Trinidad and To­ba­go needs to put prop­er poli­cies in place to trans­form the foun­da­tions of the Car­ni­val ac­tiv­i­ties, un­der­writ­ing their evo­lu­tion in­to a com­pet­i­tive in­dus­try in the glob­al mar­ket­place.

This is the ad­vice from econ­o­mist Dr Vanus James fol­low­ing com­ments made by Prime Min­is­ter Kei­th Row­ley who de­scribed the heavy for­eign ex­change ex­pen­di­ture on Car­ni­val cos­tumes as “ab­solute fool­ish­ness.”

Row­ley who made the state­ments while speak­ing at Wednes­day’s sod-turn­ing cer­e­mo­ny for Nu­trim­ix’s an­i­mal feed and pet food plant on the Point Lisas In­dus­tri­al Es­tate, said cos­tumes should be lo­cal­ly sourced.

“I saw a chil­dren’s band on Sat­ur­day, and I think it was the best band in the large band cat­e­go­ry for tod­dlers. All the cos­tumes were made in Trinidad and To­ba­go, and that, to me, is what we should be about,” Row­ley said.

Mean­while, Dr Mar­lene Attzs, a de­vel­op­ment econ­o­mist, al­so agreed that the Car­ni­val “busi­ness mod­el” must al­so be re­designed so it be­comes a net earn­er of forex rather than a forex drain.

Not­ing that this coun­try’s Car­ni­val ac­tiv­i­ties are al­ready in­no­v­a­tive, James said these can be steered with suit­able poli­cies on ed­u­ca­tion and skill-in­ten­sive train­ing, ef­fec­tive and rapid learn­ing through ap­pren­tice­ships on the job, phys­i­cal cap­i­tal in­fra­struc­ture, de­vel­op­ment cred­it, and the like.

“They can al­so be tar­get­ed with ex­port sup­port, not un­like what the Ex­im­Bank pro­vides to man­u­fac­tur­ing. For­eign in­vest­ment can be at­tract­ed to them. Care­ful study of the ac­tiv­i­ties would re­veal all the pos­si­bil­i­ties, in­clud­ing the prof­itable ex­ten­sion of the ac­tiv­i­ties in­to film and video games and the like in part­ner­ship with for­eign in­vestors. That is the sub­stance of your own point about da­ta. If we ap­proach this as in­dus­tri­al de­vel­op­ment, the com­mu­ni­ties would be seen as nat­ur­al units of en­tre­pre­neur­ship and part­ner­ship and for­eign in­vest­ment, that can be em­pow­ered to par­tic­i­pate in the process,” James ad­vised.

Then, he said, both im­port­ing and ex­port­ing will be ra­tio­nalised and T&T would not need to com­plain about the im­por­ta­tion of cos­tumes.

Attzs fur­ther ad­vised that while the dis­cus­sion on the use of scarce forex for im­port­ing Car­ni­val ma­te­ri­als is im­por­tant, the is­sue should not be viewed in iso­la­tion.

“The re­al­i­ty is that near­ly every­thing we con­sume in T&T is im­port­ed - from the food served at high-priced ex­clu­sive ‘all-in­clu­sive’ Car­ni­val events to the French fries at fast-food out­lets, for which forex con­tin­ues to be al­lo­cat­ed,” she said.

Stat­ing that the dis­cus­sion about the for­eign ex­change used to make Car­ni­val cos­tumes is not a new con­ver­sa­tion, Attzs said in 2010, then Min­is­ter of Cul­ture Win­ston “Gyp­sy” Pe­ters raised con­cerns about im­port­ing Car­ni­val-re­lat­ed ma­te­ri­als from Chi­na and In­dia.

He had urged a re­turn to the tra­di­tion of “mak­ing mas” as a means of cre­at­ing lo­cal em­ploy­ment, while al­so re­duc­ing the de­mand for forex on cos­tumes.

How­ev­er, Attzs said noth­ing sub­stan­tive was done at the pol­i­cy lev­el, adding “per­haps be­cause, at the time, forex was not the cri­sis it is to­day.”

Mov­ing for­ward, she said T&T must re­think its con­sump­tion habits, re­duce de­pen­dence on im­ports, and ac­knowl­edge the re­al­i­ty of dwin­dling for­eign ex­change sup­ply.

“With­out strate­gic in­ter­ven­tions, we risk deep­en­ing the cri­sis and fur­ther erod­ing our eco­nom­ic sta­bil­i­ty,” she added.

