A great deal of history already exists in modern economy over the decades and the impact on small and large nations that took both the right and wrong approach to sustainable growth and development.
And while some may hold particular views coloured by political sentimentality, when we in Trinidad and Tobago are discussing issues of economy, we must ensure that we call a spade a spade, even at the expense of the wild claims of those we support.
A history of challenges
Trinidad and Tobago is not the first nation in the world to experience declines and challenges and the history that many of us have lived will show us how easily good intentions and an absence of leadership can become a potent and toxic mixture.
Singapore remains one of the most outstanding models of how tough citizens and firm, sensible Government can cause stellar economic expansion and performance, even when the only natural resource to stand on is the knowledge base of its population.
It was Lee Kuan Yew, hailed as the father of modern Singapore, who pulled his nation up by its bootstraps around the time when many small nations were coming in to their own in terms of economic and resource booms.
According to Analyst Yusuff Ali in 2015, Kuan Yew was one of those Leaders who felt it difficult to sugar-coat visible truth; circa 1975, the Singapore leader said that Trinidad and Tobago was unable to develop because of what he termed a “Carnival mentality”.
Then Prime Minister, the late Dr Eric E Williams scoffed vigorously at the claim, with Trinidad and Tobago then having entered into a full-on oil boom, with Government revenue leaking at the seams, and corruption weaving its way through every corner of the public services and delivery.
In the time since then, Singapore, with no natural resources but knowledge, was able to overtake oil rich Trinidad and Tobago on almost every indicator for economic development, including GDP; per capita income and integrity in public office.
Similarly, Great Britain was one of those nations by the late 1970s besieged by the weight of socialist policies that had increased the size of Government and weakened the economy to the point of collapse.
When former Prime Minister, the late Baroness Margaret Thatcher took office, Great Britain was referred to as the “sick man of Europe” with many seeing any possibility of economic leadership as virtually impossible.
Emboldened by her own determination, she was defiant that she did not take over leadership to oversee the decline of a nation, but to turn to a different direction and make Great Britain “great again”.
By 1985 into 1986, the British economy was clocking as a leading financial capital in the world, and a new period of boom, wealth creation and economic expansion has carried even into the 21st century.
On the other hand, the United States, long hailed as the most powerful democracy in the world was hit by the most devastating financial meltdown in 2008 since the 1930s, a crisis that rippled so hard that many economies are still struggling in recovery today, seven years later.
A 2008 survey taken by the Centre for Public Leadership at Harvard’s Kennedy School, showed that an astounding 80% of the Americans believed there to be a leadership crisis in that country, and 79% felt that the United States would decline as a nation.
Trinidad and Tobago today
Here in Trinidad and Tobago, we must ask ourselves some very hard questions before we truly advance to a newly fired-up economy, robust in pace and determined in vision.
Are we here because of a Carnival mentality?
Are today’s challenges the result of poor leadership?
Have we become too dependent on leaving the decision making for the destiny of 1.3 million to an elected Executive?
Do we have confidence in those we elect, and those who are expected to be the watchdogs of democracy and development, and the collective national conscience?
Guardian Media Limited may have to ask itself those and other questions as well, having exhibited a level of lethargy in the depth of its research, particularly in taking public positions on complex economic challenges.
The Editorial of the Sunday Guardian of 05 March 2017 demonstrated that lethargy, stating: “The quantum of back-pay owed to Public Servants was due to the fact that the previous administration – in what was viewed as a fiscally irresponsible attempt to buy a general election – handed out 14% increases for overdue collective agreements.”
People’s Partnership Administration
At the time of making the settlement offer to Public Servants, the then Government was clear in its priorities, its revenue potential, the need to manage the fiscal deficit and the channels for new economic activity that would ensure Government spending was not excessively interrupted.
The People’s Partnership Government, in 2015, generated the second highest level of revenue ever raised by any Government in our nation’s history and reduced the deficit to one of the lowest levels in the last 9 years.
This was achieved in spite of the continuous decline in oil prices in 2014/5 which had fallen to US$45 per barrel, and the fact that no new taxes were implemented.
The previous Government also carried the hallmark of being one of the most labour-friendly this country has ever had, with a record number (over 130) of collective agreements being negotiated and settled in just five years.
