The right direction for Trinidad and Tobago – Part 1

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Today the TTWhistleblower begins a series of policy proposals which amount to an alternative budget for 2018 and beyond. The Keith Rowley PNM Administration has repeatedly demonstrated a complete lack of vision, direction and strong public policy, something the TTWhistleblower has observed and conveyed to readers time and time again.

But rather than bemoan the Government’s failure to deliver on its promise of a plan, the TTWhistleblower has decided that it will put forward a strategic direction for Trinidad and Tobago, for the good of all people of this country.

In Part 1, we will explore the broad issues affecting Trinidad and Tobago and the course that must be set so that the right policies can drive growth, economic expansion, a better quality of life and sustainability. While these proposals are not the exact prescription, it is hoped that the input of readers can help to make this the manifesto of our country’s future.

Aimless Government, rudderless nation

The very clear indications of a total lack of leadership and visionary direction from the Keith Rowley/PNM Administration has become one of the most enduring characteristics of the current Government.

Trinidad and Tobago has become rudderless and more vulnerable to economic shocks than it has ever been, because the social and economic environment have no clear direction of where the people of this country should be in the coming years.

We know where we came from; some of us know where we are right now, but for the most part, no member of the present or past Governments can fully and clearly articulate where Trinidad and Tobago should be in the next medium to long term, and what we need to do to get there.

What this means is that we lack policy, leadership and competence in our political administration and Trinidad and Tobago in the short term will remain vulnerable to highs and lows of the global economy, always assuming the position of fighting challenges rather than getting ahead of the curve.

In the past two years in particular, budgets have been presented to the nation that appear to speak of a long term vision, but fall short of actually articulating what that vision should be.

The core of budget intentions have been to cut spending without any consideration for the ripple impact cuts will have on the business environment, young professionals building their lives and struggling families trying to make ends meet.

The primary objective has been to shore up revenue by taking more out of a shrinking whole to meet recurrent expenditure, and pinch pennies on capital expenditure.

The budget has become an ad-hoc financial management tool, but it should be part of a continuing strategy for sustainable development, economic expansion and social advancement.

Vision for Trinidad and Tobago

Trinidad and Tobago by 2030 must become the regional model for economic transformation and diversification. Our Financial Services, Manufacturing and Services sectors (which included professional services as well as Arts and Entertainment) must become the definitive leaders in the region and highly competitive on a hemispheric level.

We must be leaders not only in trade, but also in entrepreneurship and business innovation in terms of new products, combined services, and strengthen our hand in the business of knowledge in sectors where we have historically been leaders – both in harnessing institutional knowledge as well as sectoral knowledge in helping other nations develop their energy sectors.

The population must not only become far more productive, but also far more ‘value’ orientated; people must see themselves as having a real economic value to their nation which is realised by the work they do.

This means that the hours of work they do can make the difference between profit, loss or collapse. This in turn will create a more confident professional, much hungrier for success and achievement.

Infrastructurally, this country must take on the look, feel, sound and tone of a developed nation. Yes, it is a good ambition to aim to become a first world nation, but to ‘try’ is to wait for tomorrow; to believe we can do it, believe that we will be part of it, think it and work it, our country will develop at growth rates that should exceed 5% per annum.

This country must also have a strong legislative framework that provides robust regulation in the execution of public procurement and project development and management, as well as firm codes for a resourceful, fair and thriving private sector that has the confidence of the population and global economy.

Economic context and performance

FOREX Reserves

By the end of the term of the previous Government, Trinidad and Tobago boasted US$10.4 billion in foreign exchange reserves, and over 12 months of import cover.

The position in 2017 for foreign reserves was a deterioration to US$8,736.0 billion giving this country 9.6 months of import cover.

Sovereign Savings

The Heritage and Stabilisation Fund moved from US$3.6 billion in 2010 to US$5.7 billion in 2015, and today, through unprecedented drawdowns for the purposes of servicing recurrent spending, the fund has been tapped twice removing a total of over US$620M (TT$4.1 billion)

Debt to GDP

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.

