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Bharath at pre-budget seminar: Social fall-out if subsidies reduced
Trade Minister Vasant Bharath yesterday said that reducing transfers and subsidies, which take up about 50 per cent of the national budget, is not as easy as some people think because there will always be a social fall out. “There are always issues of economics and politics. I would like to hear views on the manner and time frame on which we reduce those transfers and subsidies and manage the social implications. It is very easy to say cut the transfers but the other side of it is how we manage the social implications,” he said.
Bharath, the keynote speaker yesterday at a pre-budget seminar hosted by the T&T Group of Professional Associations at the Queen's Park Oval, Port-of-Spain, said the problem is that many people in T&T do not want to work. “The private sector will tell you that there are government programmes that have crowded out the private sector in many instances but we have created a culture where many people just do not want to work,” he said.
Economist Dr Ronald Ramkissoon said there would be an inevitable “gnashing of teeth” when transfers and subsidies are removed.
“One of the things about subsidies, which is approximately half of the expenditure, is that it cannot be reversed very easily without a lot of weeping and gnashing of teeth. We live in an economy where we depend on the vagaries of energy prices and now quantity, so the sensible thing would be to reverse subsidies and transfers when your economy turns down. Can you do that without pain? No, not in this type of economy,” he said. Ramkissoon said steps should be taken immediately to reduce subsidies.
“Could we please not increase them in 2015 so that as a proportion of Gross Domestic Product (GDP) they will fall over time? Fast rising expenditures bring pressures on your foreign reserves. I will say no more on that in the context of what has happened recently,” he said. Bharath commented on a T&T Guardian report yesterday in which Raquel Moses, president of Invest TT, said although there was a global increase in foreign investment last year, T&T was not able to capitalise on it.
“We have got to make sure that we create that enabling environment to be able to get that additional 13 per cent increase in global investment next year,” the minster said.