Time to sacrifice for better future

THE EDITOR: There are many items taken out of context in the Minister of Finance’s statements in his mid-year budget review. The one which many are seeking to earn political points on, however, concerns “the turnaround of the economy.”

The minister’s statement that the economy is turning around is valid. It is a dynamic inference since the economy came to a virtual standstill when the oil price reached US$20 or thereabouts. Today the price is well over US$70 (Brent was $77 last week), so no one can deny what is a fact – that the huge benefits accruing from increased oil and gas prices in recent months would have caused a turnaround of economic fortunes.

It is also fair to say that with the huge public sector expenditure which needs continuous attention, the country still faces a huge deficit. And while this will be plugged this year by asset sales, it will continue until other measures

are incorporated. The inference suggests that the country has not turned around yet because of this deficit.

The Government was able to avoid excessive job losses when things were bad. As the situation improves (hopefully the oil price will rise further), more money flows and opportunities increase in the private sector, this will mean terminated people will be in a better position to help themselves.

There are two other related issues.

Firstly, the country has borrowed quite a lot to keep the ship from sinking while Petrotrin faces a huge commitment next year. As someone involved in business management and financial planning for decades, I believe it would serve best interests to consider the next two or three years as a consolidation period.

I would much prefer to see national savings take priority before capital structural improvements in order to stabilise and secure the national balance sheet.

If the Government can repay some of the money borrowed and save a reasonable sum from the oil price improvement to help Petrotrin face the lenders with a part of the repayment next year, I believe the country will earn respect from the international bodies and lenders. This will be a necessary sacrifice for better times.

Regarding the second issue, the minister indicated that 29.9 per cent of Angostura shares, valued $1.07 billion, will be transferred to Corporation Sole and from this one can easily calculate that Angostura (100 per cent) is worth approximately $3.4 billion. Based on 205 million issued units, the estimated value placed on the Angostura shares more or less amounts to $16.50 a unit and reasonably matches the recent stock market price of $15.75.

Angostura is owed almost $1 billion by Clico Financial. It is therefore necessary to enquire whether the Government is short-selling itself by buying Angostura shares at this flea-market price before having Clico pay Angostura first which will fatten the Angostura coffers.

Finally, the country must come to terms with the fact that sacrifice for a better future must become the first option and a national watchword regardless of election goals. Let’s all get serious about securing the future.

PS MORALLES
, Cascade