Less than a month before the Local Government elections, Minister of Finance Colm Imbert dropped a news bombshell at a forum co-hosted by the International Monetary Fund (IMF) yesterday, saying the Government would offer trade unions representing public servants and employees of State enterprises no wage increases for the period 2017 to 2020 as part of the administration's attempt to curb expenditure.
And the minister, in what he seemed to think was a joke, said the Government might raise fuel prices by another 15 per cent in April 2017 because he had raised the price of the commodity by 15 per cent on three occasions in one year "and they have not rioted yet."
Imbert was part of a panel on global and regional challenges that included Jamaican Prime Minister Andrew Holness and Caribbean Development Bank president Warren Smith.
The conference also attracted St Lucian Prime Minister Allen Chastenet, technocrats from the IMF, the CDB and local financial institutions
Speaking about the need for the country to reduce the gap between revenue and expenditure, Imbert outlined the steps Government had taken to reduce transfers and subsidies by increasing the price of fuel and proposing reductions to the subvention for GATE.
He said: "Our only way forward is fiscal consolidation, reducing subsidies and transfers, trying to cut back on our expenditure on goods and services and wage restraint.
"I have already told the trade unions that from 2017 to 2020 our offer will be 0-0-0. I have featured in a number of placards from trade union members marching around the Prime Minister's office saying 'Imbert must go.' But that's just how it is."
The T&T Guardian first reported the minister's statement about offering 0-0-0 as a wage freeze on its website and this was copied on social media websites by other news organisations.
Two hours after the story was posted, Imbert called the T&T Guardian to say the interpretation that 0-0-0 meant a wage freeze was wrong "because 0-0-0 is the starting point of the Government's negotiations with the trade unions and not the end."
He subsequently called a press conference last evening to clear up the issue.
During the forum, Imbert said the previous People's Partnership (PP) administration increased public expenditure from $45 billion to $63 billion or 40 per cent between 2010 and 2015.
He said the current administration came into Government in 2015 faced with a number of wage increases that were granted by the PP, which totalled as much as 20 per cent when salary increases were added to allowances.
Imbert added: "We were handed a gift–I'm trying not to be too political here–of somewhere in the vicinity of US$1 billion ($6.5 billion) in arrears or back pay that we had to pay in 2016...
"From a political perspective, we had to go and discuss it with the trade unions and tell them we just can't pay all of this back pay in 2016 and we will have to do it in stages. By and large, the unions were understanding of what was happening in the economy."
Fuel subsidies to go too
On fuel prices, Imbert said the Government proposed to eliminate the subsidies on all petroleum products over a three-year period.
Further addressing the issue of cutting back on transfers and subsidies, he said the price of electricity in T&T was the lowest in the Caribbean and one-sixth the cost in Jamaica. Imbert said he "rather suspects" that water costs five to ten times more in Caribbean countries.
"So we have subsidised water, subsidised electricity, subsidised education and subsidised public transportation. And all of these things we now have to pull back on. We have no choice," he explained.
Referring to a statement made earlier by Holness that Jamaica could no longer depend on debt to stimulate growth in the economy, Imbert said T&T could not rely on borrowing in the future to close the fiscal gap.
In the 2008 fiscal year, Imbert said T&T enjoyed a very low debt to GDP ratio of 35 per cent and a fiscal surplus of almost US$2 billion.
Imbert said: "Our debt to GDP ratio is now 60 per cent and we have set ourselves a target of 65 per cent but if we go beyond that we believe we will run into difficulty.
"So we are almost at the point where it is difficult for us to borrow any more for budgetary support and capital development and therefore the only solution is growth."
Imbert said T&T had serious fiscal consolidation to do because he expected to report a fiscal deficit of five per cent of GDP for the 2017 fiscal year.
In order to achieve that five per cent deficit, the Government would have to create a number of one-off sources of revenue by selling shares in state enterprises, engaging in privatisation, among other sources, he added.
The minister said tapping one-off sources of revenue was done in 2016 and would be repeated during the current 2017 fiscal year.
"By 2018, we may have nothing left to sell," Imbert added.