Mariano Browne: TT Economy is weak

FORMER minister in the ministry of finance Mariano Browne says this country’s economy is not fragile, but weak.

Commenting on Finance Minister Colm Imbert’s description of the economy as he delivered the mid-year review of the 2018 budget on Thursday in Parliament, Browne said he did not know what the term “fragile” meant in this regard.

“The minister talked about the good sign of economic turnaround on the road to economic recovery. The road always follows bends, twists and turns before you get to your destination, so you are always on the road to economic recovery. So the metaphor is well chosen,” said Browne.

“The expenditure profile is over $50 billion, but the revenue is less than $40 billion. Supposing you want to bridge the gap and assuming you bridge the gap by taxation, if you say there is a $10 billion difference and the tax rate is about 25 per cent, then they would need about $40 billion more to be able to do that.”

Browne said this meant looking at a gross income about $50 billion, assuming a corporate tax rate of 25 per cent. He said the economy was about $155 billion and at its highest point it was at $174 billion. The bottom line, he aid, was that the country was still a way from the break-even numbers it was looking for.

“There is still a long way to go. His comment, ‘fragile’ – the revenues are weak, they’re not fragile. We are mixing up financing measures with revenue. That is what the IMF (International Monetary Fund) says, what the Standards and Poor reports says. They were written a few weeks ago and they have all the information that the minister has, and the minister is saying Standards and Poor would have changed it if they did not get wrong numbers.

“That is not true. Standards and Poor’s report factors in and considers 30 per cent increase in gas production.

The real problem,, he said, was: “Standard and Poor’s comment was that we have not dealt with the balances, and there has been no institutional reform required to get the economy to go forward.

“I am very happy the country is experiencing better prices and a better output in terms of gas. Amen for that. But the country has to go to work, in the real sense of the term, if we want to improve productivity.” Browne said the non-energy sector declined from $3.2 billion to $1.7 billion, so it was down by 50 per cent.

He noted also: “The mere fact that we have an administration that has been so slow to address the economic difficulties – we will have to say politics is trumping economics all the way through.

“This the beginning of the election season. We have 28 months to go before general election, and in between you have a local election, and one or two by-elections. So politics is trumping economics all the way through until 2020,” Browne said.