Finance Minister Larry Howai will be seeking to curb wasteful and inefficient spending in the next fiscal year, says Dr Ronald Ramkissoon, chief economist at Republic Bank Ltd. Ramkissoon was referring to public statements Howai has made within the last two weeks about austerity measures to come in the 2012-2013 budget, to be presented on October 1. “I am not so sure that the choice of words ‘austerity’ was what he meant. I think he is looking at curbing the unnecessary and inefficient expenditure. There is this sense that we continue to spend money without evaluation,” Ramkissoon told the Guardian yesterday. Ramkissoon said curbing expenditure would be a major “challenge.” “The Government must reign in expenditure and make cuts in transfers and subsidies,” he said.
He said after years of no growth, it is imperative the country returns to economic growth. “For the fiscal year 2013, must see the economy return to grow. There must be a re-direction of recurrent expenditure to capital projects,” he said. Catherine Kumar, chief executive officer, T&T Chamber of Industry and Commerce, said the first thing they would like to see is a review of what was promised in the last two budgets. “We would firstly like to see a review of the progress made on the various initiatives and measures cited in the last two budgets and which measures are still on the cards,” Kumar said. “We also expect to see performance measures detailed in an accompanying document to be issued simultaneously with the budget.” Kumar said the Finance Minister needs to incorporate measures to stimulate the economy as growth has been flat. “The public-private partnership model is one such method and we expect to hear of some projects which are to start in this year. As diversification of the economy is key, there needs to be incentives for investment in the sectors identified for diversifications, for example, accelerated depreciation for new plant and equipment,” she said.
On the issue of the fuel subsidy, she said the Government must signal a timeline to gradually remove it. “The fuel subsidy is an area which, for political reasons, the Government may not want to venture into, but with a $4 billion expenditure, we must develop a more aggressive strategy to reduce the volume of diesel and liquid petroleum fuels used. “The infrastructural development refilling and distribution is way behind its timeline and must be accelerated. The Government needs to start signalling a timeline for the future gradual movement of the subsidy so that businesses can begin to plan for this in their business plans,” she said. Kumar called for the “speedy” execution of all plans the Government intends to carry out and to cut existing bureaucracy. Hugh Howard, president, American Chamber of Commerce T&T (AmCham T&T), believes Howai will not be raising taxes as this would not be an incentive for foreign investors and local businesses. Howai had said that there would be no new taxes. “I think the Finance Minister looked at the entire picture and to avoid the case of foreign investors staying away, he is avoiding rasing taxes. Apart from property tax, there are other taxes and if these are raised, they could keep investors away,” Howard said. Howard said he hopes Howai begins to take steps to begin reducing unnecessary transfers and subsidies. “The fuel subsidy should be phased out over a period of time. This subsidy is not going to the people who deserve it the most. It is also deviating from the areas of the economy that needs it,” Howard said.