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.

Friday, July 25, 2025

The more things change, the more they remain the same

by

Curtis Williams
1890 days ago
20200520

“Al­though the T&T econ­o­my has achieved very high growth rates it has nev­er been able to do so over a sus­tained pe­ri­od. In fact, giv­en that the econ­o­my is still dom­i­nat­ed by the en­er­gy sec­tor, shocks in this sec­tor have a dra­mat­ic im­pact on the en­tire econ­o­my —par­tic­u­lar­ly, ex­ports, gov­ern­ment rev­enue and ul­ti­mate­ly growth. The eco­nom­ic strat­e­gy must there­fore ad­dress this fun­da­men­tal is­sue: the need for the de­vel­op­ment of oth­er growth cen­tres, to achieve a broad-based econ­o­my where the struc­ture of pro­duc­tion is more bal­anced and where the coun­try is to some ex­tent in­su­lat­ed from eco­nom­ic shocks gen­er­al­ly from out­side.”

The above is from the op­er­a­tional plan 2007/2010 of the Vi­sion 2020 doc­u­ment.

The risks to the econ­o­my posed by fluc­tu­at­ing com­mod­i­ty prices are per­haps more rel­e­vant to­day than they were in 2007 when the Vi­sion 2020 plan was ex­pect­ed to be op­er­a­tionalised. That is be­cause there has been no fun­da­men­tal shift in the econ­o­my of T&T in the last decade.

What has in fact hap­pened is that gov­ern­ment spend­ing has in­creased dra­mat­i­cal­ly with trans­fers and sub­si­dies grow­ing to un­sus­tain­able lev­els. In ad­di­tion, the swings in com­mod­i­ty prices have not re­sult­ed in wind­falls for at least the last sev­en years and the ad­vent of shale oil and gas have fun­da­men­tal­ly changed the mar­ket.

Nat­ur­al gas has be­come ubiq­ui­tous glob­al­ly and T&T’s place in the in­ter­na­tion­al LNG mar­ket has been neg­a­tive­ly im­pact­ed, both in terms of its in­flu­ence and its abil­i­ty to get high prices for its car­goes; as the US mar­ket turned sour and even the ar­bi­trage in the Asian mar­ket has been sig­nif­i­cant­ly re­duced due to the im­pact of re­cent low­er de­mand in Chi­na and Japan.

In Feb­ru­ary, the world’s largest nat­ur­al gas ex­porter Qatar an­nounced it was de­lay­ing, by sev­er­al months, its choice of West­ern part­ners for the world’s largest liq­ue­fied nat­ur­al gas (LNG) project and there is spec­u­la­tion that the de­ci­sion to de­lay was made based on cur­rent mar­ket fun­da­men­tals and the still un­clear im­pact of the coro­n­avirus.

In­ter­na­tion­al ex­pan­sion in Aus­tralia, Qatar, Mozam­bique and Egypt, com­bined with a con­tin­u­ous­ly strong US shale gas ex­port dri­ve have pushed down prices fur­ther.

The chal­lenge to the coun­try’s main source of rev­enue has been ex­ac­er­bat­ed as the col­lapse in the price of LNG has been rel­a­tive­ly mild com­pared to what has hap­pened to oil and petro­chem­i­cal prices.

The sto­ry of the US mark­er, West Texas In­ter­me­di­ate col­laps­ing last month to be­low ze­ro dol­lars was unimag­in­able and methanol and am­mo­nia prices have been ham­mered.

T&T is a ma­jor ex­porter of methanol and am­mo­nia and the sec­tor con­tributes in ex­cess of $5 bil­lion to the coun­try’s gross do­mes­tic prod­uct ac­cord­ing to a study dong by Econ­o­mist Dr Ter­rence Far­rell, and there­fore its chal­lenges that have now led to a call for tem­po­rary re­lief from high nat­ur­al gas prices is a di­rect out­come of the col­lapse of com­mod­i­ty prices.

I say all of this so that we un­der­stand the con­text in which the Roadmap to Re­cov­ery com­mit­tee set up by the prime min­is­ter in re­sponse to the eco­nom­ic cri­sis caused by the shut-in of de­mand in the glob­al econ­o­my was es­tab­lished.

I think it is fair to say the coun­try un­der­stands that these are ex­tra­or­di­nary times that re­quire the high­est qual­i­ty of lead­er­ship from all, politi­cians, busi­ness, labour, civ­il so­ci­ety and cit­i­zens.

No coun­try in the world has es­caped the neg­a­tive im­pact of the nov­el coro­n­avirus on its econ­o­my and small vul­ner­a­ble states like those in the Caribbean coun­tries are ex­pect­ed to pay a dis­pro­por­tion­ate price for it.

This is why the res­ig­na­tion of the co-vice chair of the com­mit­tee Robert Le Hunte has brought about so much angst amongst those fi­nal­ly hop­ing for a change in the for­tunes of T&T and for the coun­try to see that di­ver­si­fi­ca­tion of its econ­o­my is the on­ly way for sus­tain­able growth.

I have pre­vi­ous­ly point­ed out in this space that the coun­try failed when it did not im­ple­ment the vi­sion 2020 doc­u­ment and al­lowed par­ty pol­i­tics to trump what was a tru­ly na­tion­al ef­fort.

