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Friday, July 25, 2025

Econ­o­mist ad­vis­es Govt:

Revenue streams cannot support us anymore

by

20160916

Econ­o­mist In­dera Sage­wan-Al­li is cau­tion­ing Gov­ern­ment to be care­ful about sub­sidy cuts when it presents the 2016-2017 bud­get on Sep­tem­ber 30.

Sage­wan-Al­li in an in­ter­view with the T&T Guardian yes­ter­day said that from an "af­ford­abil­i­ty per­spec­tive Gov­ern­ment needs to cut sub­si­dies, as we can no longer af­ford the size of sub­si­dies we have grown ac­cus­tomed to be­cause Gov­ern­ment no longer has the rev­enue streams to meet them with­out hav­ing to bor­row mon­ey."

But she said that giv­en the long re­liance and de­pen­dence on sub­si­dies "we have to be re­al­is­tic to the kind of so­cial fall­out that could take place if the is­sue of trans­fer and sub­si­dies is not han­dled in a very care­ful man­ner."

There are a few big tick­et items which the Gov­ern­ment cur­rent­ly sub­si­dies to keep costs to con­sumers down.

These in­clude the Wa­ter Taxi Ser­vice, used dai­ly by thou­sands of com­muters from North to South and vice-ver­sa. The al­lo­ca­tion for that sub­sidy in the 2015-2016 bud­get was $39.4 mil­lion.

The in­ter-is­land fer­ry ser­vice which is used by lo­cal tourists and traders is al­so heav­i­ly sub­sidised to the tune of $284 mil­lion. The Pub­lic Trans­port Ser­vice Cor­po­ra­tion is al­so heav­i­ly sub­sidised at a cost of $138.3 mil­lion.

CEPEP, the so called "make work pro­gramme," is sub­sidised to the tune of over $600 mil­lion while the food card pro­gramme is sub­sidised to the tune of $288 mil­lion.

Sage­wan-Al­li said the mon­ey spent on sub­si­dies was high and could not be sus­tained but she said: "We can­not sim­ply en­ter­tain a dras­tic cut in trans­fers and sub­si­dies, be­cause for so many years a seg­ment of the pop­u­la­tion have grown ac­cus­tomed to it."

She sug­gest­ed that Gov­ern­ment may want to "relook at the kind of peo­ple who are ac­cess­ing and if you are able-bod­ied you should not be on the food card pro­gramme but in one of the oth­er pro­grammes that will be de­signed to in­crease pro­duc­tiv­i­ty and eco­nom­ic di­ver­si­fi­ca­tion."

Cur­rent­ly the State spends $1.7 bil­lion on the fu­el sub­sidy and Sage­wan-Al­li said once that was cut again "food prices will in­crease, the cost of trans­porta­tion will in­crease and it will im­pact the cost of liv­ing."

She added: "One ap­pre­ci­ates that the Gov­ern­ment does not have the re­sources but what these mea­sures do is put a lot of pres­sure on the mid­dle-class which is al­ready reel­ing with very lit­tle sur­plus to be able to deal with in­creas­ing tax­es, cost of gas and to pay for their chil­dren's ed­u­ca­tion."

She said Gov­ern­ment should con­sid­er en­gag­ing in part­ner­ship projects be­tween the State and the agri­cul­tur­al sec­tor and be­tween the State and the man­u­fac­tur­ing sec­tor.

The ben­e­fits, she said, would be two-fold. The agri­cul­tur­al sec­tor and the man­u­fac­tur­ing sec­tor will get the labour they need and a new more sus­tain­able type of em­ploy­ment will be cre­at­ed.

The CEPEP mod­el, she said, should be changed so that the $600 mil­lion al­lo­cat­ed to the pro­gramme should be in the first in­stance cut by 25 per cent which should be kept as ex­pen­di­ture di­rect­ed to the thrust of eco­nom­ic di­ver­si­fi­ca­tion.

Sage­wan-Al­li said the Prime Min­is­ter was right to ask peo­ple to bite the bul­let "but peo­ple need to get a sense that the Gov­ern­ment has a plan. "The Gov­ern­ment needs to ar­tic­u­late a plan in the pub­lic do­main, peo­ple must feel com­fort­able that if we make dras­tic sac­ri­fices there will come a time in the not too dis­tant fu­ture when things would be good again" she said.

Mar­ket­ing man­ag­er Daniel Austin, of Xtra Foods Su­per­mar­ket, told T&T Guardian that his or­gan­i­sa­tion "is all about the con­sumer and he hopes that there will be in­cen­tives for con­sumers in the bud­get be­cause there are many peo­ple at the low­er end who can bare­ly make ends meet and we need to en­sure they do not get left be­hind."

Austin said world ship­ping prices have in­creased and on­ly re­cent­ly an in­ter­na­tion­al ship­ping com­pa­ny went bank­rupt. He re­mains op­ti­mistic that the gov­ern­ment would look at the glob­al sce­nario when pre­sent­ing the mea­sures and en­sure that "the low­er end" is not neg­a­tive­ly af­fect­ed.

He is al­so op­ti­mistic that in­cen­tives will come in the bud­get to help busi­ness own­ers ex­pand their op­er­a­tions "be­cause we can help stim­u­late the econ­o­my and cre­ate em­ploy­ment."

Rose­marie Sant


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