It is now an unavoidable fact that 2016 brings with it the bitter reality of austerity. However, all indicators are that Prime Minister Dr Keith Rowley and his administration do not want T&T to go the route of Caribbean neighbours Jamaica and Grenada which are already several months into their latest IMF programmes.
The dawning of the new year has found the T&T economy in a situation of decline that is frighteningly reminiscent of the lean years of the 1980s when consecutive years of negative growth took a toll.
As is the case now, declining oil prices hit the country's energy-based economy, starting in 1981 but at first no one paid attention because in the preceding eight years, T&T had enjoyed a significant windfall from a rise in global oil prices. Awash with current account surpluses and increases in foreign exchange reserves, the population luxuriated in the energy riches of those oil boom years. The public service expanded rapidly and the Government embarked on major capital expenditure projects, resulting in significant increases in recurrent expenditure.
It did not help that high and unsustainable levels of consumption and expenditure by the Government and even average citizens continued long after falling oil prices should have triggered alarms. The country's stock of foreign reserves rapidly depleted and as energy sector earnings declined, the rate of unemployment more than doubled from ten per cent to 22 per cent between 1982 and 1987. The resulting balance of payment difficulties led the then National Alliance for Reconstruction (NAR) administration to sign a stand-by agreement with the International Monetary Fund (IMF) and T&T embarked on a long, painful period of structural adjustment.
That is why the announcement a few weeks ago by former Central Bank Governor Jwala Rambarran that the country is once again in a recession triggered so many expressions of worry. Among the concerns is a possible return to the IMF and a period of enduring strict conditionalities from that international lending agency.
It is now an unavoidable fact that 2016 brings with it the bitter reality of austerity. However, all indicators are that Prime Minister Dr Keith Rowley and his administration do not want T&T to go the route of Caribbean neighbours Jamaica and Grenada which are already several months into their latest IMF programmes.
Only time will tell whether his proposed remedies will be effective in reviving an economy that has been buffeted over the past 18 months by plummeting energy prices. The volatility in energy markets, which is at the core of T&T's economic woes, showed no signs of easing and in the last trading hours of 2015 West Texas Intermediate (WTI), was trading at around US$36.28 a barrel. The immediate outlook for oil prices is bleak, with some analysts forecasting prices plunging as low as US$20 per barrel.
The measures proposed on Tuesday, as tough as they are, are seen as healthier option than the IMF which, although it has done away some of its stringent harmful conditionalities, is last resort for a developing country like T&T.
Dr Rowley, whose political career as an Opposition Senator, then MP, in the People's National Movement (PNM) began during those challenging years, is fully aware of how socially and politically debilitating the IMF option can be for the country.
With an adjustment of the budget expected within the first quarter and a range of cost cutting measures and adjustments to be implemented, the coming months will be crucial. Whether T&T moves into economic recovery, or a more painful level of decline, depends on how willing the population is to finally heed the difficult lessons of the 1980s.