Every bud­get speech gen­er­ates in­ter­est from all cit­i­zens, anx­ious to de­ter­mine how they will be im­pact­ed by the pol­i­cy mea­sures con­tained there­in. Man­i­festos are glossy pub­lic re­la­tions doc­u­ments con­tain­ing broad state­ments of pol­i­cy that could mean any­thing. When in of­fice, they must be trans­lat­ed in­to se­ri­ous pol­i­cy mea­sures. Then we will have a clear­er mea­sure of the cur­rent ad­min­is­tra­tion’s ca­pac­i­ty and its in­tend­ed di­rec­tion.

There is a height­ened sense of an­tic­i­pa­tion for the 2026 Bud­get speech re­gard­ing the poli­cies and pro­grammes omit­ted from its elec­tion man­i­festo. Prime Min­is­ter Kam­la Per­sad-Bisses­sar con­firmed last week that Bud­get Day will be in ear­ly Oc­to­ber.

Min­is­ter Dav­en­dranth Tan­coo’s si­lence sug­gests that he is hard at work con­sult­ing with var­i­ous in­ter­est groups and rec­on­cil­ing pri­or­i­ties. His In­de­pen­dence Day mes­sage stat­ed that the Gov­ern­ment is “deeply com­mit­ted to pru­dent man­age­ment of the coun­try’s fi­nances and lay­ing the frame­work for buoy­ant medi­um-term growth.”

The state­ment re­flects the lan­guage con­tained in every Colm Im­bert bud­get speech. If the lan­guage is so sim­i­lar, what will be dif­fer­ent? Min­is­ter Tan­coo’s state­ment could be in­ter­pret­ed as the pro­logue to his speech, de­scrib­ing the prob­lems and ask­ing for the co­op­er­a­tion of cit­i­zens as the Gov­ern­ment nav­i­gates these “dif­fi­cult times.”

It ac­knowl­edged the en­er­gy sec­tor was in de­cline, na­tion­al debt was high, and growth was “stag­nant”. He ac­cept­ed that to achieve progress re­quires clear goals, tough de­ci­sions, fo­cused ef­fort, and un­wa­ver­ing re­solve.

Mak­ing a state­ment is easy. Walk­ing the talk is hard. This ad­min­is­tra­tion in­her­it­ed all the dif­fi­cul­ties faced by the last PNM regime: soft en­er­gy prices, lim­it­ed fis­cal space, and bal­loon­ing de­mands for ad­di­tion­al ex­pen­di­ture on health care, na­tion­al se­cu­ri­ty, ed­u­ca­tion, so­cial sup­port sys­tems, and wage set­tle­ments that are years in ar­rears.

Then there is for­eign ex­change avail­abil­i­ty, which is vi­tal to com­mer­cial in­ter­ests. Rather than make dif­fi­cult de­ci­sions that could put the coun­try on a path to a long-term turn­around, the last fi­nance min­is­ter blus­tered and pre­var­i­cat­ed, kick­ing the can down the road and wait­ing for the re­bound in en­er­gy prices, which was fleet­ing when it fi­nal­ly ar­rived.

Min­is­ter Tan­coo faces the same stub­born prob­lems as Colm Im­bert. These chal­lenges are in­com­pat­i­ble with many of the cam­paign promis­es. They can­not be ac­com­mo­dat­ed with­in the avail­able re­sources, and the Prime Min­is­ter, un­sur­pris­ing­ly, has al­ready ac­knowl­edged that this will be a deficit bud­get. The on­ly ques­tion is the size of the deficit.

The op­tions are as clear as they are po­lit­i­cal­ly dif­fi­cult: raise tax­es, re­duce ex­pen­di­ture, or some com­bi­na­tion there­of. Tack­ling URP and CEPEP are easy tar­gets, as they are make-work pro­grammes that reek of po­lit­i­cal pa­tron­age.

Deficits must be fi­nanced. The re­cent­ly re­leased fis­cal sta­bil­i­ty re­port, Nav­i­gat­ing Glob­al Un­cer­tain­ty: Safe­guard­ing Do­mes­tic Fi­nan­cial Sta­bil­i­ty, notes that com­mer­cial banks and in­sur­ers are sig­nif­i­cant­ly ex­posed to do­mes­tic sov­er­eign debt in 2024, dri­ven by gov­ern­ment bor­row­ing to fi­nance per­sis­tent fis­cal deficits.

The re­port is an im­por­tant warn­ing sig­nal, sug­gest­ing that the quan­tum of pub­lic debt held by the fi­nan­cial sec­tor is prob­lem­at­ic. How­ev­er, the num­bers cap­tured in this fis­cal sta­bil­i­ty eval­u­a­tion are con­ser­v­a­tive, as they omit the many in­ge­nious in­stru­ments used by the pre­vi­ous fi­nance min­is­ter to fi­nance the deficit.

An­oth­er deficit will ex­ac­er­bate the po­si­tion. We will dis­cov­er the oth­er dif­fi­cult de­ci­sions when the bud­get is read.