Raphael John-Lall

Econ­o­mist and a for­mer deputy gov­er­nor of the Cen­tral Bank Dr Ter­rence Far­rell is crit­i­cal of the da­ta used in the bud­get for fis­cal year 2025 and al­so the way it was pre­sent­ed to the pub­lic.

He ar­gued that some of the da­ta in the bud­get is “sus­pi­cious” and asked if the econ­o­mists at the Min­istry of Fi­nance are up to the task of prepar­ing the tech­ni­cal da­ta that was pro­duced.

He be­gan his pre­sen­ta­tion by say­ing that decades af­ter he start­ed mon­i­tor­ing bud­get pre­sen­ta­tions, not much has changed.

“I have seen bud­get speech­es for over 40 years and lit­tle has changed. We see the same doc­u­ments, the same chest thump­ing and desk thump­ing in Par­lia­ment, the same ir­rel­e­vant and in­ef­fec­tive speech­es, the rit­u­al bud­get com­men­taries, some of which were en­light­en­ing but some I sup­pose not so much.”

Far­rell made these state­ments at a post-bud­get we­bi­nar host­ed by the Trade and Eco­nom­ic De­vel­op­ment Unit of the Uni­ver­si­ty of the West In­dies (UWI), St. Au­gus­tine.

He then said that a bud­get is sup­posed to re­flect Gov­ern­ment pol­i­cy and it is much more than com­put­ing sta­tis­tics in a “book­keep­ing” man­ner.

“The bud­get is not sup­posed to be mere book­keep­ing…the point is at its core the bud­get is sup­posed to be a se­ri­ous piece of pro­fes­sion­al eco­nom­ic work, so it is not on­ly just about the num­bers, rev­enue and ex­pen­di­ture and mak­ing these things add up. It is al­so sup­posed to re­flect the stance of your macro­eco­nom­ic pol­i­cy and how whether cur­rent spend­ing, tax­a­tion pro­mote the coun­try’s de­vel­op­ment.

"The book­keep­ing is there and has to be there, there are lots of doc­u­ments and re­view of es­ti­mates and all that stuff is there and the bud­get di­vi­sion of the Min­istry of Fi­nance con­tin­ues with these thick books when what we need quite frankly are the Ex­cel spread­sheets to do the work as you can­not do any­thing with those doc­u­ments out of the bud­get di­vi­sion. It makes life dif­fi­cult for those who want to do analy­sis on the bud­get num­bers.”

He ques­tioned if the econ­o­mists at the Min­istry of Fi­nance have the abil­i­ty to gen­er­ate some of fore­casts in tech­ni­cal ar­eas.

“The first thing I do as an econ­o­mist is I look at the Re­view of the Econ­o­my, I do not read the bud­get speech, I go to the Re­view of the Econ­o­my and I look for the num­bers and I am puz­zled by the num­bers that I see there. The first thing that I no­ticed is that the num­bers for the bud­get were be­ing pre­pared by the Min­istry of Fi­nance’s econ­o­mists not by the Cen­tral Sta­tis­ti­cal Of­fice (CSO) and I don’t know that the Min­istry of Fi­nance’s econ­o­mists have any ex­per­tise in eco­nom­ics sta­tis­tics to be able to gen­er­ate the es­ti­mates that they have done for Gross Do­mes­tic Prod­uct (GDP) and to pro­duce the fore­casts that they have done for the year 2024.

"The num­bers are not adding up at least based on my arith­metic. They do not seem to be mak­ing sense and no­body has com­ment­ed on that. We have fore­casts pro­duced in the Re­view of the Econ­o­my with blank cells in there and when I see that my mind goes back to peo­ple like Frank Ram­per­sad and Frank Bar­sot­ti who would have been the per­ma­nent sec­re­taries in the Min­istry of Fi­nance in the 1970s and 1980s. They have to be rolling in their graves when they would see this is the kind of out­put be­ing pro­duced by the Min­istry of Fi­nance.”

