How the PNM left Moody’s with no choice

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The announcement by Moody’s of the credit rating downgrade of the Trinidad and Tobago economy from Baa2 to Baa3, and change of the long term outlook to negative, came with an unmistakable ‘inevitability’; we all knew the shoe was going to drop, but we simply could not figure out when.
 
But far from the version of reality which the Rowley PNM will hasten to force the media and population to believe, the facts are quite blunt.
 
The ‘inevitability’ factor of the Moody’s downgrade comes from the failures of the Keith Rowley PNM to actually tell the truth of the economy and demonstrate that it has what it takes to guide the Trinidad and Tobago economy out of energy-price related challenges.
 
Doubtless, Moody’s must also have taken very seriously the PNM’s shady Finance Minister, Colm Imbert’s, deliberate and repeated distortion of their advice, as well as advice from the International Monetary Fund (IMF) and Standard and Poors (S&P).
 
Imbert went as far as to tarnish public, official State documents with serious and calculated distortions, leaving us at the mercy of the final word of external authorities.
 
PNM failed to heed advice
 
Countless warnings were issued to the Rowley PNM from day one – make your economic plan clear, and DO NOT politicise the issues of crime and economy.
 
As is its habit, the Rowley PNM ignored sensible advice and set off on a path that has triggered economic instability, a fall in investor confidence and substantial increases in violence and crime.
 
Also, as is the habit of the PNM, the instant response was to blame the 26-year old United National Congress, despite the fact that it was the Kamla Persad-Bissessar Administration that stabilized the economy, restored growth, fortified the TT exchange rate, lowered crime and substantially restored the energy sector.
 
As recently as today, in the Sunday Newsday of 17th April 2016, the PNM’s Faris Al Rawi placed the blame for increases in crime on the UNC.
 
As ludicrous as the claim is, Al Rawi mistakenly believed that he could cause the population to change a long-held belief, based on facts, of the PNM’s undeniable link to crime and economic decline. This issue was comprehensively dealt with in a previous blog post, which you can read at this link.
 
Readers will again see the tremendous effort the PNM puts into fabricating distortions, and realise that the PNM has a keen eye on the potential for crisis. The moment issues appear that could rightly erode the party’s public standing, they do as our forebears used to say: ‘Take front before front take them’.
 
Moody’s clear position
 
The Moody’s position on why Trinidad and Tobago was downgraded, and had its long term outlook demoted to ‘negative’, however, proves a timeless fact – no matter how much you lie, the truth will find its way to the surface.
 
Moody’s said: “Despite the authorities’ fiscal consolidation efforts, low oil and gas prices will negatively and materially undermine the country’s economic and government financial strength at least throughout 2018,” and “There is a high likelihood that the policy response to the commodity price shock will not be as timely and effective as required due to lack of macroeconomic data and weak policy execution capacity.”

What could be implicit in Moody’s view of “weak policy execution capacity” include a number of factors such as:
 
        i.The PNM’s clear history of incompetence and failure in economic management, even in times of boom;
      ii. Colm Imbert’s serious and repeated distortion of the advice given by Moody’s, the IMF and S&P;
    iii.  Suspicion arising from Imbert’s failure to acknowledge $13 billion in revenue receipts for fiscal 2015, wanting instead to add this figure to his 2016 fiscal year;
     iv. The PNM’s over-zealous and sustained efforts to paint crisis on an economy that, in fact, was not in crisis.
 
To be clear, each of these four factors must be explored fully.
 
PNM history of incompetence
 
Despite the Rowley PNM’s concerted efforts to re-write history and change the story and experience of their Governments, the PNM has ALWAYS presided over contraction, low confidence, increased crime and general instability. Rather than restating the facts behind this belief, please refer to the data posted at this link.
 
What is particularly harsh in the history of the PNM is that it happened to be in power on the three occasions when Trinidad and Tobago experienced boom conditions. And it is the PNM that has always happened to sink the economy into decline despite boom conditions.
 
Historical information in The Library of Congress Country Studies gives a clear picture of how PNM politics was a major factor in stunting the growth of Trinidad and Tobago.
 
In the 1950s T&T, in what was described as a ‘post-war’ boom, real GDP increased at an average rate of 8.5% in 1951 to 1961. For the latter five years of that period, economic growth averaged 10 percent annually.
 
