As he often does when he addresses the country on matters related to the economy, Finance Minister Colm Imbert was upbeat in his assessment of T&T’s current position.
“The country is in good hands,” he declared in his response to a question asked at yesterday’s COVID-19 media briefing.
According to Minister Imbert, Standard and Poor’s has given T&T a stable rating and the other internationally recognised rating agency, Moody’s, is currently doing its assessment of the country. Minister Imbert is confident that the Government has the flexibility to adjust monetary policy in response to external shocks.
That is indeed an optimistic portrayal of what lies ahead for T&T but it is not surprising that the minister would put that type of spin on what lies ahead. The clearer picture of how this country is managing the economic shock of COVID-19 is still months away and with all that is unknown about the virus, it is just too early to declare either success or defeat.
This nation may yet be in for a sobering dose of reality, particularly as Standard and Poor’s current assignment to T&T of a BBB- with stable outlook - does not rule out the prospect of a downgrade in the future which will have a big impact on the country’s borrowing costs.
This is the backdrop against which the Dr Keith Rowley administration’s expenditure of $934 million so far on various COVID-19 relief measures, must be viewed. According to Minister Imbert, a further $250 million will be made available if needed.
To be fair, the decisions to extend relief initiatives to soften the blow of the pandemic, particularly for displaced workers and segments of the business community, were a good first step in the right direction. However, implementation has been spotty at best and still has not reached many households that have been sent reeling by the pandemic.
A harsh reality that cannot be ignored is that the levels of hunger and poverty across the country have increased significantly in just the last six weeks.
Even if Mr Imbert is amenable to a further loosening of the purse strings—and there isn’t much capacity for that anyway—T&T is dangerously close to breaking point with the current pandemic restrictions. It simply isn’t feasible to continue with a situation where so much of the country’s manufacturing and commercial activity remains in a state of lockdown.
If this suppression of activity in so many of T&T’s productive sectors drags out for much longer, the economic fallout may be of such a magnitude that the pain of the oil price shock of a few years ago will pale in comparison. If that happens, a rating downgrade may be the least of our worries.
As reckless as it might be to quickly jump back to pre-COVID levels of activity, too slow and cautious an approach could be even more dangerous.
It is time for a serious rethink of the T&T’s reopening strategy.