A budget for the poor and vulnerable but also one which raises questions about the 7.3% growth in the non-energy sector as outlined by Finance Minister Colm Imbert when he presented the more than $51 billion dollar budget yesterday.
Former Minister in the Ministry of Finance Mariano Browne said the Central Bank report indicated that real economic activity in the non-energy sector remained lacklustre for the first quarter and spoke to extra capacity in the manufacturing sector, with capacity utilisation remaining largely unchanged when compared to the corresponding period for the previous year, “in other words no growth.”
Browne said the International Monetary Fund numbers “also show weak or no growth for that sector.”
But the former Minister said he got the impression that the budget was meant to “win political support” from the vulnerable groups in society that “things are hard but we are going to do what is possible to help you, in a sense trying to win political support.”
He said there were no real revenue-raising measures revealed except for increases in fine for littering and setting bushfires.
Instead, he felt that the speech revolved around sending a message that “one would consider to the poor and dispossessed and the retirees, those on a fixed income, look we doing what we can to make life simple for you.”
It was in this vein, he said, that having admitted that it is difficult for public servants to access their pension that the Minister announced that he will pay “a minimum pension while everything gets into position.” This was in reference to Imbert’s announcement that public servants who retire will get an immediate payment of $3,500 a month.
Browne said the Minister offered nothing new on Petrotrin but hinted at liberalisation of fuel which, he said, “was interesting. What does that mean, does it mean new players? And in this instance who will those new players be.
Will they be on the import or retail side?”
On the decision to increase the price of super-gasoline, as opposed to diesel, Browne said it was a clear indication that the Minister understood the impact any increase in diesel would have had on inflation and public transportation and decided to maintain it at a low level.
Speaking on the CNC3 Post-Budget analysis economist Dr Valmiki Arjoon also questioned the statistic given by the Finance Minister that the manufacturing sector by more than 7% saying this contradicts the Central Bank data which said that the manufacturing sector deteriorated.
Arjoon also expressed concern that the fuel margin for gas station owners had diminished with the one dollar increase in super gasoline from $3.97 to $4.97 which took immediate effect in the budget presented yesterday.
Arjoon said in addition gas station owners will also have to contribute more to the Green Fund and business levy.
He also had some questions about the Minister’s disclosure that another NIF bond issue will be made next year. The NIF Bonds were issued a couple of months back in an attempt to raise revenue, among the investors were credit unions and the National Insurance Board which invested close to one billion dollars, “so now if you are issuing the NIF bonds and raised $4 bn, that is $4 bn of loan-based revenue,” once its successful, he said, it will close the deficit gap.
“The problem I see is the risk that you using the same assets, you issuing bonds backed by the same assets so the revenue stream will be spread to more bondholders,” Arjoon said.
Also on the CNC3 post-budget analysis was lecturer and Head of the Institute for Gender and Development Studies, UWI, Gabrielle Hosein who said the marginal increase in social programmes will make a difference to those who need it “if you on the ground the $100 will make a difference.”
But her real concern was that there was no sense of how exactly the country’s unemployment problem would be addressed.
Hosein said while the minister spoke of jobs in construction “you may have a job in construction for a year and a half, but when the project is completed what long-term employment will be created?”
She believes that the real devil in the budget is in the details which are not as quickly available and which she believes the population must be alert to.