Ac­cord­ing to the 2017 Re­view of the Econ­o­my, in the first fis­cal year of Colm Im­bert’s stew­ard­ship as T&T’s Min­is­ter of Fi­nance, which was the 2016 fis­cal year, to­tal ex­pen­di­ture was $52.94 bil­lion. That was 11.71 per cent less than the $59.97 bil­lion spent in the last year of the Peo­ple’s Part­ner­ship ad­min­is­tra­tion.

In the 2016 fis­cal year, the ex­pen­di­ture on trans­fers and sub­si­dies was $27.85 bil­lion, which ac­count­ed for 52.63 per cent of to­tal ex­pen­di­ture, but was 9.24 per cent less than the $30.70 bil­lion spent in the 2015 fis­cal year. In that fis­cal pe­ri­od, the Peo­ple’s Part­ner­ship’s ex­pen­di­ture on trans­fers and sub­si­dies was 51.19 per cent of the to­tal spend­ing.

But in fis­cal 2016, with to­tal ex­pen­di­ture at $52.94 bil­lion, T&T on­ly col­lect­ed $44.97 bil­lion in to­tal rev­enue, re­sult­ing in a fis­cal deficit of $7.97 bil­lion. That deficit was fund­ed main­ly by net ex­ter­nal fi­nanc­ing, which to­talled $8.95 bil­lion that year. Net do­mes­tic fi­nanc­ing was -$981 mil­lion.

So, in his first year as Min­is­ter of Fi­nance, Mr Im­bert spent $27.85 bil­lion on trans­fers and sub­si­dies and had a fis­cal deficit of $7.97 bil­lion.

In the 2017 fis­cal pe­ri­od, Mr Im­bert’s sec­ond year as Min­is­ter of Fi­nance, T&T’s to­tal ex­pen­di­ture was $49.71 bil­lion, which was 6.1 per cent less than the pre­vi­ous fis­cal year.

Trans­fers and sub­si­dies, at $26.03 bil­lion, ac­count­ed for 52.36 per cent of to­tal ex­pen­di­ture and was 6.55 per cent less than the $27.85 bil­lion al­lo­cat­ed to trans­fers and sub­si­dies in 2016.

But in the 2017 fis­cal year, to­tal rev­enue was on­ly $36.18 bil­lion, which meant that T&T had a fis­cal deficit of $13.53 bil­lion. That deficit was fund­ed by net do­mes­tic fi­nanc­ing of $10.26 bil­lion and net ex­ter­nal fi­nanc­ing of $3.26 bil­lion.

It needs to be point­ed out that T&T spent $27.85 bil­lion in trans­fers and sub­si­dies in 2017 and had to bor­row $13.53 bil­lion to fund its fis­cal deficit.

In the nine years Mr Im­bert has served as min­is­ter of fi­nance, the fis­cal ac­counts have been re­port­ed as fol­lows, with the paren­the­sis mean­ing a deficit:

• 2016—($7.97B)

• 2017—($13.53B)

• 2018—($5.69B)

• 2019—($4.02B)

• 2020—($16.68B)

• 2021—($12.35B)

• 2022—$1.33B

• 2023—($3.41B)

• 2024—($5.19B)

(NB: The 2023 fis­cal deficit is a pre­lim­i­nary num­ber from the 2023 Re­view of the Econ­o­my. The 2024 fis­cal deficit is the es­ti­mate pro­vid­ed by the min­is­ter in his 2024 bud­get pre­sen­ta­tion.)

I think there are four things of in­ter­est in the ta­ble above:

1) Of the nine bud­gets that Mr Im­bert has pre­sent­ed, on­ly one has been in sur­plus and that was in 2022 when the prices of T&T’s en­er­gy ex­ports sky­rock­et­ed as a re­sult of Rus­sia’s in­va­sion of Ukraine. A co­gent ar­gu­ment can be made that a coun­try that has spent more than it earned in eight out of nine years is liv­ing be­yond its means.

2) It is clear that the rea­son T&T has spent more than it has earned in eight out of nine years is be­cause of the in­crease in the amount of mon­ey that has been al­lo­cat­ed to trans­fers and sub­si­dies.

As pre­vi­ous­ly not­ed, in 2016, T&T spent $27.85 bil­lion on trans­fers and sub­si­dies, ac­cord­ing to the in­for­ma­tion in the 2020 Re­view of the Econ­o­my.

Ac­cord­ing to the pre­lim­i­nary num­ber in the 2023 Re­view of the Econ­o­my, trans­fers and sub­si­dies in­creased to $32.63 bil­lion in 2023. That means trans­fers and sub­si­dies may have in­creased by 17.16 per cent in eight years. The word “pos­si­ble” is used be­cause the 2023 num­ber is pre­lim­i­nary.

