tive in­crease for pub­lic ser­vants by re­fer­ring to the need for "mea­sures to sta­bi­lize the na­tion­al fi­nan­cial bal­ance sheet, trig­ger a new mo­men­tum for growth and con­front the fis­cal chal­lenges that will sus­tain the growth mo­men­tum while faith­ful­ly ad­her­ing to a strong so­cial sup­port pro­gramme." That state­ment, which was car­ried as a paid ad­ver­tise­ment in all three dai­ly news­pa­pers, in­clud­ed the sen­tences: "We are in a pe­ri­od of fis­cal deficits that emerged since 2009 and in 2011 we project an over­all fis­cal deficit of $7.7 bil­lion or 5.5 per cent of GDP...Our pri­ma­ry fis­cal chal­lenge is to re­turn to fis­cal bal­ance by 2013/2014."

Most peo­ple read­ing the min­is­ter's state­ments would come to the con­clu­sion that T&T is cur­rent­ly spend­ing more than it earns (is in a fis­cal deficit sit­u­a­tion) and that a de­ci­sion to of­fer the 33,000 of­fi­cers of the civ­il ser­vice and statu­to­ry au­thor­i­ties a salary in­crease of more than five per cent would have ru­inous con­se­quences on the econ­o­my. This con­clu­sion is but­tressed by the fol­low­ing state­ment in the min­is­ter's March 11 re­port to the na­tion: "The re­vised com­pen­sa­tion, if it were to be ex­tend­ed to the rest of the pub­lic ser­vice where ne­go­ti­a­tions are still on­go­ing, will cost the Trea­sury $1.251 bil­lion, plus an ad­di­tion­al cost for al­lowances of at least $761 mil­lion in 2011. "The wage bill for the pub­lic sec­tor will now be ap­prox­i­mate­ly $8 bil­lion an­nu­al­ly which rep­re­sents 19 per cent of our gross rev­enue." Is the con­clu­sion that T&T can bare­ly af­ford a five per cent in­crease for pub­lic ser­vants jus­ti­fied by the facts? To an­swer that ques­tion, one would have to form a judg­ment on T&T's cur­rent eco­nom­ic po­si­tion and make some rea­son­able as­sump­tions about the coun­try's fu­ture prospects. When for­mer Fi­nance Min­is­ter, Karen Tesheira, de­liv­ered the 2010 bud­get, in Sep­tem­ber 2009, she pre­dict­ed that T&T would record a fis­cal deficit of $7.703 bil­lion with rev­enue es­ti­mat­ed at $36.644 bil­lion and ex­pen­di­ture at $44.347 bil­lion. The es­ti­mat­ed deficit of $7.7 bil­lion rep­re­sent­ed 5.6 per cent of the coun­try's gross do­mes­tic prod­uct, which was record­ed at $136 bil­lion. That was the es­ti­mate. The re­al­i­ty is that while

T&T an­tic­i­pat­ed a deficit of $7.7 bil­lion, the ac­tu­al deficit out­come was $308.2 mil­lion with the coun­try col­lect­ing $43.212 bil­lion and spend­ing $43.520 bil­lion. While the an­tic­i­pat­ed deficit was es­ti­mat­ed to be 5.6 per cent of GDP, the ac­tu­al deficit was 0.22 per cent of GDP. Those are the facts sourced from the Min­istry of Fi­nance and are con­tained in the Cen­tral Bank's Jan­u­ary 2011 Eco­nom­ic Bul­letin. It's the last col­umn in Ta­ble 14 of the bul­letin. Does the fact that T&T record­ed a deficit of 0.22 per cent ($308 mil­lion) for the 2010 fis­cal year square with Mr Dook­er­an's as­ser­tion, de­liv­ered on March 11, that "We are in a pe­ri­od of fis­cal deficits that emerged since 2009 and in 2011 we project an over­all fis­cal deficit of $7.7 bil­lion or 5.5 per cent of GDP?" Most coun­tries and most econ­o­mists around the world would con­sid­er a mi­nus­cule deficit of 0.22 per cent of GDP to be an ex­tra­or­di­nary achieve­ment. Clear­ly, though, that is one achieve­ment that our Min­is­ter of Fi­nance does not choose to share with the pop­u­la­tion when de­liv­er­ing his re­port on the na­tion's busi­ness. Why would the min­is­ter as­sert that fis­cal deficits emerged in 2009, that he ex­pects a deficit of $7.7 bil­lion in 2011 and not men­tion that the deficit was a minis­cule 0.22 per cent in the 2010 fis­cal year? Is it that a deficit of 0.22 per cent of GDP does not sup­port his con­tention-and that of Prime Min­is­ter Kam­la Per­sad-Bisses­sar as re­cent­ly as Mon­day night at Pi­ar­co Air­port-that the coun­try sim­ply can­not af­ford more than five per cent? Does the

