There is much that was good in Finance Minister Winston Dookeran's 2011 budget presentation. In many respects, the budget was remarkably similar to the last two budgets presented by former Finance Minister Karen Tesheira. While there are those on both sides of the political spectrum who would take offence to that statement, there is much to be said for economic continuity and predictability. Except for a name change and slightly different emphasis, the current Minister of Finance has adopted the former administration's idea of transforming Port-of-Spain into an international financial centre. The Government has promised to expand the Government Assistance for Tuition Expenses (GATE) programme as it recognises that tertiary education is a "major driver of economic competitiveness in an increasingly knowledge-driven global economy."
The current administration has also sought to continue the diversification efforts started by its predecessor while adding an interesting twist in seeking to focus on the development of an international fashion industry. The budget also provided evidence that the Government has come to the realisation that while it can "explore the development of alternative energy, such as solar and wind," there is a recognition of the "advantages of going further downstream" of the natural gas value chain. While there was continuity, the 2011 budget also contained some discontinuities.
While the Government appears to recognise the advantages of going further downstream, that recognition does not appear to have embraced the aluminium smelter project, which is being stopped, without too much consultation, mainly because of the previous administration's failure to articulate the compelling economic and financial reasons for the location of a small, independent smelter focusing on the production of market-ready products. Hopefully, during the budget debate the Government will present its plans for the superior development of the south-west region–plans which should include an industry or industries able to create hundreds of high-paying industrial jobs. The Government should also present, and be prepared to discuss, its proposals on the cost of stopping the smelter project, including a possible request for reimbursement of the considerable sums that had been advanced to the project as a result of the Chinese Government financing and project insurance.
Given the fact that the Government of China, the second largest economy in the world, is so tied up in the smelter project, the Kamla Persad-Bissessar administration should also be prepared for the possible diplomatic consequences of its decision. Given the prevailing uncertainty of T&T's economic scenario, the decision by the Government to stop the $22.5 billion rapid rail project after the expenditure of $565 million for a feasibility study and design plans may have been a version of not wanting to throw good money after bad. There are some flashes of inspiration in the budget. The idea of paying contractors what they are owed, while seemingly obvious, eluded the previous administration for far too long while the commitment to use its best efforts in resolving the public sector wage negotiations is simply good industrial relations practice.
The Government should be congratulated unreservedly for its promotion of the idea of privatising state-owned assets and of starting the process with Methanol Holdings, the CL Financial-owned methanol company. Finally, there is some doubt about whether the Government's revenue projections are not a little too ambitious and aggressive, given what is happening in the world. With the prospect of the US economy going into a double-dip recession still alarmingly real, the decision to predicate the country's estimate of revenue collection on the hope of earning US$65 a barrel for oil and US$2.75 per mmbtu of natural gas seems quite unrealistic.