BUDGET WATCH 2018 – Part II. Nearing mid-term…

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The Rowley Govt’s poor PSIP performance

The TTWhistleblower continues its investigations into the previous budgets delivered by the Keith Rowley Administration as the 2018 budget draws closer. In Part I, we looked at the Government’s financial performance since taking office, particularly in the projects that it pursued and the ones that were abandoned.

This week, we take a closer look at the Government’s Public Sector Investment Programme (PSIP) for both 2016 and 2017.

The Finance Ministry authored 2017 PSIP admitted to a 61.1% utilization rate of funding: “A total of $4,708.8 million was expended, with $3,162.2 million (67.2%) under the Consolidated Fund and $1,546.6 million (32.8%) under the Infrastructure Development Fund, which represents a utilization rate of 61.1 percent of the revised allocation.”

The funding that was used focused on three sectors:

·         Social Infrastructure

·         Economic Infrastructure

·         Public Administration

By the time the 2016 PSIP was reviewed for analysis of performance, it was noted that for Economic Infrastructure, essential to firing up an increasingly sluggish and sinking economy, a total of $1.399 billion was spent from an original budget of $2.762 billion – a shortfall of $1.36 billion.

For Social Infrastructure, the Government used $1.711 billion out of an allocation of $2.768 billion, a shortfall of $1.05billion.

The issue here is not whether Government saved money. Rather it is about an essential instrument in generating economic activity and maintaining capital spending that failed to meet loudly publicized targets.

Targets not being met translates to capital creation works slowing and a much more sluggish engagement of private sector capacity.

And this is a core element of the economic slide that Trinidad and Tobago is currently experiencing. The Government itself has become a major competitor for economic factors of production, but by being tight-fisted with funds already allocated, it has slowed private sector activity to a crawl.

What about the 2017 PSIP?

Looking to the plans under the 2017 PSIP, the Finance Ministry authored document stated: “The sum of $5,022million has been allocated for projects and programmes to be executed in fiscal 2017 comprising $2,393 million (47.7 %) under the Consolidated Fund and $2,629 million

(52.3 %) under the IDF. The 2017 PSIP spread of funds is as follows:

Central Government – $4,443.8 million

Local Government Authorities – $289.6 million

Tobago House of Assembly – $288.6 million

The 2017 PSIP admits: “Compared to the 2016 PSIP provision, the 2017 PSIP represents a reduction of $2,679million in funding, reflecting a 35 percent decrease in capital investment available for financing projects and programmes during the fiscal year.”

Therefore, after failing to execute $2.41 billion in capital expenditure for 2016, achieving only a 61% PSIP execution, the Rowley Administration did not roll over funding for the continuation or commencement of projects it failed to pursue.

What the Government in fact did was deflate the 2017 PSIP by almost $2.7 billion, perhaps trying to bring the figures down to align with its capacity to deliver.

Curiously, however, the Government attempts to ‘take front’ masking it’s performance failures by saying: “However, when compared to the expenditure level of fiscal 2016, which amounted to $4,708.8 million, the 2017 PSIP allocation represents an increase of $313.2 million (6.7%).”

No! The fact is that only 61% of PSIP targets were met in 2016 and despite this failure to ensure capital creation and economic activity, the Government deflated PSIP funding for 2017.

This leaves the question – if we average the Government’s capacity to deliver at a dismal 61%, capital investment and economic activity will suffer even more going into 2018, despite the availability of funding.

It also makes one wonder what economic vision and philosophy the Government is operating by when it fails to execute capital spending, complains about a loss of revenue despite allocations being available for use, and then pursuing tax increases that have further stifled private sector performance.

Economic diversification

Despite failures to meet 2016 PSIP targets and withholding already allocated funding which has stifled private sector activity, the Government stated in the 2017 PSIP: “For fiscal 2016, Government advanced its strategy of restructuring and diversifying the national economy by supporting the development of a number of key initiatives in the areas of industrial and business development in Trinidad and Tobago.”

It remains to be seen how far a manipulation of words can live up to this claim since only $19 million was used for economic diversification, out of a $50 billion plus budget.

Part of the $19 million that the Government claimed “advanced its strategy of restructuring and diversifying the national economy” we see in the 2017 PSIP: “Expenditure of $6 million was incurred in providing further assistance to the film, fashion and music industries. Financial support was provided to stimulate the overall growth of these industries through their respective companies of FashionTT, FilmTT and MusicTT.”

The Rowley Administration defined its achievement of advancing diversification by:

·         Sponsorship of event “Decibel 2014” amounting to $0.1 million;

·         An initial payment of $0.1 million was made to Tribal Worldwide for website development;

·         Provision of support to the French Caribbean Inward Buyer Mission amounting to $0.1 million;

·         Payments of $0.7 million made for airfare for facilitators, videography and transportation for the Music Publishing Camp;

·         The music Content Creative Initiative was supported with injections of over $0.2 million for videography of interviews with music artists, producers and DJ’s support to Cocoa Velvet Caribbean Model Management in the Trinidad and Tobago;

·         Fashion Week and Tobago Fashion Coda 2016 payment of $0.5 million to the Production Expenditure Rebate Programme towards Happy Birthday Film Productions related to the film “Girlfriends Getaway” which was filmed in Trinidad, and

·         Support to the Production Assistance and Script Development Programme (PASD) amounting to $0.3million for the award of grants for the production of four (4) projects including: Temple by the Sea, The Two Cents Project, The Butterfly Princess and Protest.”

Another part of what the Rowley Administration referred to initiatives geared to “achieving diversification of the national economy” was expenditure of $6 million on “The Renewable Energy and Energy Efficiency Initiatives undertaken by the Ministry of Energy and Energy Industries.”

This funding was spent on “the promotion of green designs and technologies”.

The funding was also used for the Energy Ministry’s continued “National Energy Communication Campaign to increase the public’s awareness about the energy sector, renewable energy and energy efficiency through public service announcements/advertisements and articles in electronic and print media as well as the celebration of CARICOM Energy Week.”

A review of the 2017 PSIP also found: “The sum of $0.5 million was utilised in 2016 to continue the thrust towards diversifying the economy through the development of the non-energy manufacturing sector. This involved the development and implementation of a comprehensive strategy for the effective promotion of investment opportunities, through the creation of select prospectuses in the following targeted sectors: manufacturing, aviation services, agri-business inclusive of fish and fish processing, maritime, creative industries and software development.”

In addition to these words translating to the simple admission that “nothing was done but money was spent”, there cannot be much focus required for the development of strategies in these areas as they were already developed and being pursued by the previous administration.

In Part III of this series, the TTWhistleblower digs deeper into the Government’s capital expenditure programme and fiscal performance, in search of an answer to the question of what’s missing in this country’s bid to fire up economic activity and commence a robust recovery.

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