In the years following independence, short periods of prosperity largely explained the failure of various administrations to recognize the link between the need for constitutional and political reforms and economic transformation. The crumbling of the social fabric and the ongoing institutional collapse are a consequence of this. Moreover, the governments of this country have been content to make political decisions with questionable statistics and a limited range of essential data. In such a circumstance it is easy to understand the disconnect between political rhetoric and reality. Public use of poor quality data has consequences.
An in-depth study of the incidence of poverty and income distribution, a more credible consumer price index, more detailed information on unemployment and underemployment, data on national income in all its forms and a strategic plan for current economic and financial challenges.
To say that the inflation rate has been around 2% over the past decade is a national joke. More hilarious is the opinion that we don’t have a currency problem when the black market exchange rate approaches ten-to-one and banks claim they are unable to repay foreign currency deposited with they. In the 1950s and 1960s, with the presence of a highly rated CSO, we had better information and a wider range of statistics. Like in so many other areas, we haven’t built on it.
The logic and consistency of the budget is baffling. The minister is bragging about the thousands of wage subsidies and baskets he has given to people in distress. Yet he expects those same people to pay higher utility bills and property taxes in the new fiscal year. Even for those who have jobs, the reality is that the dollar has lost more than 20% of its internal purchasing power since 2011. It repeatedly speaks of the billions of uncollected revenue owed to the state. Here is a simple question. Why not collect this windfall income instead of constantly harassing taxpayers with threats of new taxes and fines of all kinds in a difficult environment. Raising taxes in a declining economy is an unusual form of the economy. WASA and T & TEC also prefer higher tariffs to a large collection effort.
If the standard of smart budgeting is the ability to give a little with one hand and take more with the other without widespread popular protest, then Budget 2021-2022 has met that standard with distinction. But this is not the criterion for building confidence and improving living conditions. It also does not address the issue of the distributive and growth impact of the adopted budget approach. In the context of improving the investment climate, there is no precise solution to the daily murders and assassinations that have given us global notoriety.
The minister’s optimistic tone is based on the higher prices of oil and gas. By removing the problem of production, the energy market is very volatile. There is no indication of creating greater resilience. In his budget statement for 1987, Mr Arthur NR Robinson made the following observation: âWe have achieved political independenceâ¦. in 1962, with an economy dependent on a single resource: petroleum. Twenty-five years later, we are more than ever dependent on the vagaries of the international oil market â. If we add gas to the declaration, has anything changed in more than 50 years after independence? What happened to all the food diversification and self-sufficiency plans? The Ministry of Agriculture was the biggest failure among public institutions in the post-independence period. In developed countries, agriculture is a key sector and farmers carry weight.
In the 1950s, agriculture represented more than 10% of the GDP. Today, after several oil and gas booms and countless development plans, the contribution is less than one percent. Caroni Ltd was closed with no plan to use its resources. Agricultural land is increasingly being diverted to shopping centers, housing, equipment and office buildings. The squatters occupy a fair share.
In a depressed tourist market, Tobago hoteliers receive $ 100 million over a year in aid as farmers daily complain about access roads, flood insurance and water damage. other forms of assistance. The link between tourism and agriculture seems to have gotten lost somewhere in politics.
The minister says there is no need to worry about the public debt which has reached $ 126 billion or 84 percent of GDP. You can always borrow a little more, the story continues, since the rating agencies have given us a good rating compared to many other countries. There are two other indicators of the debt burden that the minister rarely mentions. One is the share of current revenue allocated to debt service. Data for the last fiscal year puts it at nearly 30 percent. The other is the share of foreign exchange receipts absorbed by the service of the external debt. I don’t recognize any published data on the debt service ratio, but if your payments go up and your income goes down, that ratio would tend to go up. Debt service payments are given high priority. More debt service means less money for other uses. Future generations must be concerned.
Public debt is closely linked to deficit financing. The minister continues to stress that attempts to cut spending would lead to increased unemployment and poverty. There are different types of expenses. His response to the cutbacks argument is a clever way to defend unnecessary spending on vanity projects, bloated bureaucracy, and electoral gimmicks.
The reference to the experience with the IMF in the late 1980s is a pitiful attempt to rewrite history to support one’s own particular conception of the economy. Let’s fix the file. Whatever one can say of the late Dr. Eric Williams, he saved some of the windfall of the oil boom of the early 1970s. These savings were placed in a number of funds. Oil prices fell significantly in the early 1980s with a negative impact on income and rather than cut spending, the then House administration wasted $ 7 billion in savings between 1981 and 1986. In the mid-1980s, the country was literally bankrupt.
In the general elections of 1986, the PNM lost 33 of the 36 electoral seats, it is not by chance. The new NAR administration headed by Mr Robinson found itself in a snake pit. Not only was the country unable to pay teachers and civil servants, it could not service its external debt.
Access to the IMF not only provided some foreign currency, but the Imprimatur needed to restructure foreign loans. By the time the IMF program was signed in 1988, the economy was already in ruins. A population that benefited from the largesse of the 1970s could not come to terms with the depressed economic situation and saw a convenient scapegoat in the new administration. Professional criminals have exploited the situation to the full.