The cost of fund­ing sev­en of the main promis­es/com­mit­ments made by Kam­la Per­sad-Bisses­sar, the po­lit­i­cal leader of the op­po­si­tion Unit­ed Na­tion­al Con­gress (UNC), dur­ing the 2025 gen­er­al elec­tion cam­paign could be more than $18 bil­lion in ad­di­tion­al ex­pen­di­ture or rev­enue fore­gone, ac­cord­ing to Busi­ness Guardian cal­cu­la­tions, based on pub­licly avail­able in­for­ma­tion and ver­i­fied by se­nior econ­o­mists, who in­sist­ed on anonymi­ty be­cause of their sen­si­tive po­si­tions.

The sev­en main fi­nan­cial promis­es/com­mit­ments are:

1) In­crease the com­pen­sa­tion of pub­lic sec­tor em­ploy­ees by no less than 10 per cent—Cost: up to $12 bil­lion, with in­creased ex­pen­di­ture on wages and salaries of $1.1 bil­lion a year;

2) Low­er cor­po­rate tax­es by 5 per cent ini­tial­ly—Rev­enue fore­gone of up to $1.3 bil­lion a year;

3) Re­move val­ue-added tax (VAT) on 7,000 ba­sic food items—Rev­enue fore­gone of up to $1.5 bil­lion a year;

4) Elim­i­nate the prop­er­ty tax—Rev­enue fore­gone of up to $150 mil­lion a year;

5) Re­moval of the 7 per cent on­line tax—Rev­enue fore­gone of about $62 mil­lion a year

6) In­crease the fu­el sub­sidy—Added ex­pen­di­ture of up to $2 bil­lion a year

7) Re­move tax­es on re­tire­ment ben­e­fits and pri­vate pen­sions—Es­ti­mate of rev­enue fore­gone of $100 mil­lion

Wage hike for pub­lic ser­vants

De­liv­er­ing an ad­dress at the elec­tion meet­ing of the UNC last Sat­ur­day, March 29 at North East­ern Col­lege in San­gre Grande, the new­ly elect­ed pres­i­dent gen­er­al of the Pub­lic Ser­vices As­so­ci­a­tion (PSA), Fe­l­isha Thomas, told a cheer­ing, bell-ring­ing crowd, “The UNC gave a com­mit­ment that ne­go­ti­a­tions (for pub­lic sec­tor work­ers) would start with no less than 10 per cent. Do you want that?”

She al­so said the UNC has al­so giv­en a com­mit­ment to: reg­u­larise con­tract work­ers; im­me­di­ate­ly im­ple­ment an im­proved health plan (for pub­lic ser­vants); shelve the PNM Cab­i­net WASA sub­com­mit­tee re­port; grant pref­er­en­tial ac­cess to HDC (Hous­ing De­vel­op­ment Cor­po­ra­tion) homes for pub­lic ser­vants and im­ple­ment the 9 per cent set­tle­ment on be­half of NIB (Na­tion­al In­sur­ance Board) work­ers.

“The ques­tion then re­mains: will they de­liv­er on their com­mit­ments? Let me re­mind you broth­ers and sis­ters that the last set­tle­ment work­ers re­ceived was un­der the UNC. Pub­lic of­fi­cers en­joyed two salary in­creas­es un­der the UNC with­in one term in of­fice, 9 per cent and 14 per cent,” said Thomas.

Speak­ing af­ter the PSA pres­i­dent, Mrs Per­sad-Bisses­sar did not qual­i­fy or amend Ms Thomas’s claim that the UNC has giv­en a com­mit­ment to in­crease the salaries of pub­lic sec­tor em­ploy­ees by no less than 10 per cent.

In fact, the op­po­si­tion leader’s ref­er­ence to the com­ments by Thomas on the UNC’s com­mit­ment to in­creas­ing pub­lic sec­tor salaries by no less than 10 per cent was as fol­lows, “You don’t want a mis­er­able life. You don’t want a scrunt­ing life and if I take on Fe­l­isha, I might say the wrong word on this plat­form tonight. So let me move away from all these words be­gin­ning with ‘s’.”

Mrs Per­sad-Bisses­sar al­so re­ferred to Ms Thomas as brave and ref­er­enced her say­ing that work­ers de­served a fair day’s pay for a fair day’s work..

