Raphael John-Lall

Sev­er­al econ­o­mists have agreed with Prime Min­is­ter Dr Kei­th Row­ley that T&T’s econ­o­my has dif­fi­cult years ahead.

Pro­fes­sor emer­i­tus of the Uni­ver­si­ty of the West In­dies (UWI) Patrick Wat­son, who is an econ­o­mist, is not op­ti­mistic that the coun­try’s eco­nom­ic for­tunes will re­cov­er by the year 2027.

Wat­son spoke at a post-bud­get we­bi­nar host­ed by the Cen­tral Fi­nance Fa­cil­i­ty (CFF), which is the de­vel­op­men­tal and fi­nan­cial in­sti­tu­tion of the co­op­er­a­tive move­ment.

In Sep­tem­ber, the Prime Min­is­ter spoke of the fu­ture of T&T’s gas in­dus­try at At­lantic’s 25th an­niver­sary and re­struc­tur­ing cel­e­bra­tions at Clifton Hill, Point Fortin,

With low cur­rent lev­els of nat­ur­al gas pro­duc­tion and a less than favourable mar­ket, the Prime Min­is­ter said there would be dif­fi­cult times for T&T un­til new gas pro­duc­tion in 2027.

Wat­son ex­plained his po­si­tion.

“The Gov­ern­ment seems to think we will have some luck by 2027. I am not as op­ti­mistic as the Gov­ern­ment of T&T in that re­gard. The price of oil and gas, we have no im­pact on that. It is some­thing that is de­ter­mined else­where and those are our main levers for eco­nom­ic de­vel­op­ment. We live in a world that is un­cer­tain and I have nev­er lived in such a pe­ri­od of un­cer­tain­ty, in­clud­ing dooms­day un­cer­tain­ty, if you are fol­low­ing what is hap­pen­ing in the Mid­dle East. The cred­it union move­ment can­not ig­nore any of these when it comes to a sus­tained pro­gramme of eco­nom­ic re­cov­ery,” Wat­son said.

He al­so spoke about how un­sta­ble oil and gas prices im­pact T&T’s vul­ner­a­ble econ­o­my.

“The eco­nom­ic fluc­tu­a­tions in our coun­try are linked to the for­tunes of the hy­dro­car­bon sec­tor and that is like­ly to be so for a long time to come. Al­though there has al­ways been talk that should not be so and true eco­nom­ic re­cov­ery can on­ly come in the near fu­ture if the for­tunes of the hy­dro­car­bon sec­tor change and that is ir­re­spec­tive of the bud­get. T&T cru­cial­ly de­pends on for­eign ex­change. It can do very lit­tle with­out for­eign ex­change.”

He said even if en­er­gy prices in­crease it is un­like­ly that T&T will re­spond with the quan­ti­ties to make a dif­fer­ence in eco­nom­ic de­vel­op­ment.

“We are at 40,000 bar­rels of oil a day, which no mat­ter of how many of those bar­rels we sell, at what­ev­er price, it is not go­ing to help us a lot. The par­tic­i­pa­tion of the cred­it union move­ment is im­por­tant in the di­ver­si­fi­ca­tion of the econ­o­my. I have been hear­ing about that since I was in my moth­er’s womb and it has nev­er hap­pened and we al­ways say God will pro­vide for us. We can­not count on God any­more to do these kinds of things.”

He said Ar­ti­fi­cial In­tel­li­gence (AI), cli­mate change, glob­al wars, in­creas­ing food prices, po­ten­tial food short­ages, in­creas­ing in­equal­i­ty world­wide and a chang­ing world or­der are fac­tors that will af­fect T&T’s eco­nom­ic de­vel­op­ment.

“The cred­it union move­ment can­not be in­dif­fer­ent to this en­vi­ron­ment. AI is threat­en­ing jobs world­wide. There is al­so cli­mate change which is a threat to all of us. Iran launched at­tacks on Is­rael. There is a pos­si­bil­i­ty we could get a wind­fall as this will af­fect en­er­gy prices as the Ukraine war did in its ear­ly days. There are the BRICS coun­tries and they are hav­ing greater in­flu­ence in the de­vel­op­ing world.”

Wat­son en­cour­aged cred­it unions and the co-op­er­a­tive move­ment to make a con­tri­bu­tion to the di­ver­si­fi­ca­tion of the econ­o­my.

“The best time would have been in the 1960s but the sec­ond best time is now. When we talk about di­ver­si­fi­ca­tion of the T&T econ­o­my it must not be to pro­duce that will re­quire the use of for­eign ex­change. It must be prod­ucts and ser­vices that gen­er­ate for­eign ex­change be­cause the oil and gas sec­tor is fail­ing us and will con­tin­ue to fail us.”

