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Academics call budget more politics than economics
Three academics pounced on the national budget for fiscal 2012/2013 on Thursday evening at the University of the West Indies (UWI), St Augustine campus. Describing it as “a budget of deception,” claiming to be “not convinced” and accusing the Government of “wasting resources,” two UWI lecturers and one research fellow criticised the budget before an audience of mainly business and economics students gathered in the packed-to-capacity Learning Resource Centre at UWI.
Senior lecturer in the Department of Economics, Dr Roger Hosein, part-time lecturer Gregory McGuire and research fellow at the Caribbean Centre for Money and Finance Dr Anthony Birchwood thoroughly walked the young audience through the budget in their presentations.
Hosein said T&T is fortunate to have many strong fundamentals, but at the same time, the Government did not pay attention to some fundamentals in the budget, including inflation. He said T&T needs to be concerned about its main export, natural gas “because the United States has a substantial amount of shale gas” and is beginning to produce methanol, one of T&T’s top exports.
Speaking directly to the deficit, he said the lack of fiscal balance “is reaching worrying proportions.” Hosein said T&T needs to differentiate itself and stop trying to compete with the BRIC countries: Brazil, Russia, India and China. “The mix of policies we’re using to change the comparative advantage is not working.”
Hosein criticised the Government’s timing for dealing with the fuel subsidy, and used the analogy that when one has a leak in the roof, it is better to fix it in the dry season. “We are trying to reverse subsidies when oil production (is) falling, methanol production (is) falling,” he said. “Take your time and sequentially reduce it in a way you can manage it.”
Hosein said he agreed the fuel subsidy needs to be removed and recommends diesel to be the first to target. He bemoaned the “lack of comparison between this year’s budget and last year’s budget.”
With regard to the Government’s funding of tertiary education through Government Assistance for Tuition Expenses, Hosein jabbed at students from other institutions, saying, “Allyuh need to stop going to rogue institutions and artificially inflating fees,” because the subsidy is a heavy burden on the state. He said Tobago is in a borderline crisis situation and it should move away from sun, sea and sand tourism toward medical tourism.
Birchwood, originally from Tobago, agreed that “tourism is a fickle industry. Sometimes it makes, sometimes it doesn’t make.” McGuire, an energy expert, said diesel represents 60 per cent of the subsidy. Of the budget, which he described as one of “deception, McGuire said, “Politics once again intervened. It’s no longer about economics, but politics.”
He said “every single element” of the items that account for gross domestic product (GDP) “have been down.”
McGuire identified those areas:
• the agriculture sector is expected to contract 4.9 per cent
• of the 15 planned mega-farms, only five have started
• most manufacturing sectors are expected to decline
• the construction sector is expected to decline 20 per cent
• tourism arrivals are down
“Now, these are the major productive sectors of the economy,” he said. McGuire said the only sectors expected to grow are electricity and water, finance, insurance and real estate, but these are not labour intensive and do not produce many jobs. He said government expenditure is at “unsustainable levels.”
McGuire said it is easy to increase expenditure, but difficult to reduce it. He said there exists in T&T a unique phenomenon he called “full employment recession” in that that while the economy is stagnant, the labour force is increasing.
He challenged the Central Statistical Office to explain “how we arrived at this phenomenon.”
He criticised the Unemployment Relief Programme (URP), Cepep Company Ltd and the On-the-Job trainee (OJT) programme, saying the latter “is now the Cepep in shirt and tie.” (AK)
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