JavaScript is disabled in your web browser or browser is too old to support JavaScript. Today almost all web pages contain JavaScript, a scripting programming language that runs on visitor's web browser. It makes web pages functional for specific purposes and if disabled for some reason, the content or the functionality of the web page can be limited or unavailable.

Wednesday, May 7, 2025

Imbert has tough task for Budget 2023–economists

by

Raphael John-Lall
955 days ago
20220925
Finance Minister Colm Imbert.

Finance Minister Colm Imbert.

ABRAHAM DIAZ

Raphael John-Lall

raphael.lall@guardian.co.tt

Fi­nance Min­is­ter Colm Im­bert faces dif­fi­cult de­ci­sions as he presents the bud­get for the fis­cal year 2022/2023 to­mor­row.

T&T is emerg­ing from a two-year glob­al health pan­dem­ic which led to the clo­sure of many busi­ness­es and an in­crease in pover­ty and un­em­ploy­ment. So­cial prob­lems like crime con­tin­ue to grow and cit­i­zens are clam­our­ing dai­ly for so­lu­tions.

Even be­fore the pan­dem­ic which start­ed in 2020, the coun­try had ex­pe­ri­enced five years of neg­a­tive Gross Do­mes­tic Prod­uct (GDP) growth.

How­ev­er, T&T has been thrown an eco­nom­ic life­line as the war in Ukraine has re­sult­ed in high­er en­er­gy prices, giv­ing the Gov­ern­ment $8 bil­lion (TT) in ex­tra rev­enue, Prime Min­is­ter Dr Kei­th Row­ley in­formed the coun­try in June.

Al­though there is no in­di­ca­tion of the amount al­lo­cat­ed for the 2023 bud­get, last year Im­bert pre­sent­ed a $52.4 bil­lion bud­get. The Sun­day Guardian un­der­stands that Im­bert is like­ly to price the bud­get on high­er en­er­gy prices as the Ukraine/Rus­sia war con­tin­ues and, con­se­quent­ly, high­er com­mod­i­ty prices.

The Gov­ern­ment based last year’s bud­get on US$65/bar­rel and gas on US$3.75 per mmb­tu. Al­though econ­o­mists who spoke with the Sun­day Guardian de­clined to give spe­cif­ic fig­ures that this year’s bud­get could be based up­on, they did say that the Gov­ern­ment should be con­ser­v­a­tive in the price that the bud­get is pegged to.

The Sun­day Guardian un­der­stands that the Min­is­ter of Fi­nance could like­ly run an­oth­er deficit bud­get with high­er spend­ing on in­fra­struc­ture projects like roads, land slips and drainage.

Speak­ing at the Spot­light on the Econ­o­my on Sep­tem­ber 2, Im­bert said a new road re­pair com­pa­ny will be called the Sec­ondary Road and Re­ha­bil­i­ta­tion Com­pa­ny and will be as­signed to the Min­istry of Lo­cal Gov­ern­ment. He in­di­cat­ed that $100 mil­lion (TT) will be al­lo­cat­ed to the com­pa­ny in the 2023 bud­get.

Im­bert al­so said that the Gov­ern­ment wants to cap the fu­el sub­sidy at $1 bil­lion an­nu­al­ly, and this could like­ly lead to high­er fu­el prices in the short run. He may ad­dress the is­sue again on bud­get day.

Econ­o­mists who spoke to the Sun­day Guardian iden­ti­fied crime and na­tion­al se­cu­ri­ty, ed­u­ca­tion and eco­nom­ic di­ver­si­fi­ca­tion as ar­eas that should be dealt with in the bud­get, how­ev­er, lim­it­ed re­sources will stymie the Gov­ern­ment's op­tions.

In his Sun­day Guardian col­umn to­day, CEO of the Arthur Lok Jack Glob­al School of Busi­ness Mar­i­ano Browne not­ed that al­though Im­bert may be out­ward­ly calm, he is "sit­ting on the horns of a dilem­ma".

Browne con­tend­ed that there are many com­pet­ing claims for in­creased en­er­gy rev­enues.

The pub­lic sec­tor wage ne­go­ti­a­tions have been stalled for nine years, he said. High­er in­ter­na­tion­al en­er­gy prices force a choice be­tween a high­er fu­el sub­sidy or high­er prices at the pump, a big­ger elec­tric­i­ty sub­sidy or high­er elec­tric­i­ty prices. The pri­ma­ry and sec­ondary roads are par­lous, de­te­ri­o­rat­ing due to leak­ing sub­ter­ranean wa­ter mains which un­der­mine the road sub­sur­face, he added. "This means big­ger sub­ven­tions to WASA with­out any im­prove­ment in the de­liv­ery of wa­ter."

Browne said, "In­fla­tion­ary pres­sures and the high­er cost of food will al­so re­quire con­ces­sions to those cit­i­zens on fixed or low in­comes."

Im­bert def­i­nite­ly has a tough task on his hand, ac­cord­ing to econ­o­mists.

Pover­ty al­le­vi­a­tion

Uni­ver­si­ty of the West In­dies (UWI) econ­o­mist Dr Vaalmik­ki Ar­joon said that giv­en the in­creas­ing cost of liv­ing cit­i­zens are fac­ing, the Gov­ern­ment has "se­ri­ous de­ci­sions" to make on how it will solve some of these so­cial and eco­nom­ic prob­lems.

"It is es­sen­tial that this bud­get has a strat­e­gy to be im­ple­ment­ed dur­ing the year to pro­mote the eco­nom­ic wel­fare of the coun­try and our over­all qual­i­ty of life by con­trol­ling the cost of liv­ing, and cre­at­ing a more com­pet­i­tive pri­vate sec­tor."

