Cutting subsidies on oil and gas cannot be avoided if T&T is to reduce its expenditure to cope with declines in global markets, Mariano Brown, former Minister in the Ministry of Finance said yesterday.
"The real difficulty is not premium (gas). In fact, premium at this moment needs a reduction in price because it is probably trading at a price which is higher than the world price as we speak," he told reporters yesterday on the sidelines of a Powerful Ladies of T&T (PLOTT) networking luncheon and roundtable discussion at the T&T Chamber'headquarters, Westmoorings.
Brown said the biggest issue with subsidies is in diesel and that's the area that has to be addressed.
"There are serious implications. The issue is how you will do it, what are the things you will offset, what are the compensating measures. That's why you can't look at any one alternative. It has to be a package of measures, not one measure."
Commenting on plans for a downward revision of the oil price on the national budget is pegged to US$40 a barrel, Brown said that would not make much of a difference.
"What is important is how much money is coming in and out and how it is going to be spent. In other words, what is our gross revenue likely to be and therefore how much money can we realistically spend?"
He added that there is going to have some level of borrowing and a decision about "what you are cutting."
"Between now and October 30, it will be a very interesting period from a finance point of view," he said.
On Tuesday, Prime Minister Kamla Persad-Bissessar said Government plan to revise the oil price from US$45 to US$40 a barrel.
Brown said the declining international markets as a result of stock volatility in China has already started to impact T&T's economy.
"The fall in China's demand internationally means that the prices of commodities are falling, it is just that it is coming back down to more normal levels. Unfortunately, we've gotten accustomed to prices at high levels which has fueled our economy and in a sense fueled our income. This is an adjustment period and the level of income is not likely to be as high as it were in the past."
Continuous changes means that the Government of the day has to create dialogue so the population can get an appreciation of how it can affect them, he said, adding that there is not enough political will to get the dialogue moving.