The Min­is­ter of Fi­nance ac­knowl­edged the sever­i­ty of the fi­nan­cial chal­lenges fac­ing T&T over the next three years while re­quest­ing ap­proval for an ad­di­tion­al ex­pen­di­ture of $2.3 bil­lion. There are many chal­lenges.

The crime lev­el is af­fect­ing busi­ness con­fi­dence and, with it, the in­vest­ment cli­mate. En­er­gy out­put is de­clin­ing, and in­ter­na­tion­al prices are be­low pro­jec­tions. The for­eign ex­change mar­ket is in a con­stant state of im­bal­ance. The labour force par­tic­i­pa­tion rate is de­clin­ing and the pop­u­la­tion is age­ing, both of which have a neg­a­tive in­flu­ence on pro­duc­tiv­i­ty and the coun­try’s in­ter­na­tion­al com­pet­i­tive­ness. There are oth­ers.

The min­is­ter’s af­fi­davit sub­mit­ted to the court in sup­port of gov­ern­ment's re­quest to pro­ceed with op­er­a­tional­is­ing the Trinidad and To­ba­go Rev­enue Au­thor­i­ty was more pre­cise than his com­ments in Par­lia­ment.

The af­fi­davit recog­nised that the 2022 bud­get sur­plus was an out­lier as the fi­nan­cial out­turn for 14 of the last 15 years had been deficits.

He not­ed that be­cause of weak nat­ur­al gas pro­duc­tion and low gas prices on the in­ter­na­tion­al mar­ket, bud­get­ed rev­enues had not been at­tained, and the pro­ject­ed deficit for 2024 is es­ti­mat­ed at $9 bil­lion, sub­stan­tial­ly more than the ini­tial pro­jec­tion.

He es­ti­mat­ed an an­nu­al $5 bil­lion tax gap rel­a­tive to ex­pen­di­ture, but this gap could be as high as $10 bil­lion.

Im­por­tant­ly, he iden­ti­fied the oil and gas sec­tor as the on­ly sec­tor that could gen­er­ate the rev­enues to plug this gap. Fur­ther­more, giv­en the present state of in­ter­na­tion­al oil and gas prices, tax rev­enue from this sec­tor is un­like­ly to in­crease suf­fi­cient­ly to off­set this gap.

In­ter­na­tion­al prices were not ex­pect­ed to in­crease in the short run. Al­so, be­cause T&T was a ma­ture hy­dro­car­bon province, gas pro­duc­tion would con­tin­ue to de­cline un­til 2027, when gas from Venezuela is ex­pect­ed to be­come avail­able.

He point­ed out that the on­ly way to re­duce this gap and the deficit would be to achieve fis­cal con­sol­i­da­tion while si­mul­ta­ne­ous­ly main­tain­ing present lev­els of gov­ern­ment ex­pen­di­ture.

Why did the min­is­ter ig­nore his ad­vice and main­tain cur­rent ex­pen­di­ture in­stead of ask­ing for an ad­di­tion­al $2.3 bil­lion? More point­ed­ly, the min­is­ter spoke vague­ly of new rev­enue streams, pro­vid­ing no sub­stan­tive ev­i­dence that this was pos­si­ble in the short term.

The min­is­ter ac­knowl­edged that bor­row­ing to fi­nance con­tin­u­ing deficits was un­sus­tain­able.

A deficit is a symp­tom of a deep­er un­der­ly­ing prob­lem, and this is the de­pen­dence on one sec­tor, the en­er­gy sec­tor. The en­er­gy sec­tor ac­counts for 86 per cent of all for­eign ex­change earned and 36 per cent of GDP. It is the ma­jor cause of eco­nom­ic volatil­i­ty and cycli­cal­i­ty. Ad­di­tion­al­ly, the coun­try is de­pen­dent on a few for­eign play­ers, and there is too much em­pha­sis on the role of gov­ern­ment. These two fac­tors fur­ther ex­ac­er­bate the econ­o­my’s struc­tur­al im­bal­ance.

There are no quick and easy fix­es to ad­dress these im­bal­ances. Whilst the TTRA may be an im­por­tant step in im­prov­ing the tax ad­min­is­tra­tion sys­tem, this is not a cure-all. Sev­er­al mea­sures need to be un­der­tak­en in a co­or­di­nat­ed fash­ion.

More im­por­tant­ly, the num­ber of eco­nom­ic ac­tors who ex­port must al­so be in­creased, and the Gov­ern­ment must be­come more ef­fi­cient.

Many op­er­a­tional hur­dles and pit­falls lie ahead. These are not mi­nor is­sues that can be solved overnight by bring­ing the Drag­on or Man­a­tee fields in­to pro­duc­tion.

A coun­try’s long-term strength, its on­ly true nat­ur­al re­source, is the re­silience and ca­pac­i­ty of its cit­i­zens.