In Imbert’s ‘good times’ T&T, what to expect for the 2019 Budget

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The TTWhistleblower begins this series looking at the prospects for the 2019 budget due in September 2018.

Following Finance Minister Colm Imbert’s wild claims of economic turnaround during the mid-year review of the 2018 budget, many have been left confused as to where his information came from, and what analysis was applied to interpreting the true state of the Trinidad and Tobago economy.

To prepare ourselves, the TTWhistleblower will bring the facts, the current figures, the projections and the comments of experts both at home and abroad.

MID-YEAR RECAP

The mid-year review of the 2018 budget by Finance Minister Colm Imbert turned to be what was described by the TTWhistleblower as a minefield of deception.

According to Imbert, Trinidad and Tobago has turned a corner, decline and instability have been halted, growth is being forecast, the happy days are here again!

Imbert claimed that both the energy and non-energy sectors were in recovery, which the TTWhistleblower, and local experts, effectively dispelled in recent analyses of his statements.

In addition to readers, analysts and business associations were stunned by the boldness of the Finance Minister’s assertions, given that they would generally have the same economic information and data as Imbert.

PROJECTIONS FOR GROWTH

A rampant Colm Imbert told the House of Representatives: “After a long and discouraging period of economic decline, we are now witnessing a welcome upturn. Early estimates are indicative of a growth forecast of 2.0 percent in 2018 and 2.2 percent in 2019, rising to 2.5 percent in 2020.”

“And contrary to the negative commentary of uninformed spokespersons, who speak without having any facts, the turnaround is being driven by economic expansion in both the energy and non-energy sectors.”

However, the International Monetary Fund (IMF) is forecasting a 0.2 percent growth in Trinidad and Tobago’s economy this year.

This figure came in the IMF’s World Economic Outlook for 2018.

IMF figures pointed to a decline in real GDP of 2.6 percent 2017 and a dramatic decline of 6 percent in 2016.

Beyond 2018, the IMF has forecasted the same growth rate of 0.2 percent for 2019 and anticipates a 1.9 percent growth by 2023.

At the UN Economic Commission for Latin America and the Caribbean (ECLAC), projections are for 0.5 per cent growth in the T&T economy in 2018 based largely on increased energy sector production in both oil and gas.

According to news reports, Moody’s Investor Servicesdelivered their take on Trinidad and Tobago’s economic outlook on the same day Imbert delivered his mid-year review.

Moody’s gave Trinidad and Tobago a stable rating, but stated: “The stable outlook incorporates our expectation that capital revenue associated to asset sales would help reduce government borrowing requirements and lead to relatively stable government debt ratios around 64 percent of GDP. The stable outlook captures the presence of sizeable fiscal buffers that limit downside credit risks, as well as the government’s ample access to a relatively deep domestic financial market.”

Moody’s held the country’s Ba1 rating steady, although, according to its rating criteria, that still puts the country at the highest tier of junk bond (high-risk) investment status.

Standard & Poor’s, whose rating came out at the end of April, also held its rating steady but projected a negative outlook. S&P’s BBB+ rating is, however, according to their scale, in the mid to low range of investment grade.

One wonders which one of these agencies was Imbert’s “uniformed spokespersons’…

DOLLAR TERMS

While a great deal of heavy weather has been made about the actual figures regarding debt, revenue and other macro-economic factors, it is worthwhile knowing the actual figures according to the Central Bank’s macro-economic aggregates.

Given Imbert’s penchant for slinging mud and casting blame, it would also be useful to compare the figures as they stood at the time the PNM won the 2015 general election.

These figures are on a quarterly, year on year basis and provide a good measure for how the Rowley Administration has performed, compared to the previous Administration.

One of Imbert’s claims was that Trinidad and Tobago’s debt to GDP ratio has been reduced to 55%, down from 62%.

What he didn’t say was that the public debt in real terms was still climbing but in percentage terms against increasing revenue, things ‘technically’ looked better, masking the train wreck conditions of this country’s current debt position.

In 2015, GDP stood at $155.6 billion with a growth rate of 1.5 percent at current prices. In 2017, GDP was $149 billion with a growth rate of negative 2.3 percent.

By December 2015, the total Central Government debt outstanding stood at $78.6 billion.

By December 2017, the figure was $91.3 billion, or a figure that was 80 percent more than the 2018 budget!

Interestingly, given the punishing fiscal measures brought by the Keith Rowley Administration, tax revenue is higher, even as investment, private sector expansion, and non-energy activity are in precipitous decline.

In December 2015, the Central Government’s tax revenue position was $7.6 billion, but by December 2017, that figure climbed to $8.1 billion.

Taxes on goods and services stood at $2.3 billion in December 2015, and rose to $2.5 billion in December 2017.

Revenue from Value Added Tax in December 2015 was $1.8 billion, but by December 2017, the figure rose to approximately $2.1 billion.

Readers must keep in mind that these are quarterly, and not total fiscal year figures, which we will analyse later.

The Central Bank’s data has also shown that energy revenue, despite Imbert’s claims of hardship needing to be passed on to the population, has also been on the up.

Energy revenue in December 2015 was $1.4 billion, but in December 2017, stood at $2.2 billion.

Despite these figures, what is also interesting is when one examines where the Government has stifled funding.

While the URP and CEPEP continue to be healthily funded to preserve PNM vote banks, Central Bank data shows that, under the heading of transfers and subsidies, transfers to educational institutions in December 2015 stood at $446 million, but in December 2017, stood at $138 million.

Transfers to households in December 2015 stood at $2.9 billion, but by December 2017, stood at $1.9 billion.

In capital expenditure, which is critical to stimulating economic activity and restoring economic stability, and despite the figures revealing a story different from the Keith Rowley Administration’s sad tales of lack of money, there is also a contradictory finding.

Capital expenditure in December 2015 stood at $588 million, but in December 2017, stood at $117 million.

BUILDING A CAMPAIGN FUND?

The question that now exists is whether the population of Trinidad and Tobago has been punished at the expense of the Rowley Administration’s desire to shore up public finances for a big splash in its 2019 budget.

Have economic instability and hardship been for the purpose of a publicly funded re-election campaign for the Rowley PNM?

Moreover, a bigger question remains as to whether the people of Trinidad and Tobago will allow themselves to forget the hardships they endured?

Because despite increased revenues, increased taxes, increased unemployment, increased fuel prices and increased household hardships, the Minister of Finance and Prime Minister have routinely avoided the truth of whether:

·         That the small business sector is in recovery and regaining confidence in expanding;

·         That jobs are being created;

·         That Foreign Direct Investment is on the up;

·         That Medium and Large business are pursuing expansion programmes;

·         That capital expenditure is inspiring economic activity;

·         That the Construction Sector is recovering;

·         That more people are undertaking home expansions and building;

·         That people feel safe investing in saving and investment instruments;

·         That Foreign Exchange Reserves are recovering from a precipitous fall of three months of import cover in two years;

·         That business, investor and consumer confidence are increasing.

The refusal…or inability to face these questions, raise even more questions, and suspicions about the state of the economy, and the intentions of the Rowley Administration.

The TTWhistleblower will examine both in the next part of this series.

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