Curtis Williams
curtis.williams@guardian.co.tt
Finance Minister Colm Imbert has revealed that hard decisions will have to be made in the upcoming budget but one of them will not be a devaluation of the Trinidad and Tobago dollar.
In addressing the Spotlight on the Economy the Finance Minister said he had asked the Central Bank to model what would happen should there be a devaluation and Imbert said the Bank revealed it will have little effect on government’s revenue with the administration benefiting from as little as $40 million while at the same time it will lead to an escalation of inflation from 1 per cent to between 6 and 7 per cent and will lead to greater demand from labour unions due to the increase in the cost of living.
The Minister of Finance boasted that the Heritage and Stabilisation fund was around US$5.8 billion and the country’s official reserves at over US$7 billion leaving the country with mover than 8 months of import cover.
He said these were still levers that can support the TT dollar.
Imbert painted a gloomy picture of the country’s economy hit by both the challenges of the COVID-19 pandemic and falling commodity prices.
The Finance Minister said with the best of intention he does not see government revenue exceeding $40 billion in the next fiscal year and said mandatory expenditure is already $52 billion broken down into $42 billion on non-discretionary expenditure and $10 billion to support state enterprises and statutory bodies.
Imbert painted a scenario in which government expenditure consistently increased between 2010 and 2015 and even though government had cut it by roughly $13 billion it has had to borrow heavily to keep the country’s economy afloat.
In fact, over the last five years alone government borrowed US$1.5 billion while it withdrew another US$1.5 billion from the HSF.
He revealed that by the end of the year the country’s debt to GDP (gross domestic product) ratio is expected to hit 77 per cent. But even with all of this the Minister of Finance is insisting there will be no devaluation.
The Finance Minister said there will not be any cutting of employment in the public service. He also insisted government will continue paying pensions and gratuity and making social sector grants.
The Spotlight on the Economy comes one week before the presentation of the 2021 fiscal package and Imbert said the economy is reeling from the fallout of COVID-19.