We have come full cir­cle and in so many ways we are worst off than in 2007. Oil and gas pro­duc­tion are both sig­nif­i­cant­ly down from those days. Prices are much low­er, our bal­ance of pay­ment po­si­tion was much worse, we did not have a for­eign ex­change cri­sis. Busi­ness con­fi­dence was at an all time high and the off­shore econ­o­my was boom­ing.

To be sure the im­ple­men­ta­tion of the en­tire plan would have been dif­fi­cult as it would have re­quired an­nu­al growth rates at close to nine per cent to be­come a de­vel­oped coun­try by this year but the prob­lem is we nev­er even gave it a re­al chance of suc­cess.

Even then there were warn­ing signs, and the then Patrick Man­ning gov­ern­ment had promised to take ac­tion.

The Vi­sion 2020 re­port warned: “The in­crease in the fis­cal deficit has large ex­tent re­sult­ed from an in­crease in Gov­ern­ment’s in­vest­ment in so­cial and eco­nom­ic in­fra­struc­ture and in trans­fers and sub­si­dies, and a down­ward re­vi­sion of the non-en­er­gy tax regime. The strat­e­gy to re­duce the non-en­er­gy deficit will in­volve the fol­low­ing:

• mea­sures to in­crease non-en­er­gy out­put through in­creas­es in pro­duc­tiv­i­ty,in­no­va­tion and the in­fu­sion of new tech­nolo­gies

• pro­mot­ing the en­try of new busi­ness­es in­to the non-en­er­gy sec­tor

• as­sist­ing firms op­er­at­ing in the busi­ness sec­tor to ex­plore new ex­port mar­kets

• re­view­ing sub­si­dies and trans­fers with a view to bet­ter tar­get­ing and ra­tio­nal­i­sa­tion.”

We on­ly have to look at our bud­get to see that trans­fers and sub­si­dies have now be­come al­most half the val­ue of the na­tion­al bud­get.

The is­sue of com­pet­i­tive­ness was al­so raised way back in 2007 with the com­mit­tee find­ing that to sus­tain growth and raise the stan­dard of liv­ing there is a need to be­come more com­pet­i­tive.

“How­ev­er, we must un­der­stand that coun­tries do not com­pete, firms do. Coun­tries do not cre­ate wealth; wealth is ac­tu­al­ly cre­at­ed at the mi­cro lev­el of the econ­o­my, root­ed in the ca­pa­bil­i­ties of a na­tion’s firms, small and large, as well as in the qual­i­ty of the busi­ness en­vi­ron­ment in which these com­pa­nies com­pete. Un­less the com­pet­i­tive­ness of firms im­prove, macro­eco­nom­ic, po­lit­i­cal, le­gal and so­cial re­form will not bear full fruit. Build­ing com­pet­i­tive firms is there­fore the fun­da­men­tal de­ter­mi­nant of the lev­el of pros­per­i­ty. The Gov­ern­ment will there­fore en­able com­pet­i­tive busi­ness­es, which can com­pete suc­cess­ful­ly in in­ter­na­tion­al mar­kets by pro­duc­ing world-class prod­ucts, brands and ser­vices,” the re­port read.

We have not done well as a coun­try to im­ple­ment stud­ies and re­ports. We have not shown a ca­pac­i­ty to bring our­selves out of chal­leng­ing pe­ri­ods oth­er than re­ly­ing on the next oil or gas boom, both of which are not com­ing back any­time soon.

I have said, and I re­peat, we have to fo­cus hard on the en­er­gy sec­tor but the mod­el can­not be tak­ing out as much out of the ground, tax­ing it as much as we can and pro­duc­ing pri­ma­ry prod­ucts. It has to be about deep­en­ing the en­er­gy sec­tor and link­ing it back to the man­u­fac­tur­ing sec­tor. We must not con­fine our­selves to the use of our own re­sources and must see the po­ten­tial in im­port­ing mol­e­cules of gas if we need to so do.

This is not at the ex­pense of the oth­er sec­tors like man­u­fac­tur­ing, tourism, cre­ative sec­tor, ship­build­ing and in new ar­eas that we have not yet thought about.

We must build a knowl­edge-based econ­o­my where there is a clear com­mit­ment from the state and pri­vate sec­tor to sci­ence and re­search and de­vel­op­ment.

We must as a coun­try think big, re­turn to plan­ning and to im­ple­men­ta­tion. We must stop the de­struc­tive pol­i­tics that says it my time now and if we cant have it we must be pre­pared to mash it up. How else can we ex­plain the UNC’s de­ci­sion not to sup­port re­cent leg­is­la­tion in the Par­lia­ment and its con­tin­ued re­fusal to vote for the Rev­enue Au­thor­i­ty.

Pol­i­tics is, in some ways, the great­est chal­lenge the coun­try faces, for the signs are not good from the present gov­ern­ment about a will­ing­ness to take the hard and nec­es­sary de­ci­sions and the ex­it of Mr Le Hunte, who from all ac­counts worked tire­less­ly on the Road to Re­cov­ery team is wor­ry­ing that the more things change the more they re­main the same.


Related articles

Sponsored

Weather

PORT OF SPAIN WEATHER

Sponsored