But sure­ly, if the new PSA leader had mis­spoke or em­bel­ished the UNC’s com­mit­ment to pub­lic sec­tor em­ploy­ees, the leader of the op­po­si­tion would have used the op­por­tu­ni­ty, speak­ing af­ter Ms Thomas, to clar­i­fy her par­ty’s po­si­tion.

Mrs Per­sad-Bisses­sar al­so told her ex­u­ber­ant San­gre Grande au­di­ence, “Peo­ple want straight talk from their lead­ers. Peo­ple want the truth told to them in re­al terms and that is what you will get from me...Peo­ple want trans­paren­cy. They want ac­count­abil­i­ty. They want kind­ness com­bined with in­tel­li­gence, with com­pe­tence, with com­pas­sion, with ex­cel­lence, with em­pa­thy. They want truth! Come up young boy, give them it. We have been giv­ing you truth, plain and sim­ple, with­out dress­ing, all our po­lit­i­cal lives.”

So what is the truth?

The UNC leader’s em­pha­sis on straight talk and telling the truth to her fol­low­ers is cru­cial be­cause from where I sit, there is ab­solute­ly NO WAY, short of a mir­a­cle, that a T&T gov­ern­ment, led by Mrs Per­sad-Bisses­sar, is go­ing to be able to de­liv­er on promis­es/com­mit­ments that will cost tax­pay­ers of T&T an es­ti­mat­ed $18 bil­lion in ad­di­tion­al ex­pen­di­ture or rev­enue fore­gone.

Is it the “truth” told to the pop­u­la­tion in “re­al terms” that T&T can af­ford the be­tween $10 and $12 bil­lion that a pub­lic sec­tor set­tle­ment at 10 per cent for be­tween 2014 and 2024 is es­ti­mat­ed to cost T&T?

That range is based on an as­sess­ment giv­en by for­mer Min­is­ter of Fi­nance, Colm Im­bert, speak­ing in the Sen­ate on Jan­u­ary 26, 2021. In his con­tri­bu­tion to the de­bate on the re­form of the pub­lic ser­vice com­mis­sions, Im­bert gave an ex­am­ple of what it would cost to set­tle pub­lic-sec­tor wages at a 9 per cent in­crease com­pared to the pre­vi­ous 3 per cent for 2014-2016.

“If, for ex­am­ple, the Gov­ern­ment were to au­tho­rise the CPO to of­fer a 9 per cent in­crease to the 89,000 peo­ple in the pub­lic sec­tor for the pe­ri­od 2014 to 2016, with the as­so­ci­at­ed back­pay, the CPO (Chief Per­son­nel Of­fi­cer) has ad­vised that the cost of that, up to De­cem­ber 2020, would have been $7.2 bil­lion.”

Ex­tend­ing the pub­lic sec­tor set­tle­ment to the pe­ri­od 2014 to 2024, in­creas­ing the set­tle­ment from 9 to 10 per cent and in­clud­ing all pub­lic sec­tor em­ploy­ees—even those whose trade unions set­tled at 4 per cent—push­es $7.2 bil­lion the fig­ure to be­tween $10 and $12 bil­lion.

Can T&T af­ford 10%?

In­creas­ing the pay pack­ages of pub­lic sec­tor em­ploy­ees by 10 per cent at a cost of up to $12 bil­lion would im­pact the econ­o­my in sev­er­al ways:

1) Larg­er fis­cal deficit—In­creas­ing ex­pen­di­ture on pub­lic sec­tor em­ploy­ees by up to $12 bil­lion in the first year of a UNC ad­min­is­tra­tion, would push T&T’s ex­pen­di­ture in the 2026 fi­nan­cial year, which starts on Oc­to­ber 1, 2025, from an es­ti­mat­ed $59.74 bil­lion to $71.74 bil­lion.

