Raphael John-Lall
Although there are concerns about the Government’s ability to reduce the fiscal deficit, overall the Government presented a solid budget that has tried to address some of the country’s economic challenges.
This is the view of a former Planning Minister Dr Bhoe Tewarie who gave his analysis of the national budget that the Minister of Finance Davendranath Tancoo presented on October 13.
“When you look at the budget on the whole, it really tries to address serious challenges and to posit solutions for them. For instance, it addresses the mounting fiscal pressures in the economy. It tries to address some of the structural economic weaknesses. In terms of fiscal pressures, you can see that in the attempt to have a low deficit. In terms of the structural economic weaknesses, you could see the movement to non-energy,” he said.
Tewarie spoke on Thursday night at a virtual post-budget seminar hosted by the Trade and Economic Development Unit (TEDU) of the University of the West Indies (UWI).
He said if the projected revenue is not realised and expenditure is more than outlined in the budget, there will be a “significant deficit.”
“You are going to have to draw down on the Heritage and Stabilisation Fund (HSF). We are in a box. We have to do something now. We have six months of import cover. You have to do it before that finishes. If the revenue and expenditure balance that you are seeking is not realised and you have a higher deficit, you might have to go down to the HSF.”
Despite the positive aspects of the budget, Tewarie said there are “important concerns” that need to be raised.
“There is still an over reliance on oil and gas in the budget. The budget is premised on a very high price for oil and natural gas and on production numbers that may or may not be realised. That is a challenge and problem that has to be monitored.”
He also said that corruption and inefficiencies are a major problem that are blocking T&T’s economic progress.
He criticised the country’s corrupt practices and said if the “crookedness” continues, it is not going to make any difference in changing the country’s path.
“I have been hearing about this ASYCUDA system that cannot work up to now. I cannot believe that is has anything to do with technology, competence or anything else. I feel that it has to do with crime, I think it has to do with corruption and unless we are prepared to deal with that, we are going to have a difficult situation. The hiring of 300 revenue officers, it does not make sense to hire them if you don’t train them properly.”
He also advised that the system has to be “cleaned up.”
“You cannot have serious development in a corrupt country.”
Optimistic budget
Economist and Central Bank director Dr Indera Sagewan, who also spoke during the forum, said the budget provided optimism to the country.
“I want to start off by saying that this is the first official policy statement that we are getting from this new administration and I found that it was different from the last 10 years in the sense it was somehow able to provide a sense of optimism. I was at the T&T Chamber the very next morning and the manufacturers were very optimistic. I’ve read from Ernest & Young. I think PricewaterhouseCoopers (PwC) and other people were being quite positive.”
She also said that the budget provided relief for the average citizen.
“I think the minister attempted to balance the need to find the money, in terms of trying to ensure that the burden of the future didn’t fall on the average person, or those who can’t afford it. And we’ve had a lot of that over the years. And I felt that there was a strong sense of relief.”
However, she also spoke about some of the challenges that the country may face.
“There are things that concern me, and the obvious one would be the price assumptions that underlie this budget for gas and for oil. Based on this assumption, the Government is actually projecting to get revenue from the energy sector of about close to $12 billion. The argument obviously is, if something happens that causes the prices not to be realised, or production that they would have assumed to not come to pass, then obviously it means that there will be a shortfall in terms of the revenue being projected from the energy sector.”
She also questioned how the Government will access resources to pay the public servants.
“The other thing that obviously concerns many persons, and it concerns me as well, is the fact that the Government’s commitment to this 10 per cent increase to public servants in the budget. We don’t know what it means in this fiscal year. It obviously means it chooses to pay it out in cash. It means it has to borrow in order to do that. That obviously increases the budget deficit and it increases the government’s indebtedness.”
Instead of paying cash for the backpay, she suggested that the Government could pay the public servants with land.
“There is a huge element of this 10 per cent which will be backpay. Why not develop large, extensive parcels of development and offer to public servants in lieu of cash. Offer them land? This could stimulate the construction industry.”
She concluded by saying that although, the budget statement was an effective one, the national conversation was distracted with other topics immediately after.
“The budget renewed investor confidence and unfortunately it was followed immediately by what is happening with respect to Venezuela and the US and talk of war and all of these things. Also, followed by this massive hurricane in Jamaica which will impact all of us. But at the end of the day it is a good start and let us wait to see what happens.”