In its Ju­ly 2024 Eco­nom­ic Bul­letin, the Cen­tral Bank said, “De­clines in both in­ter­na­tion­al com­mod­i­ty prices and do­mes­tic en­er­gy pro­duc­tion led to an over­all deficit of $4.3 bil­lion on the Cen­tral Gov­ern­ment fis­cal ac­counts for the first nine months of fis­cal year 2024. Cen­tral Gov­ern­ment rev­enue de­clined by $5.5 bil­lion (year-on-year) to $35.0 bil­lion, due to a fall-off in en­er­gy rev­enues, while ex­pen­di­ture fell by $1.1 bil­lion to $39.3 bil­lion....In ad­di­tion, trans­fers to house­holds fell by $1.2 bil­lion (year-on-year) to $7.0 bil­lion in the nine months to June 2024, as there were no fu­el sub­si­dies pay­ments com­pared with $1.0 bil­lion in the pre­vi­ous fis­cal year pe­ri­od.”

3) If one tab­u­lates the eight years of deficits (out of nine years of bud­gets), the to­tal cu­mu­la­tive deficits are $68.84 bil­lion. Does that mean that T&T’s to­tal debt has in­creased by $68.84 bil­lion in the nine-year pe­ri­od?

Ac­cord­ing to the 2017 Re­view of the Econ­o­my, net pub­lic sec­tor debt stock was $87.50 bil­lion at the end of the 2016 fis­cal year, on Sep­tem­ber 30, 2016. T&T’s debt, as at the end of Sep­tem­ber 2016, was 58.8 per cent of GDP.

(Net pub­lic sec­tor debt is de­fined as the sum of all do­mes­tic and ex­ter­nal oblig­a­tions of pub­lic debtors which in­clude the Cen­tral Gov­ern­ment and au­tonomous pub­lic bod­ies such as state en­ter­pris­es and statu­to­ry au­thor­i­ties. It ex­cludes in­stru­ments of open mar­ket op­er­a­tions (OMOs) such as trea­sury bills, trea­sury notes, trea­sury bonds and ster­ilised bonds, pro­ceeds of which are held or ster­ilised at the Cen­tral Bank and not utilised by the GORTT for its op­er­a­tions.)

The Ju­ly 2024 Eco­nom­ic Bul­letin in­forms us that T&T’s ad­just­ed gen­er­al gov­ern­ment debt, which al­so ex­cludes debt is­sued for sterli­sa­tion pur­pos­es, to­talled a pre­lim­i­nary fig­ure of $141.10 bil­lion as the end of June 2024. That was equal to 73.7 per cent of GDP.

That means in nom­i­nal terms the coun­try’s to­tal stock of debt has in­creased by $53.6 bil­lion or by 61.25 per cent (from the end of Sep­tem­ber 2016 to June 2024) and, for the same pe­ri­od, T&T’s debt to GDP in­creased from 58.8 per cent to 73.7 per cent.

Why would the cu­mu­la­tive $68.84 bil­lion in deficits for fis­cal 2016 to 2024 not be clos­er to the $53.6 bil­lion by which the coun­try’s debt in­creased? I be­lieve there are two main rea­sons: with­drawals from the Her­itage and Sta­bil­i­sa­tion Fund are con­sid­ered to be part of the fi­nanc­ing of the Gov­ern­ment; and a coun­try’s debt is al­ways a mov­ing num­ber as ma­tur­ing debt can be rolled over or paid off even as new debt in tak­en on.

It is al­so use­ful to note that T&T’s ad­just­ed gen­er­al gov­ern­ment debt out­stand­ing stood at $118.4 bil­lion (79.6 per cent of GDP) at the end of Sep­tem­ber 2020, and at $126.6 bil­lion (79.1 per cent of GDP), at the end of Sep­tem­ber 2021, ac­cord­ing to the Cen­tral Bank’s 2021 An­nu­al Eco­nom­ic Sur­vey. That means T&T’s ad­just­ed gen­er­al gov­ern­ment debt has de­clined to 73.7 per cent of GDP, as at June 2024, from 79.1 per cent of GDP as at Sep­tem­ber 2021.

The fact that T&T’s debt to GDP is de­clin­ing, and not in­creas­ing, is some­thing to cel­e­brate.

4) The 2024 Draft Es­ti­mates of Ex­pen­di­ture doc­u­ment projects the Gov­ern­ment’s spend­ing on trans­fers and sub­si­dies for the fis­cal year end­ing Sep­tem­ber 30, 2024, at $33.47 bil­lion. In my view, fis­cal pru­dence re­quires that the Gov­ern­ment come up with a plan to re­duce the trans­fers and sub­si­dies al­lo­ca­tion by a spe­cif­ic amount, maybe be­tween $1 bil­lion and $2 bil­lion, every year for the next five years.

Of course, any dol­lar sub­tract­ed from trans­fers and sub­si­dies will hurt a group of peo­ple, which is dif­fi­cult for any min­is­ter of fi­nance to do in what is like­ly to be the last bud­get pre­sen­ta­tion be­fore the next gen­er­al elec­tion, which is con­sti­tu­tion­al­ly due by No­vem­ber 9, 2025.

But, if T&T con­tin­ues spend­ing more than half of its to­tal ex­pen­di­ture on trans­fers and sub­si­dies, the coun­try’s nom­i­nal debt is go­ing to rise to a point of no re­turn, which could mean a re­turn to the In­ter­na­tion­al Mon­e­tary Fund.