TT is living beyond its means, UWI business lecturer Dr Balraj Kistow has said, and at the current level of debt, each person in the country would have to pay $83,000 to clear it.
“We have been borrowing for the last ten years. And these loans won’t have to be paid back by us, but by our children and grandchildren,” Kistow said yesterday at the Association of Female Executives’ (AFETT) breakfast budget review.
The country has been running a deficit budget for ten years, he said, spending more money than it earns and financing it by borrowing.
“In the last ten years, we have earned about $430 billion, but we have spent nearly $100 billion more in that same period. That’s an average $5 billion deficit.” From 2010-2015, the deficit was $15 billion. In the last three years, it was $26 billion.“We’re spending the same amount of money as we did in 2013, but with challenges in revenue, we’re owing more,” he said.
He gave the government credit for cutting expenditure but noted that in 2013, the debt-to-gross-domestic-product ratio was about 30 per cent. Today, it’s nearly 61 per cent. And, he noted, most of the country’s expenditure goes towards transfers and subsidies, rather than capital investment.
“As the debt-to-GDP ratio increases, more of our money has to pay back debt and less for everything else. Then you run the risk of interest increasing, plus revenue challenges – our capacity to pay back debt over time could put us in a compromising position,” he said.
Kistow said the 2019 budget was “in large part the Finance Minister reshuffling the cards and redistributing what we had.
“We didn’t see any real plan to put the budget into a strategic long term plan in a meaningful and significant way.”
Going back to the budget’s theme, Turnaround, Kistow said it could be possible, but there needs to be an overall macroeconomic framework.
“People need to understand not everything is free. We have to figure out how to create value. We keep fighting each other to share a small piece of a small pie, when what we should be doing is trying to make a bigger pie,” he said.