As we usher in the New Year with the spirit of optimism that goes with the season of new beginnings, it may be time for us, as a nation, to inject some realism into the prospects for 2015. This is likely to be our most challenging year since the collapse of the international financial system in 2009.
That crisis was a major contributor to the collapse of CL Financial, one of the largest conglomerates in the English-speaking Caribbean. That collapse needed the injection of $25 billion dollars to insulate Trinidad and Tobago from the contagion to the local and regional economies.
The collapse in oil prices and the deflation of natural gas prices, this country's major revenue earners, are a major challenge to the Trinidad and Tobago economy. It is all the more worrying when one considers that today, we begin an election year when talk of austerity may not be the most appealing message to voters.
This is precisely why the government needs to set the tone in the navigation of this crisis by demonstrating leadership in financial and economic management. Thus far, we have heard a lot of what the Government does not want to touch, including wages and salaries, Carnival and some pet projects, but there has been no indication of any attempt to significantly contain expenditure which was already in deficit even before energy prices began to fall.
Hopefully, we will gain greater insight with the statement promised by the Prime Minister on January 8, on the state of the economy, and the Opposition should also get a chance to outline its position when debate on the Finance Bill begins next Friday.It is imperative, however, that the Prime Minister use the opportunity to show some restraint and responsibility in the face of the ever-gloomier prospects of T&T's energy exports.
Given the heavy hand of the State in the economy, falling energy prices can have an even greater effect than the financial collapse of 2009.But even as the government calibrates its responses, we should remember that energy prices are cyclical and while this down cycle may be prolonged, there is little doubt that the same forces of demand and supply that have led to oil scraping US$50 a barrel at the end of last year, will eventually lead to higher prices.
The problem is no one can predict when prices will recover and if they do, whether we will still have the oil and gas necessary to keep us in the style and fashion to which we have become accustomed.In this new year, the main challenges for the Government are fostering an environment to truly diversify the economy while weaning the population off the kind of dependency that is a natural consequence of the economic and social policies we have pursued across administrations.
As we prepare to meet the challenges of 2015, we should not forget the added imperative of ending the scourge of killing without consequence that has seen the murder rate relatively unchanged from the previous year.The next few months may very well inform the major decision we will have to make later in the year.