He al­so said that there are oth­er “sus­pi­cious da­ta” in the bud­get speech and in the bud­get con­tri­bu­tion such as da­ta on the growth in man­u­fac­tur­ing ex­ports.

“We can­not find those any­where to sub­stan­ti­ate what is in the bud­get speech. There are some num­bers that are sim­ply not there. How can we talk about growth in the econ­o­my if we are not talk­ing about in­vest­ments? There is no in­vest­ment rate, what is the type of in­vest­ment that we are hav­ing in the econ­o­my, where is that in­vest­ment go­ing? How much of it is for­eign and how much is lo­cal? We talk about em­ploy­ment and un­em­ploy­ment, you have to start with your pop­u­la­tion num­ber. The num­ber that we have in the Re­view of the Econ­o­my is 1.3 mil­lion, the num­ber the CSO has con­sis­tent­ly pro­duced. If you look at the In­ter­na­tion­al Mon­e­tary Fund (IMF) pub­li­ca­tion on T&T, they put our pop­u­la­tion at 1.5 mil­lion. What is it? So if the pop­u­la­tion num­ber is wrong, then your labour force num­ber is wrong, your un­em­ploy­ment num­bers are wrong.”

He added that all of this shows that there is a need for in­de­pen­dent sta­tis­ti­cal agen­cies to re­view these bud­get num­bers.

"I am not blam­ing the Min­is­ter of Fi­nance, who is not an econ­o­mist. He is a civ­il en­gi­neer but where the da­ta is demon­stra­bly wrong, it casts doubt on all the num­bers that are pre­sent­ed in the bud­get.”

He al­so spoke about three “im­per­a­tives” for the coun­try go­ing for­ward which are ad­just­ment, di­ver­si­fi­ca­tion, and trans­for­ma­tion.

“Di­ver­si­fi­ca­tion and trans­for­ma­tion are what to­geth­er are con­sti­tute our de­vel­op­ment strat­e­gy. None of these fea­ture in the bud­get in any co­her­ent, pro­fes­sion­al man­ner.”

Far­rell al­so said that the Gov­ern­ment and coun­try must adopt a new way of view­ing how the en­er­gy re­sources are used.

“The as­sump­tions are that the oil and gas re­serves that we have are con­sump­tion goods not cap­i­tal goods. This is crit­i­cal­ly im­por­tant in my view. We think, the Gov­ern­ment cer­tain­ly thinks that the gas in the ground…that these things when they come out, when they are mon­e­tised and they go in­to the fis­cal rev­enues that they are to be con­sumed. How­ev­er, oth­er coun­tries like Nor­way, why is their Her­itage and Sta­bil­i­sa­tion Fund like this?…Be­cause the Nor­we­gians un­der­stand that the gas com­ing out of the ground and it is mon­e­tised is still cap­i­tal. Our view is that is it con­sump­tion and it is to be con­sumed as quick­ly as pos­si­ble.”

Falling rev­enue

For­mer Plan­ning Min­is­ter Dr Bhoe Tewarie, who al­so made a pre­sen­ta­tion at the fo­rum, warned that if oil and gas pro­duc­tion is not raised and there is lit­tle rev­enue then, he does not ex­pect there to be any sig­nif­i­cant con­tri­bu­tion to the HSF any time soon.

“You look at the HSF num­bers and the on­ly point I want to make on that is that at the cur­rent lev­el of pro­duc­tion and prices, it is un­like­ly that we will ever con­tribute that again for a long time. On the is­sue of debt, I sim­ply want to make the point that un­less we man­age the in­come, ex­pen­di­ture and deficit, we may have to bor­row more. I sim­ply alert the pop­u­la­tion of the coun­try to that.”

He added that the coun­try’s for­eign re­serves are falling and there seems noth­ing on the hori­zon to change T&T’s for­tunes.

“The num­bers for the for­eign re­serves are half of what they used to be about 10 years ago. And what we need to un­der­stand is that for­eign re­serves are not like­ly to in­crease be­cause the bal­ance of trade is not in favour and if we con­tin­ue at the same tra­jec­to­ry, it is not like­ly to change any­time soon.”