Ar­joon ad­vo­cates in­creased so­cial pro­grammes to help al­le­vi­ate some of the so­cial ills as a re­sult of pover­ty.

"Giv­en that we have an im­proved fis­cal space, it is al­so im­por­tant for the State to mit­i­gate the ef­fects of the high cost of liv­ing by tem­porar­i­ly in­creas­ing its so­cial safe­ty net for vul­ner­a­ble house­holds to pre­vent them from falling deep­er in­to pover­ty, such as more cov­er­age for the food card and school feed­ing pro­gramme, tem­po­rary cash trans­fer pro­grammes, util­i­ty bill dis­counts etc.

"The util­i­ty and fu­el cash cards which were pre­vi­ous­ly pro­posed to help low­er the cost-of-liv­ing bur­dens should be pro­vid­ed this year with ur­gency. While they pre­vi­ous­ly re­moved VAT on sev­er­al food items, they could con­sid­er broad­en­ing the ze­ro-rat­ed items list, and tem­porar­i­ly ad­just­ing im­port du­ties paid, while tak­ing care that it does not fur­ther dis­ad­van­tage the fis­cal space."

On the sub­ject of en­er­gy prices, he said that af­ter the ini­tial rise ear­li­er this year en­er­gy prices are al­ready falling and the Gov­ern­ment has to be care­ful of the oil and gas prices that the bud­get is pegged to.

"Al­ready we are see­ing oil prices start­ing to fall, where Brent has moved from $122 per bar­rel at the end of May to now $86.15–a 29 per cent drop, large­ly due to the in­crease in in­ter­est rates by many cen­tral banks glob­al­ly to curb glob­al in­fla­tion and the strength­en­ing of the US dol­lar. We are al­so fac­ing the high­est cost of liv­ing ever ex­pe­ri­enced for gen­er­a­tions, es­pe­cial­ly since we im­port much of what we use on a dai­ly ba­sis and prices in­ter­na­tion­al­ly are high!"

Econ­o­mist Dr Vanus James, based in To­ba­go, said the Cen­tral Gov­ern­ment and the To­ba­go House of As­sem­bly (THA) must fo­cus on crime re­duc­tion, pover­ty and how to di­ver­si­fy the econ­o­my in the bud­get.

"Once you have so­cial prob­lems you al­ways have to ad­dress them as a con­di­tion for ini­ti­at­ing any pro­gramme or else there will be no de­vel­op­ment. If crime is out of con­trol, prop­er pro­grammes are need­ed for that. These pro­grammes would fit in­to the in­sti­tu­tion­al frame­work which is nec­es­sary for the econ­o­my to make progress. The Gov­ern­ment must al­so look at ex­cess pover­ty. The Gov­ern­ment has to know the liv­ing stan­dards of the low­er end of the in­come dis­tri­b­u­tion. In the ab­sence of those peo­ple be­ing able to sur­vive, the Gov­ern­ment will run the risk of se­ri­ous so­cial un­rest."

Speak­ing about en­er­gy prices, he said that the Gov­ern­ment has al­ready de­cid­ed on what prices it will base the bud­get.

He ex­plained how econ­o­mists work the for­mu­la out.

"The Gov­ern­ment has been mon­i­tor­ing oil prices and nor­mal­ly what they do is they take a range and they will study and track the prices and try to use a pro­jec­tion that fits in the mid­dle of a range. Then they peg the bud­get on the bot­tom of that."

He al­so called on the THA and Cen­tral Gov­ern­ment to do more to di­ver­si­fy the econ­o­my.

"The THA and the Cen­tral Gov­ern­ment are the biggest con­trib­u­tors to the econ­o­my. We’ve re­al­ly nev­er re­al­ly put in place a prop­er pro­gramme of de­vel­op­ment here in To­ba­go. They must de­vel­op tourism be­yond invit­ing tourists to the beach. We need to in­dus­tri­alise tourism. Al­so, they need to look at ed­u­ca­tion and health­care and the cre­ative in­dus­tries.”

James is hop­ing that the Cen­tral Gov­ern­ment al­lo­cates more mon­ey for To­ba­go in the next fis­cal year as he be­lieves that not enough mon­ey is ever giv­en to To­ba­go.

"The Cen­tral Gov­ern­ment nor­mal­ly al­lo­cates a por­tion of the bud­get and then the THA takes that and re­con­fig­ures it ac­cord­ing to the needs of the peo­ple of To­ba­go. Usu­al­ly, you are look­ing at $2 bil­lion for re­cur­rent spend­ing and $300 mil­lion for de­vel­op­ment spend­ing. This can’t do any­thing or can’t ini­ti­ate a se­ri­ous eco­nom­ic re­struc­tur­ing pro­gramme."

There should not be a big­ger bud­get–Ramkissoon

For­mer Re­pub­lic Bank econ­o­mist Dr Ronald Ramkissoon said that de­spite high­er rev­enues, he does not think that there should be a big­ger bud­get for the next fis­cal year.

"I don’t think that the bud­get should be big­ger. There are things that T&T has been spend­ing mon­ey on and we have not seen the re­sults. The ten­den­cy is that we should spend more mon­ey as oil prices are high­er.

"We have to re-ex­am­ine what the Gov­ern­ment is spend­ing mon­ey on. The state-run en­ter­pris­es come to mind. Are they ef­fi­cient­ly run? The Gov­ern­ment must be con­ser­v­a­tive. What­ev­er sav­ings are made should go to­wards gen­er­at­ing rev­enue and in­vest­ment in for­eign ex­change earn­ing ac­tiv­i­ty."

Business Budget


Related articles

Sponsored

Weather

PORT OF SPAIN WEATHER

Sponsored