West: TT spared harsh austerity measures

MINISTER in the Ministry of Finance Allyson West says this country was spared from harsh austerity measures.

She was speaking in the Senate last week during the debate on the Finance (Supplementary Appropriation) (Financial Year 2019) Bill, 2019

West said between 2010 and 2015, the government of TT benefited from supernormal revenues buoyed by high energy commodity prices but what they did with it was the more important revelation.

“Projects that bore little relevance to sustainable economic development prevailed. Even in the face of a rapid decline of oil and gas revenues that commenced in 2014 the extravagance continued. With little breathing room, we sequenced economic programs designed to arrest the fallout and begun a series of careful adjustments in expenditure to give this country the breathing room to maintain necessary operations, and avoid the need to enter an IMF programme, an achievement which should not be minimised.”

She continued: “We have spared the population, especially the most economically exposed among us, the harsh austerity programme that might have

compromised our social support systems. However, even with narrowing revenue streams we did not forget the vulnerable.”

She then proceeded to list a number of major fiscal initiatives including increasing the personal allowance, the food card and public assistance grant.

West said the economy remains resilient is exemplified in the following economic indicators including: public sector debt which had been rising in the context of consistent fiscal deficits has now been stabilised at around 62 per cent of GDP in 2018, well within standard international benchmarks; Heritage and Stabilisation Fund at US$6 billion; sound and stable macroeconomic conditions namely low and stable inflation and a stable exchange rate; and nine months import cover indicating that our official gross foreign reserves exceed typical benchmarks of reserve adequacy. Finance Minister Colm Imbert, however, previously reported there was eight months of import cover.

Independent Senator Amrita Deonarine in her contribution said the Government should pay attention to the stock of debt and at 52 per cent of GDP it is unsustainable. She said the country was in its ninth year of a fiscal deficit and more importantly the fourth consecutive year of a primary deficit.

“Even before we think about paying out our interest on our loans we are already in debt. So we are basically borrowing to repay our debts.”

She said the loan financing for housing and the Tobago House of Assembly will add to the stock of debt. She expressed concern the rate of external debt was growing in a situation with tight foreign exchange.

She said the food import bill was still very high and all these factors were placing increasing pressures on foreign exchange reserves.

She added, while the dollar was not being devalued, the foreign exchange market was creating pressures for a devaluation to take place.

Deonarine said restructuring public debt is a painful exercise but it can reduce public debt. She also said a reduction of wastage will reduce debt and the use of foreign exchange.