If Government had pegged the national budget at US$30 per barrel of oil, there would have been no need to withdraw money from the Heritage and Stabilisation Fund (HSF). This is according to economist Dr Roger Hosein who had said while the $2.5 billion was a small withdrawal from the fund it must be used prudently.
In the budget review on April 8, the 2015-2016 budget was pegged at a budgeted oil price of US$35 per barrel. He said: "Substantively then, the budgeted price of oil assumed helps in a large way to condition when resources are withdrawn from the fund and the higher the budgeted oil price the greater the probability that if market prices swing south, that resources from the fund will be called upon. But a high budgeted price of oil may simply be a reflection of fiscal imprudence or political craftiness of a government."
As Mary King rightfully states in a letter written to the editor on Tuesday, we have to plan as though the current recession will be long standing. She has interpreted this to mean that we cannot continue indefinitely to draw down on the HSF or sell assets of Clico and others to meet budget gaps.
She has labelled three pressing economic requirements and one that particularly stands out based on what Hosein states is this–there must be a reduction in government traditional spending and the $59 billion 2015-2016 budget surely does not indicate that.
We need to ask ourselves whether or not current projects that have been proposed by government for the fiscal year are necessary or not. Are they urgent, will they provide alternate means of revenue generation. For instance, government has committed to two projects that strikes as completely unnecessary, the first being the completion of the Brian Lara stadium in Tarouba and the second being the construction of the Valencia to Toco highway.
According to PM Rowley the Inter-American Development Bank (IDB) has committed to providing Government with funds for the latter of the two–the construction of the Valencia to Toco highway. He further states that, "It's not just the road, it's the port facilities which will make that road into what it has to become, which is the contact between Trinidad and Tobago."
Whether or not the IDB has decided to fund this is irrelevant as it is completely unnecessary and contributes to our debt to GDP ratio. How does this help to stimulate the economy? How does this help to generate revenue? How many will leave Port-of-Spain to go to Toco to conduct relevant business/trade?
Furthermore, government has completely abandoned the extension of the Solomon Hochoy Highway to Point Fortin which has already consumed billions of dollars. Billions have already been spent on laying the foundation, yet it is left to rot away and deteriorate.
That highway would have connected densely populated communities giving them better road access, ease the daily commute of thousands of citizens thus decreasing the time spent in traffic, increasing productivity and creating ease of access to the oil belt–the industrialised part of Trinidad that generates the greatest part of our revenue.
In reference to the HSF a lot of economists have said that government is within its rights to tap into the fund. Government also argues that the drop in its revenue from the energy sector far exceeds the legal requirement to use the stabilisation fund to support the economy. However, what we are not hearing them elaborating on are the ways in which they intend to use this fund to maintain economic activity. What revenue generation measures are being put into place? What are their plans in the long run instead of looking toward a quick fix in the short to medium term?
Rajneesh Toolsie