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Wednesday, June 18, 2025

Politicians have to face reality when elected

by

GEISHA KOWLESSAR-ALONZO
47 days ago
20250430

GEISHA KOW­LESSAR-ALON­ZO

From lap­tops for all school chil­dren to its com­mit­ment to restor­ing pros­per­i­ty to the work­ing class, the Unit­ed Na­tion­al Con­gress made a num­ber of promis­es to the na­tion as it swept to a huge vic­to­ry in Mon­day night’s gen­er­al elec­tion.

How­ev­er, with dwin­dling oil and gas re­serves amount­ing to a struc­tur­al re­duc­tion in this coun­try’s po­ten­tial fu­ture rev­enue, how will the new ad­min­is­tra­tion fi­nan­cial­ly trans­form such pledges in­to tan­gi­bles for cit­i­zens?

The Busi­ness Guardian reached out to for­mer Min­is­ter of Fi­nance Sel­by Wil­son as well as lead­ing econ­o­mists Dr Ronald Ramkissoon and Dr Mar­lene Attzs to gar­ner their per­spec­tives.

Wil­son said it is still too ear­ly to de­ter­mine whether the new ad­min­is­tra­tion would be forced to dip in­to the Her­itage and Sta­bil­i­sa­tion Fund (HSF) or turn to the In­ter­na­tion­al Mon­e­tary Fund (IMF), but at the same time he not­ed that go­ing in­to the HSF is a pos­si­bil­i­ty, stat­ing that the “PNM used the HSF to the max.”

“If they have a lot of ex­pen­di­ture they would have to find a way to fi­nance it...but I think it is too ear­ly to judge as you have to see what is the ac­tu­al im­ple­men­ta­tion pro­gramme,” Wil­son said.

On the is­sue of the IMF, Wil­son, who was ap­point­ed as Min­is­ter of Fi­nance and the Econ­o­my in 1989 in the Na­tion­al Al­liance for Re­con­struc­tion ad­min­is­tra­tion, ex­plained that this was de­pen­dent on cer­tain de­vel­op­ments like if the coun­try was in a po­si­tion where it could not re­pay its ex­ter­nal debt and it want­ed cer­tain ac­com­mo­da­tions then it would have to con­sid­er a fund pro­gramme.

“It’s a lot of vari­ables. It’s not black and white. Peo­ple on the cam­paign say any­thing but when they get in they would have to face re­al­i­ty,” Wil­son added.

Ramkissoon ad­vised the in­com­ing ad­min­is­tra­tion to take stock and ex­am­ine care­ful­ly what the ex­pen­di­tures would be as im­plied by those man­i­festo and elec­tion promis­es.

Then, he said, it has to look on the rev­enue side and see what is doable in terms of what the coun­try cur­rent­ly earns from ex­ports, pri­mar­i­ly of oil and gas, as well as what rev­enue is earned through tax­a­tion of in­di­vid­u­als and of com­pa­nies.

“Gov­ern­ments have op­tions in re­spect of ex­ist­ing re­sources and sources of in­come and along with pos­si­ble sale of as­sets and oth­er­wise max­imis­ing the in­comes from ex­ist­ing state as­sets, as well as for­eign bor­row­ing.

“...So I think an as­sess­ment would have to be done, and I’m sure it has be­gun of our rev­enue po­si­tion and our ex­pen­di­ture promis­es. I strong­ly sug­gest and sus­pect that there is go­ing to be need for some ne­go­ti­a­tion of what was promised,” Ramkissoon added.

There­in, he added, said lie cer­tain chal­lenges as Ramkissoon not­ed it was go­ing to take great lead­er­ship skills and a lot of work to rea­son with in­ter­est groups and even the pop­u­la­tion if those promis­es could not be met.

On turn­ing to the IMF, Ramkissoon said, “Economies glob­al­ly who are mem­bers of the IMF, and they be­come mem­bers of the IMF vol­un­tar­i­ly, if they find them­selves in a po­si­tion where they can­not man­age pru­dent­ly the fis­cal side, the macro­eco­nom­ic side of the econ­o­my, they then turn to the In­ter­na­tion­al Mon­e­tary Fund.

“I don’t know that we are there, but what I do know is that the present cir­cum­stance that would have faced any gov­ern­ment com­ing in­to of­fice. It would have had to deal with our low rev­enue po­si­tion, the fact that we have not as yet been able to in­crease pro­duc­tion sub­stan­tial­ly. We have not had par­tic­u­lar­ly high prices, so our rev­enues have tak­en a hit, and I think we have al­ways had to be very care­ful about the ex­pen­di­ture side, which we have his­tor­i­cal­ly not done very well about in that we have run deficits for over a decade,” Ramkissoon fur­ther ex­plained.

High Up­front Cap­i­tal-Attzs

Attzs, a de­vel­op­ment econ­o­mist, in giv­ing her take on where would the new gov­ern­ment ob­tain fi­nanc­ing, said many of the cam­paign promis­es made by the PM des­ig­nate, Kam­la Per­sad-Bisses­sar and the UNC such as restart­ing the Petrotrin, re­mov­ing prop­er­ty tax and ex­pand­ing so­cial wel­fare pro­grammes, rep­re­sent high up­front cap­i­tal or high re­cur­rent costs. Those may widen the fis­cal deficit un­less there are ac­com­pa­nied by im­me­di­ate and ro­bust rev­enue-rais­ing mea­sures. The lat­ter (new rev­enue rais­ing mea­sures) is un­like­ly to hap­pen in the fore­see­able fu­ture giv­en the in­com­ing gov­ern­ment’s con­cern for the ris­ing cost of liv­ing on an al­ready eco­nom­ic-weary pop­u­la­tion, Attzs stat­ed.

