As politically tempting as it might be to sugar-coat the facts when Finance Minister Colm Imbert delivers the mid-term budget review, he should take the opportunity to level with the T&T public about the economic realities ahead.
It would be easy to point to the recent International Monetary Fund’s (IMF) forecast for a strong economic recovery this year while glossing over the multilateral agency’s warning about downside risks. However, the projected 5.5 per cent growth in GDP is dependent on the recovery in oil and gas production, among other factors.
As eager as this population might be for some good news about the economy, it would be better to focus on fiscal prudence given continued uncertainty from the ongoing COVID-19 pandemic and the far-reaching effects of Russia’s invasion of Ukraine.
After a few years of low to negative growth caused mainly by contractions in the energy sector, this country is still experiencing a recovery that is slow and uneven.
The priority needs to be structural reforms to help diversify the economy, reduce public debt levels, increase competitiveness, attract investment, and take any other steps needed to make this country more resilient to regional and global shocks.
The rollback of pandemic restrictions, improved commodity prices and new projects in the energy sector due to come on stream later in the year are all good for T&T’s economic health, but a boom is not around the corner.
There is still the matter of continued reduction in energy sector production. In addition, data from the Central Statistical Office (CSO) shows that headline inflation is on an upward trajectory due to increases in international food prices, higher shipping costs, and global supply chain disruptions.
Citizens are being hit hard in their pockets, and the recent increases in fuel prices have only added to the hardships.
What the population is most interested in at this time are not the usual promises of better days ahead but a discussion of more practical, down-to-earth matters such as measures to address the impact of inflation.
Fiscal projections for the rest of the year should be framed in the current situation of slowing global growth, which is down from an estimated 6.1 per cent last year to 3.6 per cent–0.8 and 0.2 percentage points lower than had been projected at the start of the year.
Unlike the full-scale budget presentation later in the year, this mid-year review is not expected to include the introduction of new fiscal measures or major adjustments to existing ones. Instead, at the halfway point of what was introduced in the last budget, this will be more of a status report and assessment of those measures.
Mr Imbert, now well versed in these presentations, should be mindful, however, of the strange and uncertain times in which he will deliver his latest statement on the economy. This is a nation that is still only on the cusp of recovery, prone to external factors, and therefore delicately poised.
Budgets and midterm reviews are occasions for political engagements on all sides of the ideological divide that can obscure and distort the facts.
But if ever there was a time to level with this population and have a straightforward conversation about the economy and what lies ahead, it is now.