Yvonne Ba­boolal

Tech­ni­cal­ly, T&T is in re­ces­sion, se­nior econ­o­mists have de­clared. This, de­spite Cen­tral Bank Gov­er­nor Ewart Williams' in­sis­tence that T&T is not in a re­ces­sion but ex­pe­ri­enc­ing a sharp eco­nom­ic slow­down. Se­nior econ­o­mists, Dhanesh­war Ma­habir and Win­ston Dook­er­an, a for­mer Cen­tral Bank gov­er­nor, sought to clear up the con­fu­sion over the state of the econ­o­my in a Sun­day Guardian in­ter­view last week.

"Yes, we're def­i­nite­ly in a re­ces­sion. There is no ifs, buts and maybes.

"If we are ex­pe­ri­enc­ing a con­tin­u­ing re­duc­tion in the size of the econ­o­my, if it's shrink­ing, get­ting small­er, then, yes... we are in a re­ces­sion. "We have been in per­sis­tent de­cline for the last nine months and the econ­o­my will con­tin­ue to de­cline for the next 12 months." Ma­habir not­ed, how­ev­er, that the term "re­ces­sion," is re­al­ly a de­vel­oped coun­try phe­nom­e­non but it's tech­ni­cal­ly cor­rect to ap­ply it to our present sit­u­a­tion. He con­tin­ued, "It means that the ma­te­r­i­al wel­fare of those who work in such an econ­o­my will ex­pe­ri­ence a re­duc­tion in in­come.

"I'm fore­see­ing more job loss­es. Peo­ple should pinch and save every pen­ny they can over this dif­fi­cult pe­ri­od." Ma­habir said nat­ur­al gas prices have been around the ex­treme­ly low fig­ure of $3.50 per mil­lion British Ther­mal Units since Sep­tem­ber last year. He said he would not gam­ble on nat­ur­al gas, T&T's main for­eign ex­change earn­er, ris­ing in the next fis­cal year. Oil prices, al­though around US$70 a bar­rel, are volatile and un­pre­dictable, he said. He said the Her­itage and Sta­bil­i­sa­tion Fund, which has US$2.8 bil­lion, is "so small."

Rev­enue short­fall

Ma­habir es­ti­mat­ed that the com­ing Na­tion­al Bud­get will be close to $45 bil­lion, even though max­i­mum rev­enues are pro­ject­ed to be $38 bil­lion.

De­scrib­ing the eco­nom­ic sce­nario as gloomy, the econ­o­mist said he could not say when T&T would re­cov­er but not­ed that the coun­try would ex­pe­ri­ence a ma­jor rev­enue short­fall for 2009 and 2010.

Ma­habir said if things got re­al­ly bad, the Gov­ern­ment may even be forced to bor­row mon­ey from the In­ter­na­tion­al Mon­e­tary Fund, which would re­quire an ad­just­ment pro­gramme in re­turn. Fur­ther, Gov­ern­ment would be un­able to con­tin­ue pub­lic ex­pen­di­ture and main­tain sig­nif­i­cant as­sis­tance to the needy at the same time, he said. "Gov­ern­ment will have to make choic­es. "If they are say­ing they are not go­ing to in­ter­fere with the Gov­ern­ment As­sist­ed Ter­tiary Ed­u­ca­tion pro­gramme, or Chron­ic Dis­eases As­sis­tance Pro­gramme, they would have to de­cide which pub­lic works they would do."

Tech­ni­cal re­ces­sion

"There's no doubt we're in a tech­ni­cal re­ces­sion," Dook­er­an told the Sun­day Guardian last Fri­day. "We're in a re­ces­sion as de­fined by the Na­tion­al Bu­reau for Eco­nom­ic Re­search, the in­ter­na­tion­al au­thor­i­ty in re­ces­sion is­sues."

Ac­cus­ing Williams of con­fus­ing the elec­torate and con­tra­dict­ing him­self, Dook­er­an added, "Williams spent an en­tire press con­fer­ence try­ing to say we're not in a re­ces­sion, we are in a slow­down. "But he has giv­en all the ev­i­dence to sug­gest that we're in re­ces­sion time. "He said we're not in a cri­sis and things will get bet­ter but he has iden­ti­fied the per­for­mance dri­vers in the econ­o­my that will al­ter the di­rec­tion in which the coun­try is mov­ing." Dook­er­an warned cit­i­zens to be pru­dent about their spend­ing.