He harsh­ly crit­i­cised the busi­ness sec­tor for re­ly­ing on the old mod­el of im­port­ing goods and sell­ing lo­cal­ly in­stead of com­ing up with in­no­v­a­tive ways to gen­er­ate for­eign ex­change.

“I un­der­stand the agony of busi­ness­men when they say they want for­eign ex­change. The for­eign ex­change gen­er­at­ed by bpTT and At­lantic LNG. They want that to put goods in their big shops. When you are earn­ing your liv­ing off the source that oth­ers are re­spon­si­ble for, you are play­ing with fire. It can­not last. You can­not con­tin­ue buy­ing goods and ser­vices from abroad and I am not say­ing that you must stop. The on­ly way you can do that is to earn the for­eign ex­change and that re­quires di­ver­si­fi­ca­tion of the econ­o­my.”

There are ac­tions that the cred­it union can un­der­take to help steer the coun­try away from the path it is on, he added.

“In re­cent times, large agri­cul­ture pro­duc­ers like In­dia have been hold­ing back on their ex­ports of rice as they need that rice. I want to sug­gest and I have done this with the cred­it union move­ment be­fore, T&T is too small to talk about food se­cu­ri­ty and it is not go­ing to hap­pen, es­pe­cial­ly if peo­ple think that in a cri­sis peo­ple think that we will feed our­selves. Food se­cu­ri­ty is mea­sured in how long you can feed your­self for. We do not have a great tra­di­tion in agri­cul­ture in T&T.”

He de­scribed the in­crease in the pub­lic sec­tor min­i­mum wage as a “vote catch­ing” mea­sure which will on­ly hurt the agri­cul­ture sec­tor.

“What is that go­ing to do? That will im­pact on agri­cul­ture as it has al­ready done over time. This makes the cost of agri­cul­ture labour more ex­pen­sive as few­er and few­er peo­ple will go in­to agri­cul­ture. We have to find ways and the cred­it union move­ment is ca­pa­ble of try­ing to find ac­tiv­i­ty be­yond the shores of T&T in col­lab­o­ra­tion with your cred­it union broth­ers and sis­ters. We can work with coun­tries like Guyana and oth­ers with the ex­per­tise.”

Econ­o­mist Ronald Ramkissoon, who al­so spoke dur­ing the we­bi­nar, point­ed out that the fis­cal pol­i­cy is just one in­stru­ment that the Gov­ern­ment us­es to man­age a coun­try’s fi­nances. Oth­er in­stru­ments in­clude trade poli­cies and ex­change rate poli­cies.

He said fis­cal deficits have been record­ed for the last 11 out of 14 years and this re­flects that the coun­try’s fi­nances have not been man­aged well.

“This means that as a coun­try, we have been liv­ing be­yond our means for many years. We bor­row from abroad and bor­row­ing in­ter­nal­ly and from time to time we dis­pose of as­sets to help us meet that deficit that we have been talk­ing about.”

He said notwith­stand­ing T&T’s “can­tan­ker­ous” so­ci­ety, one is­sue that all stake­hold­ers can agree on is that the coun­try does not have the oil and gas re­sources and the in­come the coun­try once had..

“The 2025 bud­get now pins our hopes on im­ports of gas from Venezuela in 2027 and be­yond. I ob­serve that not on­ly our cur­rent cir­cum­stances are very chal­leng­ing, it is like­ly to be so for at least the next three years as in­di­cat­ed by our Prime Min­is­ter and by our Min­is­ter of Fi­nance. Fur­ther be­cause of glob­al over­heat­ing, the world is now shoo­ing us away from fos­sil fu­el and in­to a green­er econ­o­my. We seem not to be anx­ious to be shooed away. Notwith­stand­ing our rel­a­tive­ly good for­tunes over the last 62 years and more, a myr­i­ad of lux­u­ry im­ports, dou­ble dig­it wage in­creas­es, sub­si­dies for all…we have to ad­mit that of now, we are not at a com­fort­able enough place.”

He blamed “weak poli­cies” from suc­ces­sive ad­min­is­tra­tions for the se­ri­ous prob­lems T&T now faces.

“It is what we chose to do with our wind­fall that has put us in this po­si­tion. It is a bless­ing if you win the lot­to but it can be a curse if you spend it bad­ly. I en­cour­age the cred­it union move­ment and the en­tire so­ci­ety in terms of the next few years which I con­sid­er a squeeze, to re­think, re­tool and strate­gise for the years ahead.”