Econ­o­mist Dr Vaalmik­ki Ar­joon says Fi­nance Min­is­ter Dav­en­dranath Tan­coo is fac­ing a del­i­cate bal­anc­ing act fol­low­ing his pre­sen­ta­tion dur­ing the Mid-year Bud­get Re­view.

He says Tan­coo is man­ag­ing in­her­it­ed ar­rears and liq­uid­i­ty pres­sures while sup­press­ing a swollen deficit pro­ject­ed at $9.67 bil­lion along­side a $46 bil­lion con­sol­i­dat­ed fund over­draft and for­eign re­serves of just US$5.2 bil­lion (51 per cent low­er than a decade ago).

These fig­ures, Ar­joon said yes­ter­day, un­der­scored the ur­gent need for de­ci­sive rev­enue mea­sures, mod­ernising the Board of In­land Rev­enue (BIR) to plug col­lec­tion gaps and spend­ing repri­ori­ti­sa­tion to shore up fis­cal buffers.

Ar­joon added the Gov­ern­ment may al­so tap mul­ti­lat­er­al sources such as the World Bank’s IFC, CAF, and the IDB; lever­ag­ing fund­ing from these agen­cies to se­cure low­er in­ter­est rates and al­so en­sure en­hanced trans­paren­cy when spend­ing these funds.

Fur­ther, Ar­joon said pred­i­cat­ing the bud­get on a new price of US$66 is a con­ser­v­a­tive and cau­tious es­ti­mate of where the oil price is like­ly to be, so there is no over­bud­get­ing of spend­ing, and the gas price of US$5 should al­so be suit­able giv­en that the coun­try no longer us­es on­ly the low­er Hen­ry Hub but a weight­ed av­er­age pric­ing scheme al­so com­pris­ing the high­er JKM and UK NBP prices.

Ar­joon al­so not­ed that the mid-year re­view men­tioned a few di­ver­si­fi­ca­tion and ex­port-pro­mo­tion strate­gies. 

For in­stance, a pro­posed for­eign-cur­ren­cy tax ex­emp­tion for ex­porters, con­di­tion­al on repa­tri­at­ing all earn­ings, would in­cen­tivise firms to bring more ex­port earn­ings in­to the lo­cal sys­tem, re­liev­ing pres­sure on the Cen­tral Bank’s forex pool.

He added, that an ex­port al­lowance and ex­port growth in­cen­tive were men­tioned, which could ex­pand agro-pro­cess­ing ex­ports be­yond Cari­com in­to the US and oth­er high-val­ue mar­kets. Ar­joon said this al­lowance could help to off­set lo­gis­tics, cer­ti­fi­ca­tion, and com­pli­ance costs (qual­i­ty con­trols, pack­ag­ing stan­dards, cold-chain stor­age) that cur­rent­ly pose en­try bar­ri­ers. 

These mea­sures Ar­joon ex­plained may en­able agro-proces­sors, cos­met­ics mak­ers, spe­cial­ty pack­agers, and con­struc­tion-ma­te­ri­als firms to com­pete more ef­fec­tive­ly abroad, boost­ing both ex­port vol­umes and for­eign-ex­change earn­ings and fur­ther di­ver­si­fy­ing T&T’s eco­nom­ic base.

Glen­wayne Su­chit of the T&T Re­tail Phar­ma­cy Busi­ness As­so­ci­a­tion al­so not­ed the Fi­nance Min­is­ter has com­mit­ted to lev­el­ling the play­ing field re­gard­ing forex al­lo­ca­tions.

This move, he said, would en­sure fair­ness in the dis­tri­b­u­tion of forex and would build busi­ness and in­vestor con­fi­dence.

How­ev­er, Su­chit called on Tan­coo to even­tu­al­ly tell the coun­try how the re­sources of forex have been al­lo­cat­ed and en­sure that this kind of prac­tice will nev­er hap­pen again.

Mean­while, the T&T Man­u­fac­tur­ers As­so­ci­a­tion (TTMA) com­mend­ed the Gov­ern­ment’s in­ten­tion to ex­plore the in­tro­duc­tion of an ex­port al­lowance and ex­port growth as­sis­tance, with a fo­cus on ex­pand­ing in­to non-Cari­com mar­kets; es­tab­lish an ex­port pro­ceeds re­ten­tion fa­cil­i­ty, al­low­ing man­u­fac­tur­ers to re­tain a por­tion of their earned for­eign ex­change for rein­vest­ment and ex­pan­sion and strength­en in­ter­na­tion­al trade rep­re­sen­ta­tion, en­hanc­ing T&T’s glob­al pres­ence and com­pet­i­tive­ness.

The TTMA said these ini­tia­tives aligned close­ly with its long-stand­ing vi­sion to grow the non-en­er­gy man­u­fac­tur­ing sec­tor, pro­mote na­tion­al self-suf­fi­cien­cy, cre­ate sus­tain­able em­ploy­ment and in­crease the sec­tor’s con­tri­bu­tion to GDP.

The as­so­ci­a­tion said it looks for­ward to the de­tailed roll­out of these ini­tia­tives and an­tic­i­pates the Gov­ern­ment pre­sent­ing a plan for the long out­stand­ing pay­ment of VAT re­bates owed to the busi­ness com­mu­ni­ty. It added that it stood ready to col­lab­o­rate and con­sult with the Gov­ern­ment in sup­port of these mea­sures and in dri­ving the con­tin­ued di­ver­si­fi­ca­tion of the na­tion­al econ­o­my.

Cham­ber con­cerned
about fis­cal deficit

The pres­i­dent of the Ch­agua­nas Cham­ber of In­dus­try and Com­merce (CCIC) Bal­dath Ma­haraj said while the group wel­comed the Gov­ern­ment’s com­mit­ment to trans­paren­cy and con­tin­ued fis­cal sup­port for key sec­tors, it re­mained con­cerned about the ris­ing fis­cal deficit.

It has now been pro­ject­ed to be at $5.6 bil­lion—and re­ports of fi­nan­cial ir­reg­u­lar­i­ties, in­clud­ing un­ver­i­fi­able ex­pen­di­tures.

Ma­haraj said these is­sues un­der­scored the need for ur­gent re­forms in pub­lic fi­nan­cial man­age­ment, adding that it sup­port­ed the Gov­ern­ment’s move to en­hance the Au­di­tor Gen­er­al’s ca­pac­i­ty and en­cour­age swift im­ple­men­ta­tion of mea­sures that im­prove ac­count­abil­i­ty, ef­fi­cien­cy and trans­paren­cy.

“As bor­row­ing is con­sid­ered to fi­nance the ad­di­tion­al ex­pen­di­ture, we urge the Gov­ern­ment to en­sure that all funds are pru­dent­ly man­aged and in­vest­ed in ar­eas that gen­er­ate tan­gi­ble eco­nom­ic re­turns—par­tic­u­lar­ly for small and medi­um en­ter­pris­es (SMEs), which re­main vi­tal to job cre­ation and eco­nom­ic ac­tiv­i­ty in Cen­tral Trinidad,” he added.

Ma­haraj not­ed the in­jec­tion of $3.14 bil­lion in sup­ple­men­tary fund­ing, par­tic­u­lar­ly in health, ed­u­ca­tion, in­fra­struc­ture, and pub­lic util­i­ties, re­flect­ed an ef­fort to main­tain es­sen­tial ser­vices and eco­nom­ic sta­bil­i­ty.