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IDB advisor says smaller govt necessary
T&T’s private sector needs to play a bigger part in the economy while the Government needs to play a smaller role said Moises Schwartz, Regional Advisor for the Caribbean, Inter American Development Bank (IDB).
“We need a smaller government, we need a less obstructionist economy. However we are in a situation where it is difficult to move in that direction. We have to be consistent in policy making. If we agree that the government needs to be smaller and the economy needs to be less distorted then the policy needs to move in that direction even though it might take time,” he said.
Schwartz spoke yesterday on the opening day of the Conference on the Economy 2017, hosted by the Department of Economics at the University of the West Indies, St Augustine.
He said when a country is in a “comfortable” position as T&T had been in when energy prices were higher, it was difficult to change spending patterns and to cut subsidies.
“As long as you have a clear aim and you have policy moving in that direction, that prevents a piece meal approach, then it is the right way to go.”
Schwartz, who is Mexican said that the Mexican economy was at one time similar to T&T’s as it was heavily dependent on oil revenue but he said all that changed when they began opening the economy up to more investment and they allowed the private sector to play a bigger role.
He said “fiscal rules” are important in running an economy.
“Even a budget which is obvious nowadays is kind of a fiscal rule. You have commitments, you explain to sectors of society how you are going to allocate revenue and expenditure so it gives clarity. The good thing about fiscal rules is that it reduces the scope for fiscal mismanagement.”
Dr. Anthony Gonzales, a former head of the Department of International Relations at UWI who spoke on the panel also advocated a smaller role for government in the economy.
He said that while he is no “market fundamentalist” , the free market plays an important role in allocating resources in the economy.
He added that there are many inefficient state run enterprises and the Government must consider privatizing these to make the economy more efficient.