I have assigned a failing grade to the PNM Government after assessing their stewardship on the economy over the past four years. When it assumed office, it decided to engage on a programme of stabilisation and control of Government expenditure which, at the time, I endorsed as a short-term measure. After four years, however, the Government still seems to be in stabilisation mode at a much lower level of national productive activity but with an escalated level of borrowing, which all seems to be absorbed in meeting current expenditure and very little expended on projects geared towards growth, development and diversification.
It was not just a question of controlling expenditure but its re-orientation to productive initiatives by restricting outlays on non-productive activity.
After four years there is little indication that there was any notable attempt at redirecting expenditure for economic reform or diversification.
The need was not only for the redefinition of public sector investment expenditure but for policies, programmes and incentives for higher levels of private sector investment, be it foreign or local. In its 2015 Manifesto (p. 17), the PNM stated, among other things, that the key objectives of its economic policies would include “….investor confidence…sustainable growth and diversification…and job creation.” On all counts, the Government has failed. There has been almost an absence of foreign or local equity investment in the economy.
While there has been some investment by way of loans from the Chinese, the servicing of these loans will be subject to the viability of the projects in question, otherwise, they become millstones on Government finances. Furthermore, T&T has fallen further behind in the index of the ease of doing business and now stands at 105 among countries of the world. Incentives to encourage investment are patently lacking.
In the years since 2015, according to IMF sources, the economy has recorded negative growth of -6.5 per cent for 2016, -2.0 per cent for 2017, .03 per cent for 2018 and 0 per cent for 2019. The Government’s projection for positive growth in 2019 is based largely on increased gas production coming on stream now due to exploration incentives provided by the previous PP government. The promise of growth, therefore, has been stillborn and, even if marginally achieved, may not be sustainable if production in the energy sector and world energy prices remain subdued.
However, with the promise to diversify the economy to develop a broader base for sources of revenue, foreign exchange and employment, the Government has recorded one of its greatest failures. This is not to say that diversification is effortless or easily attainable in the short term. The Government’s failure to seriously and meaningfully focus on this objective and undertake even modest steps to pursue it has been obvious. Even non-energy sectors with some potential have fared badly in the last four years. The tourism sector continues to contract.
The Business Guardian of 20/6/19 carried a report from the Caribbean Tourism Organisation which noted a 2.2 per cent decline in T&T’s tourism sector, while the Caribbean region as a whole recorded double-digit growth. The Government’s flawed policy was to rely on one single project funded entirely by taxpayers with limited benefits, which has now been abandoned.
The Business Guardian of 19/8/19 also painted a bleak picture in agriculture, which now accounts for only 0.4 per cent of GDP. Despite Budget promises, little progress has been made in the sector. The number of farmers is shrinking. There is little research or technology upgrade and “there has been no indication that agriculture, fisheries and rural development have had any significant importance to the national agenda.”
The manufacturing sector has been negatively affected by several factors, including foreign exchange shortages for critical inputs, an unhelpful exchange rate regime, bureaucratic delays, minimal investment in technology, innovation and skills development and low productivity. Consequently, competitiveness has declined and there is no identifiable Government policy to address it. Financial services as an area identified in the diversification thrust has seen little progress, while development of the maritime services Sector is relying on a single initiative to be undertaken by Chinese loan investment with its viability still in doubt.
Instead of job creation, the country has experienced job losses in almost every sector in the last four years. As a result, household incomes have declined and poverty levels have risen. Over the last four years, the Government has failed to address the issue of moulding a workforce that is trained, disciplined, skilled, adaptive, technologically-empowered and innovation-oriented.
