In announcing that a mission from the International Monetary Fund (IMF) would conduct its annual one-week staff visit to T&T starting tomorrow, Finance Minister Larry Howai said that he would focus this year's discussions around the impact on the national budget of the recent declines in energy prices and the measures being taken to address the shortfalls in revenue.
"I am pleased with the timing of this visit as it offers an opportunity to obtain in-depth information from a major multilateral institution on the likely trajectory of oil and gas prices and best practices in managing the effect on the country's overall fiscal situation," Mr Howai is quoted as saying in a statement Friday from his ministry.
In calling on the IMF mission to conduct an assessment of the measures that the Government is undertaking to address T&T's estimated $7.4 billion shortfall in revenue, Mr Howai is either demonstrating exceptional bravery or extreme political naivety.
The IMF mission follows the January 8 presentation to the nation by Prime Minister Kamla Persad-Bissessar, in which she advanced the notion that the $7.4 billion revenue shortfall could be addressed by selling state assets, cancelling unfunded infrastructure projects, trimming spending on goods and services and reducing the fuel subsidy as a result of lower oil prices.
The Prime Minister's speech has been widely criticised for not addressing–either in tone or in deed–the need for national adjustment to the expected sharp reduction in revenues. Various Government spokesmen have pointed to the downward adjustment of the oil and natural gas pegs and the potential impact of more widespread reduction in Government spending on the jobs and incomes of the working population.
The unvarnished reality, which will be acknowledged by the IMF mission, is that it is always challenging for an administration in a democracy to impose unpopular adjustment measures within six months of a general election. No doubt, the IMF mission will point to T&T's buffers–its US$11.3 billion in foreign reserves, US$5.5 billion in the Heritage and Stabilization Fund as well as its ability to borrow– as contributing to the country's ability to weather the current fiscal storm.
But the mission will also renew its calls for the Government to broaden the base of non-energy revenue collection, look at the impact of the vast expenditure on transfers and subsidies on the domestic labour market, curtail the fuel subsidies, introduce greater flexibility to the foreign exchange market and encourage the diversification of the economy.
All of these calls have been made repeatedly by previous IMF missions to T&T and while the Government officials have listened to them politely, many of the ideas have been dismissed as being unrealistic, while others have been consigned to the paralysis-of-analysis bin.
In the local context, the Article IV consultation process has almost been reduced to a farce with the IMF mission mouthing the appropriate economic remedies and the local officials nodding their heads in agreement, while quickly readying the latest IMF report for the darkest place on the highest shelf of the ministry's farthest office. Hopefully, the sharp reversal of fortune will force the hubristic officials to take their responsibilities more seriously and the results of these consultations will redound to the nation's best interest.