Go­ing to the IMF, she not­ed, is al­ways po­lit­i­cal­ly sen­si­tive, and al­so un­like­ly to be a con­sid­er­a­tion for the new gov­ern­ment since an IMF pro­gramme would in­volve struc­tur­al re­forms, aus­ter­i­ty, pub­lic sec­tor ra­tio­nal­i­sa­tion – all of which are po­lit­i­cal­ly un­palat­able.

“A UNC gov­ern­ment would like­ly try to avoid this route at all costs, at least ini­tial­ly,” Attzs said.

To fund its cam­paign promis­es, Attzs said the HSF is the most like­ly and least painful op­tion for the pop­u­la­tion, at least in the short term.

“The HSF has al­ready been tapped dur­ing the COVID-19 pan­dem­ic and could be used again un­der the ra­tio­nale of stim­u­lat­ing the econ­o­my. I don’t sug­gest that the Gov­ern­ment fund the re­open­ing of the re­fin­ery, which is like­ly to cost mil­lions/bil­lions of US$, (from the HSF) but rather find a pri­vate in­vestor to bear those costs if that (re­open­ing the re­fin­ery) re­mains one of its pri­or­i­ties,” Attzs sug­gest­ed.

That said, she rec­om­mend­ed it must be cog­nisant that the HSF is a fi­nite source of funds and, more im­por­tant­ly, not de­signed for rou­tine bud­get sup­port, em­pha­sis­ing that it is meant to buffer against en­er­gy-price volatil­i­ty or be pre­served for fu­ture gen­er­a­tions.

“The in­com­ing gov­ern­ment should fo­cus on fis­cal dis­ci­pline even as it tries to ful­fil some of its com­mit­ments to the peo­ple of T&T,” Attzs said.

Cre­ation of 50,000 jobs

Job cre­ation is a cru­cial as­pect of any econ­o­my and it plays a vi­tal role in pro­vid­ing em­ploy­ment op­por­tu­ni­ties to in­di­vid­u­als.

In her vic­to­ry speech, Per­sad-Bisses­sar ad­vised that one of the new gov­ern­ment’s key pil­lars was the cre­ation of 50,000 jobs for cit­i­zens.

Di­anne Joseph, pres­i­dent of the T&T Coali­tion of Ser­vices In­dus­tries (TTC­SI), said this would be an at­trac­tion to those who have been un­em­ployed or un­der­em­ployed, not­ing the da­ta on the un­em­ploy­ment rate (per­cent­age of to­tal labour force) (mod­elled ILO es­ti­mate) re­flect­ed 4.5 per cent in 2024 and the Cen­tral Sta­tis­ti­cal Of­fice –(CSO) 5.5 per cent in 2024 as at quar­ter four.

In 2023 the CSO re­port­ed a rate of four per cent.

Joseph said this ini­tia­tive for job cre­ation would re­quire ad­di­tion­al peo­ple to ad­e­quate­ly fill these po­si­tions and thus cre­ate a high­er lev­el of em­ploy­ment.

Stat­ing that the TTC­SI un­der­stood that the cre­ation of jobs may be a com­plex process that may in­volve var­i­ous fac­tors such as eco­nom­ic poli­cies, tech­no­log­i­cal ad­vance­ments and de­mo­graph­ic changes, Joseph sug­gest­ed to the new gov­ern­ment to col­lab­o­rate with stake­hold­ers such as the TTC­SI to build out on its strate­gies, as­sess any in­her­ent risks, the po­ten­tial for suc­cess, along with the need for strong im­ple­men­ta­tion teams.

“Many gov­ern­ments have had what may be clas­si­fied as beau­ti­ful plans for em­ploy­ment, rev­enue gen­er­a­tion, so­cial ser­vices and oth­ers. Sad­ly, each term, we are left with sev­er­al of them on the ‘back-burn­er.’

“This for the sim­ple rea­son that they may not have had the right mix of tal­ent or the right im­ple­men­ta­tion teams. Im­ple­men­ta­tion seemed to lack the crit­i­cal at­ten­tion that it de­served for past gov­ern­ments to be suc­cess­ful in ex­e­cu­tion of their plans. Not to add, that there seemed to be a lack of any form of rep­ri­mand for those who would have failed to per­form their roles well or to ef­fi­cient­ly and ef­fec­tive­ly im­ple­ment the tasks as­signed to them,” she added.

Em­pha­sis­ing that job cre­ation is crit­i­cal for eco­nom­ic growth, Joseph not­ed, how­ev­er, that the strate­gies would re­quire a lev­el of fund­ing as many of the ar­eas to be im­ple­ment­ed in the man­i­festo would re­quire sig­nif­i­cant fi­nan­cial re­sources.

“It will there­fore, re­quire a thor­ough re­view and analy­sis of the coun­try’s fi­nan­cial re­sources and a stud­ied ap­proached to pri­ori­ti­sa­tion of which may be first and which may be lat­er,” Joseph added.


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