Min­is­ter of Fi­nance feel that if it were wide­ly known that the ac­tu­al deficit for 2010 were 0.22 per cent, which is a frac­tion of what was orig­i­nal­ly es­ti­mat­ed, that his ne­go­ti­at­ing po­si­tion with the pub­lic sec­tor unions would be se­vere­ly weak­ened? The main fac­tor con­tribut­ing to T&T achiev­ing a fis­cal per­for­mance that would have made us the en­vy of 90 per cent of the coun­tries in the world was the fact that en­er­gy rev­enues in the 2010 fis­cal year were 45 per cent high­er than an­tic­i­pat­ed. The orig­i­nal es­ti­mate of en­er­gy rev­enue was $15.556 bil­lion while the ac­tu­al rev­enues amount­ed to $22.597 bil­lion-$7 bil­lion more. Both the for­mer and the cur­rent ad­min­is­tra­tions al­so con­tributed to keep­ing the coun­try's to­tal ex­pen­di­ture low­er than es­ti­mat­ed with the ac­tu­al spend­ing com­ing in at $43.5 bil­lion, which was about 2 per cent low­er than the es­ti­mat­ed spend­ing of $44.4 bil­lion. In sup­press­ing ex­pen­di­ture, T&T was suc­cess­ful in low­er­ing wages and salaries (by $310 mil­lion), goods and ser­vices (by $621 mil­lion) and in­ter­est pay­ments by $491 mil­lion. How­ev­er, trans­fers and sub­si­dies were high­er by $2.181 bil­lion, while cap­i­tal ex­pen­di­ture and net lend­ing was $472 mil­lion high­er than the bud­get. Most of the high­er trans­fers and sub­si­dies would have been the re­sult of the sharp in­crease in the gaso­line sub­sidy, which is di­rect­ly linked to the high­er price of oil. The high­er oil prices go, the more mon­ey the

Gov­ern­ment spends on sub­si­dis­ing gaso­line prices. Ac­cord­ing to the doc­u­ment 2010 Draft Es­ti­mates of Re­cur­rent Ex­pen­di­ture at page 271, the Gov­ern­ment spent $2.16 bil­lion on the sub­sidy re the sale of pe­tro­le­um prod­ucts in 2008, the re­vised es­ti­mate for 2009 was $1.2 bil­lion and the es­ti­mate for 2010 was $960 mil­lion. The 2011 es­ti­mate of the gaso­line sub­sidy, con­tained on page 288 of the doc­u­ment 2011 Draft Es­ti­mates for Re­cur­rent Ex­pen­di­ture, is for $1.18 bil­lion. The fact that the Gov­ern­ment spent close to $1 bil­lion on gaso­line sub­si­dies in 2010-and $310 mil­lion less on the salaries of pub­lic ser­vants-should be an in­di­ca­tion of where the re­al prob­lem lies. In ef­fect, while T&T earned $7 bil­lion more from en­er­gy rev­enues, close to $1 bil­lion of that went right back to the coun­try's gas-guz­zling SU­Vs. Can it not be ar­gued that if the Gov­ern­ment were to re­duce the gaso­line sub­sidy to­mor­row it could more eas­i­ly af­ford salary in­creas­es high­er than five per cent for pub­lic ser­vants?

