Somewhere in the late 1970s, speaking in the House of Representatives, the late Dr Eric Williams made a comment for which he is widely, but incorrectly, quoted to this day.
What he actually said was, “Money is not an issue” although it was widely reported as, “Money is no problem.”
Actual words aside, it was an accurate depiction of the country’s economic health at the time. When the man revered as the father of this nation made that remark, T&T was in a very healthy economic position. Income from oil was at about US$920.8 million after a decade of steady expansion, providing this country with almost two-thirds of its income.
Those days are long gone. When Finance Minister Colm Imbert presents the 2019/2020 Budget tomorrow, it will be against a backdrop of economic stagnation and a continued reliance on an oil industry that no longer yields the revenue that once made this the richest nation in the Caribbean.
While there is expected to be some marginal improvement in the budget deficit, which had been in the range of 3.40 per cent of T&T’s gross domestic product in 2018, the reality is that the country is still mired in debt. Successive political administrations have been spending much more than the country earns, so recent fiscal packages have had to measures to increase taxes and cut spending.
Although Mr Imbert may seek to put a positive spin on T&T’s economic position—after all this is a Budget being presented just before the country shifts into election mode—it will be hard to shake off the spectre of fiscal deficits which will continue to put pressure on our international reserves levels and the currency.
The most recent forecasts from rating agencies Moody’s and S&P are that T&T will continue to borrow just to pay the interest on current debt several years into the future.
The expectation is that a restrictive fiscal policy will have to be maintained because the State is burdened with a high public servant salaries and wages bill, as well as high transfers and subsidies.
Over the last decade, economic growth averaged -0.5 per cent. The country is far from a position of fiscal strength, due in no small part to mixed performances in the energy and non-energy sectors. Declines in gas production and prices on one hand and a nine per cent increase in oil prices plus a marginal improvement in output.
A fiscal deficit in the range of $2,968.1 million and a reduction in the stock of foreign exchange, down to US$9,760.3 million or 7.9 months of import cover in the first half of this year are not matters to be trifled with.
The bottom line is that money is an issue for this country. If and how Mr Imbert addresses this unsustainable debt burden will become clear tomorrow.
