One of the more in­trigu­ing as­pects of the 2025 bud­get de­liv­ered by Min­is­ter of Fi­nance, Colm Im­bert, on Sep­tem­ber 30, is how he paint­ed the pic­ture of the econ­o­my that the Peo­ple’s Na­tion­al Move­ment in­her­it­ed when it re­turned to of­fice in Sep­tem­ber 2015.

“Re­flect­ing on the chal­leng­ing cir­cum­stances that char­ac­terised our en­try in­to of­fice, it is es­sen­tial to ac­knowl­edge the tur­bu­lent eco­nom­ic land­scape which con­front­ed us in 2015, with de­clin­ing com­mod­i­ty prices and pro­duc­tion lev­els, fol­lowed by COVID-19, glob­al in­fla­tion­ary trends and short­ages, con­flicts in the Mid­dle East and the Rus­sia/Ukraine war. We had to man­age this hos­tile eco­nom­ic en­vi­ron­ment in the face of an over­drawn gov­ern­ment bank ac­count and a dis­con­nect be­tween gov­ern­ment ex­pen­di­ture and rev­enue, where ex­pen­di­ture had in­creased by 40 per cent over the pe­ri­od 2010 to 2015 with­out a cor­re­spond­ing in­crease in rev­enue.”

Mr Im­bert then out­lined that from 2016 to 2019, oil prices re­mained de­pressed, while nat­ur­al gas prices plum­met­ed from over US$6 per MMB­tu in 2014 to less than US$2 per MMB­tu in 2016, cou­pled with de­clin­ing oil pro­duc­tion.

He said in 2020, T&T was hit by COVID-19 pan­dem­ic, which he de­scribed as an eco­nom­ic cat­a­stro­phe, which

shut down ac­tiv­i­ty in al­most every area and closed bor­ders, re­quir­ing sub­stan­tial Gov­ern­ment fis­cal stim­u­lus and so­cial grants.”

The Min­is­ter of Fi­nance not­ed that T&T has come a long way from the COVID-19 pe­ri­od, when Gov­ern­ment rev­enue dropped by $13 bil­lion in one year, from $47 bil­lion in 2019 to $34 bil­lion in 2020, and our econ­o­my con­tract­ed by 9.8 per cent.

“In fact, I dare say a few in the po­lit­i­cal are­na even hoped that we did not re­cov­er and over­come that calami­ty,” Mr Im­bert said, adding that the lo­cal econ­o­my not on­ly sur­vived, but it re­bound­ed, stronger and more re­silient than be­fore.

He point­ed out that in 2023, three years af­ter the on­set of COVID-19, gov­ern­ment rev­enue had im­proved by $19.4 bil­lion, when com­pared to 2020, an in­crease of 56 per cent.

He then said words that may be the most im­por­tant in his bud­get pre­sen­ta­tion.

“We have al­so been able to in­crease ex­pen­di­ture from $50.8 bil­lion in 2019 to $59.7 bil­lion in 2025, thus putting al­most $9 bil­lion more in­to the lo­cal econ­o­my, which is a sig­nif­i­cant fac­tor con­tribut­ing to our sus­tained eco­nom­ic growth. These are re­mark­able achieve­ments by any yard­stick, and it is no won­der that our de­trac­tors are work­ing over­time to bury this good news and to dis­tract with false and far-fetched claims about our man­age­ment of the econ­o­my.”

With­out a doubt, Mr Im­bert is very pleased with his abil­i­ty to project that al­most $9 bil­lion more would go back in­to the do­mes­tic econ­o­my in 2025 than in 2019. That is an in­crease of 17.5 per cent in sev­en years, which av­er­ages out at 2.5 per cent a year.

In a sense, that is not an ex­tra­or­di­nary in­crease, but it must be placed in glob­al con­text of the fluc­tu­at­ing en­er­gy prices and the need for a small, en­er­gy-de­pen­dent econ­o­my to err on the side of fis­cal pru­dence.

In a sense, if you are a min­is­ter of fi­nance in a po­lit­i­cal par­ty that is one year away from a gen­er­al elec­tion, putting al­most $9 bil­lion more in­to the lo­cal econ­o­my would be quite an achieve­ment.

But con­sid­er the pos­si­bil­i­ty of a min­is­ter of fi­nance, in Mr Im­bert’s po­si­tion, de­cid­ing to hold ex­pen­di­ture at $50.8 bil­lion?