De­clin­ing forex sup­ply and de­mand

In its No­vem­ber 2024, Mon­e­tary Pol­i­cy Re­port, the Cen­tral Bank said: “Pur­chas­es of for­eign ex­change by au­tho­rised deal­ers (sup­ply) from the pub­lic amount­ed to US$3.72 bil­lion over Jan­u­ary to Oc­to­ber 2024, a de­crease of 0.7 per cent rel­a­tive to the same pe­ri­od a year ear­li­er. The mar­gin­al de­crease in pur­chas­es fol­lowed a 0.3 per cent rise in con­ver­sions by en­er­gy com­pa­nies rel­a­tive to the same pe­ri­od in 2023. For the pe­ri­od Jan­u­ary to Oc­to­ber 2024, pur­chas­es from the en­er­gy sec­tor ac­count­ed for 72.7 per cent of to­tal for­eign cur­ren­cy pur­chas­es over US$20,000 in val­ue.

“Sales of for­eign ex­change by au­tho­rised deal­ers to the pub­lic (de­mand) reached US$4.92 bil­lion over Jan­u­ary to Oc­to­ber 2024, a de­crease of 5.7 per cent rel­a­tive to the same pe­ri­od a year pri­or. Based on re­port­ed da­ta for trans­ac­tions over US$20,000, cred­it cards (43.7 per cent), en­er­gy com­pa­nies (17.1 per cent), re­tail and dis­tri­b­u­tion (15.8 per cent), and au­to­mo­bile com­pa­nies (5.3 per cent) made up the bulk of for­eign ex­change sales by au­tho­rised deal­ers to the pub­lic. The net sales gap reached US$1.20 bil­lion dur­ing the pe­ri­od. To sup­port the mar­ket, the Cen­tral Bank sold US$1,075.0 mil­lion to au­tho­rised deal­ers.”

In­for­ma­tion in the No­vem­ber Mon­e­tary Pol­i­cy Re­port in­di­cates that the Cen­tral Bank sold US$6.62 bil­lion to au­tho­rised deal­ers in the five-year pe­ri­od be­tween 2019 and 2023. That av­er­ages an an­nu­al in­ter­ven­tion by the Cen­tral Bank of at US$1.32 bil­lion.

The Cen­tral Bank, in a foot­note in the re­port, said sales of for­eign cur­ren­cy to au­tho­rised deal­ers by the Cen­tral Bank are con­sis­tent­ly small­er than sales of for­eign ex­change by au­tho­rised deal­ers to the pub­lic and tend­ed to ap­prox­i­mate the net sales gap.

“Over Jan­u­ary to Oc­to­ber 2024, in­ter­ven­tions by the Cen­tral Bank were on­ly 21.8 per cent the size of to­tal sales of for­eign ex­change by au­tho­rised deal­ers to the pub­lic, up from 21.2 per cent a year pri­or,” ac­cord­ing to the Cen­tral Bank.

Why re­duced en­er­gy sup­ply

In ex­plain­ing the rea­son be­hind the de­cline in the sale of for­eign ex­change by the en­er­gy sec­tor to the com­mer­cial banks, Min­is­ter of Fi­nance, Colm Im­bert, in de­liv­er­ing the 2025 bud­get linked it to the is­sue of VAT re­funds.

He said the Gov­ern­ment is aware that there is a sig­nif­i­cant sum of VAT re­funds out­stand­ing, par­tic­u­lar­ly for com­pa­nies in the en­er­gy sec­tor, which are ze­ro rat­ed.

“In fact, over 80 per­cent of VAT re­funds are nor­mal­ly due to en­er­gy sec­tor com­pa­nies at any giv­en time.

“On a pre­vi­ous oc­ca­sion, when a large quan­ti­ty of VAT bonds was is­sued, many of these bonds were re­deemed al­most im­me­di­ate­ly and used by en­er­gy sec­tor com­pa­nies to pay tax­es on in­come and prof­its. This had the ef­fect of re­duc­ing the avail­abil­i­ty of for­eign ex­change in the com­mer­cial bank­ing sec­tor, since it is ex­pect­ed that en­er­gy sec­tor com­pa­nies that ex­port all of their pro­duc­tion, or sell their pro­duc­tion lo­cal­ly in US dol­lars, such as up­stream gas pro­duc­ers, would pay their tax­es in US dol­lars.”