Fi­nance Min­is­ter Colm Im­bert's an­nounce­ment yes­ter­day that he ex­pects the lat­est plunge in oil prices could re­sult in a $3.5 bil­lion bud­get short­fall is cer­tain­ly wor­ry­ing news for Trinidad and To­ba­go's econ­o­my go­ing for­ward.

The sit­u­a­tion has been brought about by two mat­ters now dras­ti­cal­ly im­pact­ing the glob­al econ­o­my. In the first in­stance, the dead­ly coro­n­avirus (COVID-19) out­break that con­tin­ues to spread glob­al­ly—which moved clos­er to home yes­ter­day af­ter Ja­maica con­firmed its first case—had al­ready be­gun to dis­rupt glob­al trad­ing lines. And with sci­en­tists and doc­tors still un­able to ful­ly un­der­stand how the virus op­er­ates, or find a cure, it is like­ly to con­tin­ue to have neg­a­tive fall­out in sev­er­al crit­i­cal eco­nom­ic sec­tors.

Then came the price dis­pute be­tween Rus­sia and Sau­di Ara­bia, two of the largest oil pro­duc­ers in the world, which re­sult­ed in crude oil prices plum­met­ing to its low­est lev­el since the late 1990s. Bench­mark US crude climbed back up yes­ter­day to set­tle at US$34.36 a bar­rel but the volatil­i­ty of the spat be­tween these ma­jor oil play­ers means there is no way of de­ter­min­ing when there will be a res­o­lu­tion and if prices will rise above the low US$30 re­gion in which they are now hov­er­ing.

Both sit­u­a­tions will nat­u­ral­ly im­pact T&T's for­eign rev­enue stream, which has long tak­en a se­vere hit from the con­tin­u­ing glob­al re­ces­sion. How­ev­er, it be­comes dou­bly harsh for this coun­try be­cause gov­ern­ments have been un­able, de­spite years of talk about it, to find al­ter­na­tive rev­enue streams to ease the de­pen­den­cy on the oil and gas sec­tor's con­tri­bu­tion to na­tion­al rev­enue.

Hav­ing pegged the oil price at US$60 in the 2019/2020 Bud­get, Min­is­ter Im­bert was nat­u­ral­ly forced to re­vis­it his pro­jec­tion, hence his new fore­cast. But what is more wor­ry­ing in that de­spite this an­nounce­ment of the ex­pect­ed fall­out, the Fi­nance Min­is­ter al­so re­vealed that he does not in­tend to cut his $52 bil­lion ex­pen­di­ture plan. Rather, Min­is­ter Im­bert in­ti­mat­ed that Gov­ern­ment will bor­row to fi­nance the deficit.

But such a thrust will al­so mean that the na­tion­al debt will al­so in­crease at a time when there is no way to fore­cast whether the econ­o­my will be able to re­cov­er any time soon.

Prime Min­is­ter Dr Kei­th Row­ley had warned cit­i­zens, up­on tak­ing of­fice, of the pos­si­bil­i­ty of hav­ing to take belt-tight­en­ing mea­sures giv­en the state of the lo­cal econ­o­my as im­pact­ed by glob­al fall­out. In­deed, one of the hard de­ci­sions Gov­ern­ment took as a re­sult of this stark re­al­i­ty was the sale of Petrotrin, which was la­belled a ma­jor drain on the Trea­sury.

This me­dia house, there­fore, hopes that Min­is­ter Im­bert's plan, which seems risky at best giv­en the un­cer­tain­ty of the sit­u­a­tion, is not premised on the fact that the gen­er­al elec­tion is around the cor­ner. It is a known pol­i­cy that in­cum­bent gov­ern­ments up the ante on ex­pen­di­ture to en­sure the elec­torate is hap­py head­ing in­to the vot­ing sea­son. We, there­fore, hope that Min­is­ter Im­bert will tread cau­tious­ly with his plan to bor­row.