If the sev­en items of in­creased ex­pen­di­ture or rev­enue fore­gone are in­clud­ed, the fis­cal deficit would go from an es­ti­mat­ed $5.51 bil­lion in 2025, to $23 bil­lion in 2026. That fig­ure is ar­rived at by adding $14 bil­lion (high­er salaries and in­creased fu­el sub­sidy) to the $59.74 bil­lion es­ti­mat­ed ex­pen­di­ture in 2025 and re­duc­ing rev­enue by $4 bil­lion from $54.22 bil­lion in 2025 to $50 bil­lion in 2026;

2) More debt—A high­er fis­cal deficit means more bor­row­ing. Some 76.22 per cent of the 2024 fis­cal deficit of $9.11 bil­ion was fund­ed by for­eign fi­nanc­ing (a to­tal of TT$6.945 bil­lion). An in­creased fis­cal deficit of $23 bil­lion in 2026 would like­ly mean in­creased to­tal bor­row­ing to fund the deficit and in­creased for­eign fi­nanc­ing;

3) High­er in­fla­tion—Dis­trib­ut­ing up to $12 bil­lion to the 89,000 em­ploy­ees in the pub­lic sec­tor would put more mon­ey in the hands of those work­ers. As a re­sult of many pub­lic sec­tor em­ploy­ees not hav­ing a wage in­crease since 2014, they are sure, in the ag­gre­gate, to in­crease their pur­chas­es of re­frig­er­a­tors, stoves, wash­ing­ma­chines, cars as well as al­co­holic and non-al­co­holic bev­er­ages and food. That in­creased de­mand will lead to a sharp in­crease in the rate of in­fla­tion;

4) Greater forex de­mand—Be­cause more than 75 per cent of what is pur­chased in T&T is im­port­ed, an in­crease in ag­gre­gate de­mand as a re­sult of more cash in the hands of pub­lic sec­tor em­ploy­ees is like­ly to trans­late in­to an in­crease in de­mand for for­eign ex­change.

Ac­cord­ing to the Cen­tral Bank’s new Eco­nom­ic Dat­a­Pack, the de­mand for for­eign ex­change in the pe­ri­od Oc­to­ber 2024 to Feb­ru­ary 2025 was US$2.39 bil­lion, while the sup­ply was US$1.72 bil­lion. That led to the Cen­tral Bank sell­ing US$589.5 mil­lion to the au­tho­rised deal­ers in that five-month pe­ri­od to ad­dress the gap be­tween sup­ply and de­mand;

5) De­plet­ing for­eign re­serves—In­creased de­mand for for­eign ex­change puts pres­sure on T&T’s for­eign re­serves be­cause the gap be­tween de­mand and sup­ply will in­crease and the Cen­tral Bank will be re­quired to sell more re­serves to com­mer­cial banks to ad­dress the wider gap. T&T’s net of­fi­cial for­eign re­serves in Feb­ru­ary 2025 stood at US$5.294 bil­lion, which was 21.6 per cent low­er than US$6.754 bil­lion in Feb­ru­ary 2023. That is an av­er­age de­ple­tion of about 11 per cent over two years;

6) Rat­ing agency down­grades—Coun­tries that are fis­cal­ly im­pru­dent tend to get down­grad­ed by rat­ing agen­cies. T&T has two main rat­ing agen­cies, S&P and Moody’s. The coun­try is rat­ed junk by one and just above junk by the oth­er. Coun­tries that get down­grad­ed to junk sta­tus have to pay more to ser­vice their for­eign debts and may even find lo­cal fi­nanciers would shun them.

Why promise if you can’t de­liv­er?

The econ­o­mists ad­vis­ing Mrs Per­sad-Bisses­sar know that giv­ing a com­mit­ment to in­crease pub­lic sec­tor com­pen­sa­tion by at least 10 per cent is fis­cal­ly ir­re­spon­si­ble. And they know that that is a com­mit­ment that the UNC, if elect­ed, is not go­ing to be able to keep be­cause it would crash the econ­o­my with­in one year.

It is sur­pris­ing that the leader of the ven­er­a­ble PSA would be so tak­en in by the UNC’s labour-friend­ly com­mit­ments that she would not ask the ob­vi­ous ques­tion: Where is the mon­ey com­ing from for the 10 per cent wage hike?

One as­sumes that the leader of the op­po­si­tion is tak­ing ad­vice from her econ­o­mists be­fore mak­ing com­mit­ments to trade unions.

So the ques­tion be­comes: Why would the po­lit­i­cal leader of the UNC make a com­mit­ment to the PSA that she KNOWS that, if elect­ed, she will not be able to keep?

And if giv­ing a com­mit­ment to the PSA to in­crease the com­pen­sa­tion in the pub­lic sec­tor by 10 per cent were so easy, why does Mrs Per­sad-Bisses­sar think Mr Im­bert did not do it?