It was in 1956 that Texaco consolidated oil production from the acreage of several other companies, increasing production from 60,000 barrels per day (bpd) to over 80,000 bpd.
 
Increased production poured huge revenues into the Government coffers. While many would attribute these revenues to the spur of development, it must be remembered that Port of Spain and Western Trinidad were the only areas that tangibly benefited from this particular boom.
 
Rural Trinidad and Tobago languished in neglect, and it was around that time that, despite higher revenues, the PNM bluntly refused to build schools for Hindu children.
 
It was the legendary politician, trade unionist and businessman, Bhadase Sagan-Maraj who, from his personal finances, built over 40 schools under the management of another organisation he created, the Sanatan Dharma Maha Sabha. Not content to deny Hindu children of an education, the then PNM Leader Eric Williams condemned the new schools as ‘cow-sheds’.
 
In addition to rural neglect, it was at this time that all historical accounts point to the PNM’s strangling of agriculture as an economic sector. Agriculture was mostly populated by the children and grandchildren of former indentured labourers. The sector at one time contributed 17% of GDP, which subsequently fell to just under 12%, and then fell further for each successive year of PNM Administration.
 
So in addition to boom revenues that were withheld by denying Hindu children an education, the PNM also discredited the economic contribution of agriculture, replacing it almost entirely with black gold.
 
As the 1960s advanced so too did the onset of industrial relations representation for workers, particularly in the dominant oil and sugar industries.
 
The early tendency of the then young PNM was towards a denial of workers’ rights. With unemployment accelerating to over 15%, triggering widespread industrial unrest, the conditions were being laid for an eruption against the PNM’s political arrogance and discrimination in the 1970 Black Power Movement.
 
The first boom experienced by a very young Trinidad and Tobago was thus squandered, mismanaged, and used indirectly to fuel unrest, instability and an industrial relations uprising.
 
By late 1973, world oil prices rose by over 400% and it was this onset of oil boom that is said by historians to have “rescued Trinidad and Tobago from the decaying economic and political trend of the late 1960s and early 1970s.”
 
This was the second boom for Trinidad and Tobago in less than two decades which saw annual growth rates of up to 9.6% from 1974 to 1979.
 
Government revenues from oil increased from 20 percent in the early 1970s to 41 percent by 1980, and by 1980, oil revenues account for 65% of Government revenue.
 
The by then permanent impairment of the agriculture sector, and the lopsided tilt towards energy reliance inspired Williams’s statement that “money was no problem.” Indeed, it was the oil sector that was paying for a vastly increased food import bill.
 
Coincidentally, Williams’ remarked drew a sardonic and apt response from late Prime Minister of Barbados, Sir Grantley Adams: ‘You know how to make the money, but we know how to spend it.’
 
This second boom is credited by some for the advent of the Point Lisas Industrial Estate, the Central Bank towers, the Mt Hope Medical Complex and the Hall of Justice.
 
Few, however, remember that all Government projects went over-budget by at least double, and a post-boom analysis by former Central Bank Governor, Dr Euric Bobb, revealed how obscene corruption had become, with tempered glass for the Central Bank towers being listed at more than twice the actual cost.
 
Rampant PNM corruption, arrogance, mismanagement and failure to apply true economic management principles caused the then Prime Minister of Jamaica, Michael Manley, to scoff that: “Oil wealth went through Trinidad and Tobago like a dose of salts.”
 
Some would remember that Keith Rowley reminded the nation of Manley’s statement in the 2009/2010 budget debate when he joined the loud chorus of condemnation of PNM corruption which, before his dismissal, he was part of, silent and complicit.
 
Who knew that this period of unbridled corruption, arrogance and mismanagement in the 1970s and early 1980s would replicate itself in the post-2000 PNM era?
 
It was in this period, 2001 to 2010 that approximately $400 billion was spent by the PNM, eventually creating a fiscal crater because of billions of dollars in cost-overruns, non-payments to contractors and the corrupt mismanagement of the energy sector which started a rapid decline in 2005.
 
Details of the PNM’s wanton incompetence have been comprehensively covered in a two part series which you can view at this link forPart 1 and this link for Part 2.
 
Imbert’s repeated distortions
 
Another factor of Moody’s position on downgrading Trinidad and Tobago must have been partly related to the repeated, deliberate distortions of their advice by Colm Imbert.
 