A fair settlement to Public Servants (one of the lowest paid cohorts of administrative workers in our country) was therefore nothing unusual in the context of a Government that maintained a mostly stable relationship with the representatives of working men and women.
The sum total of Government’s job is to deliver services to the nation in a way that makes life better.
This is why the philosophy remained true when the salaries of women in the URP were increased to equal those of the men; old age pensions were increased; grants to the differently abled were increased on two occasions and the minimum wage was also increased on two occasions.
Starting Government on untruths
The PNM Administration through its Finance Minister, Colm Imbert, immediately went to work on softening an already defeated People’s Partnership with an arsenal of dubious facts on the overdraft at the Central Bank.
What Imbert conveniently failed to mention at the time of the PNM’s rise to Government was that there were projected cash inflows of $13 billion, due in the weeks following the General Election, which were sufficient to clear the overdraft.
These inflows included $6.5 billion in year-end tax receipts; $1.5 billion from the NGL IPO; $500 million in dividends from the NGC, and $3.5 billion from a loan repayment by Trinidad Generation Unlimited.
In addition, there was sufficient legislative room to borrow $1 billion in the event of delays in revenue receipts, and this was arranged prior to September 7th, 2015.
What Imbert also failed to say was that a significant part of the build-up of debt and the tightening of Government cash flows was the CLICO liability that had to be met.
The Central Bank’s Economic Bulletin of July 2013 Volume XV No. 2 categorically stated that the deterioration of the nation’s debt to GDP ratio was not due to Government borrowing, but because of 2001 to 2010 PNM Government’s bailout for CLICO/CL Financial.
The report found that the PNM calculated the cost of the bailout at approximately $11.9 Billion. The true cost was in fact in excess of $22 Billion, and as high as $26 Billion when Government support to Caribbean nations is included.
In addition to the projected cash flows above, the Government was expecting approximately $12 billion of the amount due from CLICO within the next 18 months. This was to be used to reduce debt and further stabilize the Government’s cash position.
The remainder of the amount due was expected to be collected based on Cabinet’s agreement to the repayment arrangements proposed.
2015’s strong economic indicators
With respect to our economic indicators, when the People’s Partnership left office, Trinidad and Tobago boasted as high as US$10.4 billion in foreign exchange reserves.
A strong additional buffer existed in the Heritage and Stabilisation Fund which moved from US$3.6 billion in 2010 to US$5.7 billion in 2015.
This country’s debt to GDP level was also a very manageable 46%, having found a debt to GDP ratio of over 30% when the People’s Partnership took office in 2010.
Post 2015 downturn
In stark contrast, the present Rowley Government is still to articulate a clear economic vision and development strategy, despite threats to do so since their time in Opposition.
Instead, they have effectively talked the economy into drastic decline; warded off any potential for foreign investment, and given the impression that the Government is there to manage decline rather than inspire regeneration and growth!
Since September 8th 2015 (just 18 months), the Rowley Government has collected over $75 billion in revenue, but the country has very little to show for it.
In the time between September 2015 and the present, the Rowley Administration has driven debt to GDP to as high as 77.2%, according to the Central Bank estimates for the period to December 2016. This is mainly because of the economic contraction that their lack of economic policies have created since they came into office, which has significantly deflated GDP.
According to the Central Bank, we have seen a 6.7% decline for the first half of 2016 and projections are for a very dangerous 8% decline for the second quarter of 2016 – the worst in our economic history.
In terms of investor confidence, the previous Government took Foreign Direct Investment (FDI) to one of its highest levels in history, peaking at almost US$3B.
According to the Central Bank, up to June 2016 the Rowley Administration had attracted under US$700M in FDI and one suspects that most of that had its genesis in the incentives for the energy sector delivered by the People’s Partnership.
So calling the spade means that the People’s Partnership Government generated higher revenues; created more jobs; maintained low levels of inflation; increased FOREX reserves; attracted significant investments from abroad, and increased sovereign savings for future generations.
The policy failures of the Rowley Administration have caused a reversal for the economy on every indicator, and every citizen is feeling the impact.
This means that the Government’s failure to meet its obligations, including the payment of back pay to public servants, and maintain the standard of living of the people of Trinidad and Tobago is not about a previous Government’s management, but really about the current Government’s failure to manage!