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2018—a tipping point for T&T

Wednesday, December 6, 2017

2018 will be a tipping point year for T&T. If we can survive it economically and socially, a serious hurdle will have been crossed. If we cannot survive, the consequences are too dire to mention.

The current government has tried to find a very shaky middle road between the drastic recommendations of the International Monetary Fund (IMF) and local requirements. However, all signs are that 2018 will be a very, very difficult year.

Thousands of people have lost their jobs in 2017, either through non-renewed contracts or involuntary terminations. Many of these terminations went under the radar of the Ministry of Labour. Employers used a very silly part of the law, Retrenchment and Severance Benefits Act 32 of 1985, Chapter 88:13, Section 4(1) and Section 6, of not having to report terminations of less then five people within a 45-day period.

Government monetary policies have focused on managing our foreign exchange at a “reasonable” rate notwithstanding the IMF mandate to devalue to TT$9 -10 to the US$1.

There is already an unofficial devaluation of our currency, with rates on the black market going between TT$7-$10 per US$1. This is reflected in the current higher prices for imported items.

While official statistics show that inflation is averaging around one—two per cent, it seems that the purveyors of these figures do not shop where ordinary mortals do.

The taxation regime is regressive and unfair. The middle-class is taxed relentlessly, while the top income earners use every available means at their disposal to either avoid or evade taxes.

The public debt is close to TT$100 billion (actual $93.7 billion).

WASA, recently, put an ad in the media stating that the properties of delinquent customers can be sold. That is good. However, it begs the question: who is WASA’s greatest debtor? Is it not the government of T&T? So instead of locking off the water of non-delinquent customers on a Friday, Saturday and Sunday, should WASA not go after the properties of its truly delinquent customers? This is a state entity that receives a subsidy of over TT$2 billion annually, according to the Finance Minister, on pg 4, of the 2018 budget. Yet, it is one of the most inefficient state enterprises.

While all these things are happening, there is great concern over the government’s decision to appoint a cabinet sub-committee to buy a boat for the sea bridge. This is after the Board of the Port Authority had its recommendations for a boat denied by the Cabinet.

Energy prices are trending well above the 2018 budgeted estimates with West Texas Intermediate oil closing at US$57.84 (2018 budget US$52) and natural gas closing at US$3.09 (2018 budget US$2.75 per MMBtu) as at 1/12/2017.

The problem with these nice figures is that the production levels of oil and gas, at this time, are abysmally low. Thus, the windfall to the government may not be as much as expected.

The management of the economy will determine how well we will survive in 2018.

All of this is being watched by a very sinister Opposition, which is hoping that it will soon get its hands back on the Treasury.



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