Since the 2016 budget, Imbert claimed over and over again that agencies such as Moody’s, the IMF and S&P supported the PNM’s accusations of the Persad-Bissessar Administration.
 
Detailed checks of the advice of each of these agencies proved that Imbert not only distorted their advice, but also used it as part of official Government documents, thereby bringing official publications into question.
 
By March of 2016, contrary to Imbert’s claims, the IMF issued a public statement saying, in no uncertain terms that “Trinidad and Tobago had enormous strengths…with substantial financial buffers, and is NOT in crisis.”
 
More interesting was the Moody’s statement of 4th March 2016 which said categorically: “Moody’s would downgrade Trinidad and Tobago’s Baa2 rating if its rating review were to conclude that the Government’s plans are unlikely to be adequate to sustain Trinidad and Tobago’s economic or government balance sheet strength.”
 
So while we expect the PNM to shamelessly put blame on the previous Government for the downgrade, readers are now well informed of the truth – the PNM’s inability to articulate an economic plan, its incompetence and its early mismanagement are the causes of the Moody’s downgrade.
 
Failure to collect revenues
 
Another factor which must have weighed heavily on Moody’s deliberations is Colm Imbert’s failure to collect 2015 revenues to appropriately settle the fiscal accounts for that period.
 
The Persad-Bissessar Administration programmed end of year revenue collections amounting to approximately $13 billion, including loan repayments from a State agency, collections from an IPO and tax revenues.
 
Imbert not only delayed collection, but also tried to deny that the revenues existed at all. He subsequently tried to hurriedly gloss over revenue collections from these very sources during the April 2016 Mid-Year Review of the budget.
 
This means that Imbert deliberately delayed revenue collection to ensure that fiscal 2015 would end in an artificial deficit, so that he can in turn use the $13 billion to offset the 2016 deficit, thereby creating a second consecutive artificial deficit, or possibly an artificial surplus.
 
Considering Moody’s clear statements that the PNM’s policy response “will not be as timely and effective as required” and its view of the PNM’s weak policy execution capacity” we see that Moody’s might not have been left with much choice.
 
If Moody’s could not trust the Rowley PNM’s words; official State publications; the integrity of revenue figures; the true accounting for the 2015 fiscal period, and the true estimates for 2016, there was no way they could confidently maintain the Trinidad and Tobago credit rating.
 
Artificial crisis
 
What these lead one to question is whether the Rowley PNM deliberately fired up panic and anxiety through an artificial crisis, out of knowing that they simply did not have the competence to manage economic challenges that up to September 2015, were advancing quite well.
 
The conditions for the budget were carefully fabricated, by Imbert’s insinuations of “difficulty for money”, and that “there were only two days’ worth of spending left” dutifully supported by Al Rawi’s dishonest claims that “the IMF was prevented from visiting T&T in 2015”, and Rowley’s inflammatory suggestion that “things are worse than they first thought”.
 
By the time of the 2016 budget, the Rowley PNM had already established that Trinidad and Tobago was “in crisis”. But the fact is that we were not in crisis, and were in fact in the midst of managing challenges brought on by price shocks in the global energy sector.
 
So if one were to try to walk in Moody’s shoes for just a moment, a logical question is: “If you claim there is a crisis when there isn’t; you fail to collect revenues and allowed an artificial deficit to develop for fiscal 2015, and your budget measures are based on total distortions of reality, how in the world can we expect the economy to return to stability and growth?”

That Trinidad and Tobago has been forced down a path of crisis management, based on an artificial crisis, makes one very fearful of the coming short term.
 
PNM is out of its depth
 
What we as citizens of Trinidad and Tobago now have to contend with are:
 
        i.The failures of the Rowley PNM to tell the truth;
      ii. The failure of the Rowley PNM to deliver a robust economic plan, and
    iii.  The failure of the Rowley PNM to properly manage the transition from one fiscal year to another.
 
The sum-total of these failures have placed us in the precarious position of having to rely on external analyses to understand the reality of our current status.
 
The Rowley PNM is a failed 20th century party that is trying without success to govern a 21st century society.
 
The Rowley PNM is out of its depth, severely lacking in skill and competence, and woefully incapable of managing our economic challenges.
 
So thanks to those who were ‘red and ready’ in 2015, all 1.3 million of us must now take the shafting ‘slow and steady’, until 2020, and possibly beyond, given the extensive repair work a new Government will have to undertake.

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