Economist: Brace for three years of economic hardship

Economist Dr Dhaneshwar Mahabir says citizens should brace for three more years of economic hardship and stagnation as the global economy continues to grapple with issues such as inflation, unemployment and crime. Dr Mahabir said today’s budget will be a deficit budget and he was not optimistic that the nation would get a balanced budget until 2014. “This is going to the third year in a row that there is going to be a deficit budget because of the economic and domestic slowdown in T&T. We have to borrow to finance the deficit so I believe that the public debt is going to become the number one economic issue in 2012.”

The 2011/2012 fiscal package is to be delivered this afternoon by Finance Minister Winston Dookeran at Tower D, of the Waterfront Complex, Port-of-Spain. “I have always maintained that economic stagnation was going to be long-term in Trinidad. In the medium term, we will have to expect a measure of difficulty because I believe that the minister would not be able to make major concessions and will not be able to expand public infrastructure as much as we would like to,” he said. Dr Mahabir also predicted an increase in “indirect taxes” on luxury items such as alcohol and tobacco and said he “would not be surprised” if the minister also increased gasoline prices.

He called on the Finance Minister to ensure that there was “at least one or two per cent” of economic growth, in order to keep the economy afloat. “The minister also needs to indicate the anticipated growth rates for the non-oil economy and how much employment he expects to generate economically from these areas neglected in the past.” He added, “In the medium term, the minister needs to raise revenue via a growing economy. And in the short term, he has to raise revenue via an increase in revenue collection, which can be done by having greater compliance measures, cutting allowances for individuals and reducing allowances for firms and corporations.”