The 2016 Review of the Economy stated: “The CSO’s 2014 and 2015 Nominal GDP has been revised from $174,756.9 million to $167,764.3 million in 2014 and from $165,286.1 million to $150,246.6 million in 2015. The 2016 Nominal GDP is now estimated by the CSO to be $145,910.7 million.”

(Nominal GDP refers to gross domestic product (GDP) valued at current market prices. GDP is the dollar value of all the finished goods and services produced in a specific period.)

The 2016 Review of the Economy stated: “Net Public Sector Debt Stock is anticipated to increase by 16.2 percent from $76,541.3 million in fiscal 2015 to $88,964.2 million by the end of the current fiscal year, based primarily on a US$1 billion bond raised in July 2016.”

“Based on revised Nominal GDP as provided by the CSO, Net Public Sector Debt as a percentage of GDP is estimated to rise from 50.9 percent in fiscal 2015 to 61.0 percent by the end of fiscal 2016.”

Debt to GDP rose to as high as 77.2%, according to the Central Bank Data Centre estimates for the period to December 2016.

In December of 2016, the Government floated another TT$500 million, six-year bond. In addition, from its recent Roadshow to the United States to raise funds, the Government accessed at least US$1 billion in borrowing.

Unemployment

The Finance Minister has been dismissive about the scale of unemployment saying: “The unemployment rate has only risen by just over half of a percent to 4.0 percent as at the end of 2016 from 3.4 percent a year earlier. The number of unemployed persons rose to 25,500 by the end of 2016 from 21,900 the year before, or by less than 4,000. This is a far cry from the wild figure of 25,000 job losses being bandied about by Members opposite.”

This is in stark contrast to 2015, when then Trade, Industry, Investment and Communication Minister at that time announced at the sod-turning ceremony for the Courts facility in Freeport that 56,000 new jobs and over 11,000 new businesses were created in the previous two years.

General decline

Beyond those, there has been a very serious general decline in the economy and in the social sphere where people are feeling a much more painful pinch that legislators are willing to admit. And some deliberate factors have created these conditions, including:

  • The completion of a Tarouba Stadium project at a cost of approximately $1.3 billion, which is the equivalent of 4% of the 2006 budget, the year the project was conceptualized;
  •  A dismal Public Sector Investment Programme (PSIP) execution and utilization of 61%, down from 95% by the previous Administration;
  •  Increased unemployment;
  •  A shrinking small business sector;
  •  Declines in energy production and revenues;
  •  An increase in food price inflation;
  •  A shrinking non-energy sector due to declines in output in Manufacturing and Services in particular;
  •  An all-out crisis in crime and national security;
  •  A growing crisis in healthcare;
  •  Threats of staff cuts in the Public Sector;
  •  Increasing instability in the Industrial Relations environment;
  •  Historic economic decline figures such as 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;
  •  An increasingly uncomfortable level of borrowing when calculated as debt to GDP;
  •  Downgrades to our sovereign credit rating;
  •  Loss of a major energy sector rig fabrication investment;
  •  The advent of new taxes and charges on a population whose cost of living is escalating while also carrying the burden of economic challenges;
  •  Two increases in the price of petrol and diesel;
  •  Unprecedented draw-downs on sovereign savings in the Heritage and Stabilisation Fund;
  •  Declines in Foreign Exchange Reserves;
  • Suspicion and threats of a devaluation from the Prime Minister:

“The Government could have opted to forgo the property tax and instead devalue the Trinidad and Tobago currency to TT$10 to US$1, remove subsidies on water and electricity rates and retrench public servants.”

It is this backdrop that summarizes the Trinidad and Tobago reality today making clear that a new policy direction must be pursued if we are to truly defend a future that people hope can still be achieved.

In Part 2 of this series the TTWhistleblower will examine how we should pursue economic recovery, manage the Energy Sector, reform the Public Service and approach expenditure audits and Public Sector Investment.

Read: Part 2, part 3, part 4 and part 5 of this serie.

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