Economic hardships continue as mid-year review looms

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The TTWhistleblower today begins this series looking at economic hardships that continue, even after three budgets by the Keith Rowley Administration.

In this series, previous budgets will be analysed together with the Rowley Administration’s delivery and performance.

With the mid-year review of the 2018 on its way, the present conditions and forecasts for the immediate future will also be examined.

Worse off

With the mid-term of the Keith Rowley Administration just passed, and the mid-year review of the 2018 budget on its way, the Trinidad and Tobago economy is now in a worse position than it was in 2015.

Three budgets have been delivered so far which have all demonstrated almost a compulsion by the Government to use the present hardships to bring even tougher measures, purportedly to rein in the fiscal deficit and decrease spending at the expense of thousands of livelihoods.

Some authorities suggest that it is in economic difficulty that spending should increase in order to jump start economic activity and keep key economic sectors such as construction going. Spending should also be focused on inspiring the development of new sectors that would build a diversified economy as recovery begins.

To date, we have seen the opposite and the economy is struggling under the weight of increasing unemployment, escalating food prices, higher transport and fuel costs, stagnation in key economic sectors such as manufacturing and services, and growing disenchantment over an array of new taxes, and the threat of even more.

Previous budgets

In its first 18 months of office, the Keith Rowley Administration recorded revenues of at least TT$75 billion, which does not include borrowing and local bonds.

While oil and gas prices remained depressed in the previous budget periods, one of the first projects taken on by the Rowley Administration was the completion of the heavily corrupted Tarouba Stadium, even as the Government bluntly refused to operationalize the Couva Children’s Hospital, the structure and some outfitting for which were complete.

The Tarouba project was developed by the Patrick Manning PNM Administration in 2006 at a budgeted cost of $275 million. After five budgetary increases, the cost of the project escalated to almost $1.2 billion and was still incomplete by the time the PNM left office in 2010.

The stadium was intended for the 2007 ICC Cricket World Cup. A 2009 enquiry report into the construction sector called the Tarouba Stadium project “nothing short of a national disgrace”, and recommended police investigations of UDECOTT Chairman, Calder Hart and the rest of the board.

The final cost of one stadium started and completed by two PNM Administrations over the course of 11 years was almost $1.3 billion.

Rowley also brought the Government Campus project back to the front burner claiming to have completed it, with a formal commissioning and claims of saving $18 million in office rentals.

In making the Tarouba Stadium and Government Campus the flagship projects of his Government, Rowley simultaneously put the Point Fortin Highway, Couva Children’s Hospital, Point Fortin Hospital and Arima Hospital, on the back-burner, causing accusations of political spite.

In the time since then capital spending has slowed drastically, causing further pains for the Construction Sector and triggering a domino effect in other sectors.

Moreover, despite claiming that his Government completed it, the fact is that the Government Campus project was completed by the People’s Partnership Government.

In the 2015 budget delivered by former Minister of Finance and the Economy, Larry Howai, it was clearly outlined: “Madam Deputy Speaker, the outfitting of the Government Campus Plaza which commenced this year will add another dimension to the vibrancy of the capital city of Port of Spain. On completion, our public servants will now be accommodated in state-of-the-art facilities with acceptable and appropriate office space. The sequencing will be as follows:

·         October 2014, next month, the Customs and Excise Division of the Ministry of Finance and the Economy;

·         March 2015 the Immigration Division of the Ministry of National Security;

·         August 2015 the Board of Inland Revenue Division of the Ministry of Finance and the Economy;

·         September 2015 the Ministry of Legal Affairs; and

·         September 2015 the Ministry of Education.”

The Kamla Persad-Bissessar Administration spent $1.5 billion for the completion of the Government Campus buildings.

Abandoning projects

The previous Government also constructed a new building at Chaguanas to house the head-office of the Ministry of Tertiary Education.

The Rowley Administration overturned the project and the building was assigned to the Ministry of Agriculture, Land and Fisheries.

Plans were also in place for COSTAATT to move of its main Campus to Chaguanas as part of a decentralization programme, but this too was abandoned by the Rowley Administration.

In discontinuing these plans, no alternatives have been presented by the Government to date.

The Rowley Administration also abandoned the Chaguaramas Water Park project that was planned for his own Diego Martin West constituency.

Project abandonment became a new concept with the Rowley Administration, as the previous Government chose to continue projects which were already promised when it came to office in 2010.

Some of the projects continued and completed by the Persad-Bissessar Administration included:

·         Tobago Hospital, after it was started by the Basdeo Panday Administration and abandoned by the 2001 to 2010 PNM Government;

·         National Academy for Performing Arts (NAPA);

·         Southern Academy for the performing Arts (SAPA);

·         Chancery Lane Complex;

·         Churchill-Roosevelt Uriah-Butler Highway;

·         Aranguez Overpass;

·         Churchill-Roosevelt Highway Extension;

·         Diego Martin Highway project.

Public Sector Investment.

The Public Sector Investment Programmes (PSIP) and the pace of delivery of the Rowley Administration has also been dismal.

According to the 2017 PSIP: “Government has set out its broad, long-term development agenda in the draft National Development Strategy 2016-2030 (Vision 2030). Vision 2030 seeks to transform Trinidad and Tobago into a developed country, with sustainable growth and development and an optimal quality of life for all citizens, by the year 2030.”

It outlines the broad strategies for advancement over the next five years, 2016-2020. As such, Vision 2030 provides the development context for all national and sector policies as well as projects and programmes to be funded under the PSIP.”

The PSIP went on to state: “The 2017 PSIP incorporates the high priority investments which are cognizant of the country’s development goals outlined in the draft National Development Strategy. These goals coalesce around five key thematic areas:

I. Putting People First: Nurturing Our Greatest Asset

II. Delivering Good Governance and Service Excellence

III. Improving Quality Infrastructure and Transportation

IV. Building Globally Competitive Businesses

V. Valuing and Enhancing Our Environment”

However, in terms of the Rowley Administration’s capacity for execution of promises PSIP programmes, the record for the previous year was as dismal as the current.

In fiscal 2016, an allocation of $7,000 million was appropriated to facilitate the implementation of projects and programmes under the PSIP.

This allocation was later revised to $7,700 million by the end of the fiscal year.

However, for that fiscal period, there was a 61.1% utilization rate of the PSIP 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

However, the 2016 PSIP review noted that for Economic Infrastructure, 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 $1.05 billion.

The 2017 PSIP stated: “The sum of $5,022 million 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

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

On the heels of failure 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 Rowley Administration did was deflate the 2017 PSIP by almost $2.7 billion, triggering a substantial slow-down in the Construction sector, which caused a ripple impact on other key sectors in the non-energy sector, including Manufacturing and Services.

In Part 2 of this series, we look at the Rowley Administration’s performance in Economic Diversification and Education

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