Wouldn’t keep­ing ex­pen­di­ture at $50.8 bil­lion in 2025 lessen the pos­si­bil­i­ty of T&T run­ning a fis­cal deficit in the cur­rent fis­cal pe­ri­od?

Ac­cord­ing to the 2024 Re­view of the Econ­o­my, which was one of the bud­get doc­u­ments that ac­com­pa­nied the 2025 fis­cal pre­sen­ta­tion, T&T’s to­tal ex­pen­di­ture in 2020 (with at least six months of COVID-19 ex­pen­di­ture) was $51.05 bil­lion. In that year, T&T’s fis­cal deficit was $13.23 bil­lion.

To­tal ex­pen­di­ture in fis­cal 2021 (an­oth­er year of COVID-19) was $49.61 bil­lion, a year in which the fis­cal deficit was $10.13 bil­lion.

In fis­cal 2022, to­tal spend­ing was $53.27 bil­lion, with T&T re­port­ing a fis­cal sur­plus of $1.33 bil­lion.

In 2023, the ex­pen­di­ture was $57.85 bil­lion and the deficit was $3.17 bil­lion.

In 2024, the pre­lim­i­nary es­ti­mate of ex­pen­di­ture was $57.50 bil­lion and the deficit was $7.14 bil­lion.

Giv­en the volatil­i­ty and the un­pre­dictabil­i­ty of en­er­gy prices, it seems like a pret­ty good idea to hold ex­pen­di­ture at a pre-de­ter­mined lev­el. Or start at a pre-de­ter­mined lev­el and on­ly in­crease ex­pen­di­ture in the fol­low­ing year by the low­er of the av­er­age rate of in­fla­tion or by a fixed num­ber.

So it seems that Mr Im­bert has es­chewed the idea of fis­cal con­sol­i­da­tion.

It is note­wor­thy, that in de­liv­er­ing the 2025 bud­get, Min­is­ter of Fi­nance, Colm Im­bert men­tioned the word ‘con­sol­i­da­tion’ twice, once in re­la­tion to the es­tab­lish­ment of the Trinidad and To­ba­go Rev­enue Au­thor­i­ty.

In the 2024 bud­get, he men­tioned con­sol­i­da­tion on five oc­ca­sions, all of which had to do with the need for fis­cal con­sol­i­da­tion.

Re­cov­ery?

Last Fri­day, I told a friend that I did not think the T&T econ­o­my would ever get back to its peak, which I de­ter­mined sub­se­quent­ly was prob­a­bly the 2014 fis­cal year.

In pure­ly fi­nan­cial terms, T&T col­lect­ed to­tal rev­enue of $58.39 bil­lion and re­port­ed to­tal ex­pen­di­ture of $62.83 bil­lion, ac­cord­ing to the Re­view of the Econ­o­my doc­u­ments.

In no year be­fore or af­ter 2014 did the gov­ern­ment of this coun­try col­lect or spend as much mon­ey, in nom­i­nal terms, as it did in 2014.

Was that a func­tion of su­pe­ri­or man­age­ment of the econ­o­my by the then Peo­ple’s Part­ner­ship ad­min­is­tra­tion?

I think not, rev­enue in the 2014 fis­cal year was more like­ly a func­tion of nat­ur­al gas pro­duc­tion and prices.

In the 2014 fis­cal year, when the to­tal ex­pen­di­ture was $62.83 bil­lion, some $34.66 bil­lion was spent on trans­fers and sub­si­dies, which ac­count­ed for 55.16 per cent of all the mon­ey spent in that fis­cal pe­ri­od.

“Trans­fers to house­holds, the largest share of ex­pen­di­ture un­der to­tal trans­fers and sub­si­dies, are pro­ject­ed at $13.46 bil­lion for fis­cal 2014, 22.6 per cent high­er than 2013,” ac­cord­ing to the 2014 Re­view of the Econ­o­my.

The 2014 cal­en­dar year was al­so the peak year for T&T’s net of­fi­cial for­eign re­serves, to­talling US$11.49 bil­lion.

By com­par­i­son, in the 2022 fis­cal year, the on­ly fis­cal pe­ri­od be­tween 2016 and 2024 in which the cur­rent ad­min­is­tra­tion of the Peo­ple’s Na­tion­al Move­ment (PNM) re­port­ed a fis­cal sur­plus, the gov­ern­ment col­lect­ed $54.60 bil­lion and spent $53.27 bil­lion.