Are you personally responsible for climate change?
The brutish and short answer is “yes.”
Economists are questioning just how this country is going to repay its multi-billion dollar debt in light of falling earnings of revenue and the debt to GDP which now stands at 62 per cent.
The borrowings have been deemed “reckless” with concerns that it could result in increased taxes and devaluation.
But speaking in Parliament last week during debate on the International Financial Organisation’s Corporation Andena de Fomento bill 2017 Finance Minister Colm Imbert questioned how Government would run the country without borrowing.
He said, “We had to run deficit as we try to contain public sector expenditure, all the talk is we must not borrow, but they know there is a financing gap, get past why we borrowing. If we don’t borrow what happens should we send home public servants, cut school feeding, close down state enterprises that is what they want?” he asked.
Imbert explained that this year government was trying to finance a capital development programme of TT$7 billion, “we project a deficit of TT$6 billion, the only way to finance that is by borrowing. I am constantly amazed when they ask why we borrowing obviously it is to finance the fiscal deficit.”
But he said, “We were not born yesterday we will not take policy advice from them, they say we must not borrow money so what to do send home ten thousand public servants that’s what they want us to do, but we not taking basket from them.”
Speaking to the T&T Guardian yesterday economist Valmiki Arjoon said, “Our revenues have declined rapidly over 2016, falling by over 17 per cent from the second quarter to the fourth quarter of 2016.”
Arjoon said he is concerned that debt levels “have risen by over TT$12.3 billion in the past year.”
Some of the expenditure, he said, had been reckless, “wages and salaries expenditure have increased by over two per cent even though productivity is dwindling.”
Arjoon cautioned that the spate of borrowings “drawing on the HSF, declining revenue generation, and misguided expenditure will not be looked upon favourably by Moody’s who will be evaluating our credit ratings next month.”
Sounding a cautionary note Arjoon said “irresponsible spending of this and any other debt will be harmful for our future economic prospects especially since sufficient revenues are not being generated to be able to service this debt in the future.”
If sound management is not applied Arjoon said “we may find our currency devaluing further,” and the country will “have to tap into national savings, taxes may increase further to earn revenue for debt repayment and economic development will be stymied, as the same funds which could have gone into stimulating investments locally would instead be used to repay the debt.”
As to the drawdown from the HSF he said, “It is quite probable that the US$251 million drawdown will be converted to TT$1.7 billion by the central bank, which will then add the US$251 million into the foreign reserves fund,” or alternatively he said the Central Bank “may inject some of the US into the financial system through the commercial banks to make US dollars available for businesses and citizens.”
He also has questioned what the drawdown will be used for saying the money should be primarily allocated to areas that will not only “stimulate revenue generation and food security but also create further sustainable jobs and boost exports.”
Indera Sagewan-Alli said the Government projections in the budget “did not indicate there would be this level of borrowing.” She said “Government revenue is not panning out in the way they envisaged and it seems they are intent on maintaining expenditure. If you intent on maintaining expenditure levels and revenues fall short, then you must find the money.”
While the Heritage and Stabilisation Fund is “a place they can draw down,” Sageewan-Alli reiterated she is on record as saying that it is an unsustainable and dangerous model to be using up our savings for recurrent expenditure when no revenue is being generated.”
She said government “must say what the money will be used for.” She said there had been some “vague statement that it would be used to finance the budget and a large part of the development fund, but eighteen months into the government’s term and you look at development spending there does not seem to be much happening.”
Sagewan-Alli said, “Government needs to come clean on what is its development agenda. The construction sector which is an indicator of development seems to be at an all-time standstill, persons in the construction industry saying their survival now is dependent on work from up the islands because the sector in Trinidad and Tobago is dead.”
She expressed concern that none of the development projects articulated in the last two budgets including “a highway network, the port in Toco and other different development projects have been rolled out.”
Sagewan-Alli is also concerned that the country continues to put all its eggs in one basket, oil and gas “we hear the Prime Minister talking about the deal with Shell building the pipeline for gas from Venezuela and we can breathe a sigh of relief, but the reality is until the agreement comes to fruition that is us hedging our future on the word of a country that does not have a reputation for delivering on commitments.”
She said while the energy sector continues to be important “it cannot generate jobs or the foreign exchange that we need to grow the economy.”
It is for this reason she said the country must get cracking on diversification. “Unless diversification becomes priorities one, two and three we creating a sinkhole that will get deeper and deeper. We don’t need the IMF to tell us we walking on dangerous ground and policy makers need to wake up,” she said.