In his pre­sen­ta­tion of the bud­get for the 2012 fis­cal year, Min­is­ter of Fi­nance Win­ston Dook­er­an at­tempts to lay the foun­da­tion for the Trinidad and To­ba­go econ­o­my in the medi­um term but, in do­ing so, the coun­try may be ex­posed to some sig­nif­i­cant down­side risks if the world econ­o­my con­tin­ues to slow as has been wide­ly pre­dict­ed.The bright spot in the 2012 bud­get is the Gov­ern­ment's pro­pos­als to re­vi­talise the lo­cal stock mar­ket.Mr Dook­er­an is right when he said T&T's small and medi­um en­ter­pris­es con­tin­ue to be over-re­liant on bank fi­nanc­ing. The Gov­ern­ment is to be com­mend­ed for its pro­pos­al that would see the cor­po­ra­tion tax rate of el­i­gi­ble small and medi­um-sized com­pa­nies re­duced to ten per cent."We ex­pect this tax in­cen­tive regime to en­cour­age small and medi­um-term en­ter­pris­es to ac­cess re­sources from the cap­i­tal mar­ket," said Mr Dook­er­an.

The Gov­ern­ment is al­so on the right track in terms of its pro­pos­al to part­ly di­vest First Cit­i­zens Bank, sell more shares in Plipde­co and cre­ate a new mort­gage bak­ing in­sti­tu­tion which will be part­ly di­vest­ed.One area of po­ten­tial risk for the econ­o­my is in the rev­enue pro­jec­tions put for­ward by the Min­is­ter of Fi­nance.The Gov­ern­ment ex­pects to col­lect some $47 bil­lion pred­i­cat­ed on an oil price of US$75 per bar­rel and a price of nat­ur­al gas of US$2.75 per unit, along with a pro­jec­tion for eco­nom­ic growth of 1.7 per cent and an in­fla­tion rate of sev­en per cent.The ques­tion that the tech­nocrats at the Min­istry of Fi­nance need to an­swer is whether the T&T econ­o­my can gen­er­ate $47 bil­lion in tax rev­enue based on the as­sump­tions that have been out­lined in the 2012 bud­get.

The fact is that T&T col­lect­ed $45 bil­lion in to­tal rev­enue for 2011, ac­cord­ing to the Re­view of the Econ­o­my, and this was based on a re­vised weight­ed av­er­age price for crude oil of US$87.66 per bar­rel and for nat­ur­al gas of US$2.75 per unit and a huge­ly suc­cess­ful tax amnesty pro­gramme.The like­li­hood of the econ­o­my gen­er­at­ing more tax rev­enue in 2012 than in 2011, es­pe­cial­ly with no new tax­a­tion mea­sures be­ing pro­posed for the cur­rent fis­cal year, seems re­mote. And this is de­spite the min­is­ter's over­ly op­ti­mistic pro­jec­tion about the abil­i­ty of the econ­o­my to gen­er­ate and at­tract new in­vest­ment.But more trou­bling is the fact that Mr Dook­er­an's rev­enue pro­jec­tions are based on growth in the lo­cal econ­o­my.The abil­i­ty of the lo­cal econ­o­my to grow-es­pe­cial­ly what is re­ferred to as the on­shore or do­mes­tic econ­o­my-is linked to the abil­i­ty of T&T's man­u­fac­tur­ers to ex­pand sales in their re­gion­al mar­kets.

But if there is no re­al re­cov­ery with­in Cari­com, the prospects of man­u­fac­tur­ing growth in T&T in the short term may be re­mote.An­oth­er fac­tor that must be con­sid­ered is the ex­tent to which the re­cov­ery of the Caribbean economies-de­pen­dent as many na­tions are on tourism-is linked to growth in the ma­jor world economies.Giv­en the di­rec­tion in which the world econ­o­my is head­ing-with the Unit­ed States limp­ing along with at best a job­less re­cov­ery and with economies in Eu­rope and Japan slow­ing down or stalling-the prospects for growth in the Caribbean mar­ket are slim.