The fact that the Gov­ern­ment has not opt­ed to go the route of re­duc­ing the gaso­line sub­sidy in or­der to set­tle the pub­lic ser­vants dis­pute, it seems to me, is based on a choice to al­low the stan­dard of liv­ing of pub­lic ser­vants to de­cline as a re­sult of the de­bil­i­tat­ing im­pact of in­fla­tion. (We will dis­cuss the im­pact of a gaso­line price in the near fu­ture). But giv­en that the 2010 deficit of $308 mil­lion (0.22 per cent of GDP) was a frac­tion of the $7.7 bil­lion orig­i­nal­ly es­ti­mat­ed, is the min­is­ter in a po­si­tion to tell the na­tion what is the cur­rent fis­cal po­si­tion for 2011, for which he es­ti­mat­ed an iden­ti­cal deficit of $7.7 bil­lion? His an­swer, of course, should be in the con­text of the fact that world oil and petro­chem­i­cal prices are sig­nif­i­cant­ly high­er this year than he bud­get­ed and nat­ur­al gas prices are like­ly to be in line with the bud­getary es­ti­mates. And can't there be an agree­ment that if the fi­nan­cial sit­u­a­tion de­clines in the fu­ture, that what the Gov­ern­ment gave in 2011 can be tak­en back in 2013 or 2014?


Related articles

Sponsored

Weather

PORT OF SPAIN WEATHER

Sponsored

Today's
Guardian

Publications

A model in a costume from The Lost Tribe’s 2026 presentation Island Circus

A model in a costume from The Lost Tribe’s 2026 presentation Island Circus

KERWIN PIERRE

A model in a costume from The Lost Tribe’s 2026 presentation Island Circus

A model in a costume from The Lost Tribe’s 2026 presentation Island Circus

KERWIN PIERRE

Ringmasters of the Road: Crowds flock to Tribe’s circus-themed band launch

17 hours ago
Students, principal and staff of St David’s RC Primary, along with the UWTT and Scotiabank Foundation teams at the handover of steelpans at the school.

Students, principal and staff of St David’s RC Primary, along with the UWTT and Scotiabank Foundation teams at the handover of steelpans at the school.

Students, principal and staff of St David’s RC Primary, along with the UWTT and Scotiabank Foundation teams at the handover of steelpans at the school.

Students, principal and staff of St David’s RC Primary, along with the UWTT and Scotiabank Foundation teams at the handover of steelpans at the school.

Scotiabank Foundation, United Way donate steelpans

17 hours ago
The Executive of the National Parang Association 2025-27. Back row, from left: Kervin Preudhomme, assistant secretary; Shaquille Headley, committee member; Cheriese Pierre, committee member; Lisa Lee, trustee; Joanne Briggs, PRO; Yarelis Touissant, committee member; William Calliste, trustee. Front row, from left: Jenais Carter, secretary; Alicia Jaggasar, president; Henrietta Carter, vice president; Joseph Bertrand, youth officer. Missing: Kerrylee Chee Chow, treasurer; Chevone Pierre, committee member.

The Executive of the National Parang Association 2025-27. Back row, from left: Kervin Preudhomme, assistant secretary; Shaquille Headley, committee member; Cheriese Pierre, committee member; Lisa Lee, trustee; Joanne Briggs, PRO; Yarelis Touissant, committee member; William Calliste, trustee. Front row, from left: Jenais Carter, secretary; Alicia Jaggasar, president; Henrietta Carter, vice president; Joseph Bertrand, youth officer. Missing: Kerrylee Chee Chow, treasurer; Chevone Pierre, committee member.

The Executive of the National Parang Association 2025-27. Back row, from left: Kervin Preudhomme, assistant secretary; Shaquille Headley, committee member; Cheriese Pierre, committee member; Lisa Lee, trustee; Joanne Briggs, PRO; Yarelis Touissant, committee member; William Calliste, trustee. Front row, from left: Jenais Carter, secretary; Alicia Jaggasar, president; Henrietta Carter, vice president; Joseph Bertrand, youth officer. Missing: Kerrylee Chee Chow, treasurer; Chevone Pierre, committee member.

The Executive of the National Parang Association 2025-27. Back row, from left: Kervin Preudhomme, assistant secretary; Shaquille Headley, committee member; Cheriese Pierre, committee member; Lisa Lee, trustee; Joanne Briggs, PRO; Yarelis Touissant, committee member; William Calliste, trustee. Front row, from left: Jenais Carter, secretary; Alicia Jaggasar, president; Henrietta Carter, vice president; Joseph Bertrand, youth officer. Missing: Kerrylee Chee Chow, treasurer; Chevone Pierre, committee member.

Jaggasar returns as National Parang president

Yesterday
Charles Town junior drummers and dancers take to the stage

Charles Town junior drummers and dancers take to the stage

Charles Town junior drummers and dancers take to the stage

Charles Town junior drummers and dancers take to the stage

Jamaican Maroons celebrate, question land rights

Yesterday