Minister of Finance Colm Imbert expects to continue his expensive defence of the TT foreign exchange rate, citing an improvement in net reserves of US$7.5 billion. TT has used its petroleum sector rent to defend its exchange rate for 26 years, a practice that underwrites a stable economy, but creates a distortion of market forces.
But then, the Finance Minister also believes that after cutting expenditure by 20 per cent, the economy hasn't gone into crisis. Since the government is the country’s largest employer any variance in spending, particularly one that cuts expenditure by a fifth, will have a deleterious effect. Imbert’s optimism is found in the potential of 0.9 of a percent’s worth of economic improvement. It’s a prediction, and even in the realm of informed conjecture is hardly an indicator of success in managing the nation’s financial position to growth.
All the reporting agencies that monitor global economic performance, including Standards and Poor and the World Bank, are projecting flat performance from the local economy for the next two years based on our stubborn reliance on the faltering petroleum sector as the anchor of the TT economy.
The Finance Minister’s stabilised economy is in desperate need of a government inspired kickstart. Describing the first three and a half years of the PNM's management of the economy as steward of a really tight ship, Imbert promised that his government is "ready to start spending," particularly in what he called the productive sectors of infrastructure construction and VAT refunds. But the Finance Minister also boldly titled the 2017 and 2018 budget statements, Changing the Paradigm and The Turn-Around neither of which have happened in any tangible way. He has not announced what role diversification will play in his plans to loosen the treasury's purse strings. It would be difficult to be hopeful.
For all the lip service offered in support of environmentally-driven green economies and ocean-based blue economies, the bottom line of TT economic planning remains the petroleum sector. Now citizens are now being asked by their Prime Minister, apparently quite seriously, to pray for its revival.
UWI’s TT Campus Principal Brian Copeland has pledged to put innovation and entrepreneurship at the forefront of the university’s 2017-2022 strategic plan and to create an ecosystem that fosters bridges between academia and the private sector. But this government hasn’t proven to be keen on such measures, first ignoring its own Economic Advisory Board and eventually, in the face of frustrated resignations, dissolving it.
Diversification is a long-term strategy, but it’s one that should be strategically leveraged by access to our energy resources, not worshipful genuflections to the spent force of oil and a tradition of exploitation rents.