IN THE FACE of continued public sector debt, the 2020 budget does nothing to allay concerns about the continued disinterest demonstrated by the Government in delivering a balanced budget. Public debt was already running as high as $17 billion when Minister of Finance Colm Imbert read the budget into Hansard last week and next year’s expenditures will, if the Finance Minister’s projections hold firm, add $5.28 billion to that deficit. TT is now in the disturbing position of borrowing to pay the interest on our debt.
National debt as a percentage of gross domestic product (GDP) – an accepted measure of the health of a nation’s economy – dropped to its lowest point since 1988 to 13.77 per cent in 2008. Of what use is the debt to GDP benchmark? It’s traditionally one of the indicators that investors use to consider the potential of a country for business development.
Add that to TT’s appalling ease of doing business ranking globally and it’s clear why external investment has stalled over the last five years. The steady drop in debt to 2008 has been matched by a steady rise since then. According to the Central Bank, total net government debt is now at 63.6 per cent of GDP, holding steady in the low 60s since March 2017.
Opposition politicians have been keen to illustrate this level of debt in personal terms. According to Carolyn Seepersad-Bachan, leader of the COP, current debt places a debt of $96,000 on every living citizen of TT today. If oil prices drop below US$60 per barrel and gas prices shrink under US$3 per MMBTU, the proposed deficit could soar even higher.
In the face of this, there is no substantial plan in place in the budget to support or bootstrap any kind of major diversification, an initiative that economists and the business sector have been calling for over the entire four years of Dr Rowley’s government. Every successive budget has been created with fingers crossed for improvements in the price of oil and gas and increased output from our fields while paying, at best, lip service to projects that half-heartedly address the diversification call.
In 2020, it’s the turn of agriculture, which has been given the smallest slice of the budget with an allocation of $0.7 billion, but the Ministry of Finance plans to remove taxes and duties on inputs and resources for both farmers and the processing of local goods. That’s not quite an incentive and development programme, but removing a hurdle is a start. Borrowing against hope isn’t a proper economic plan.
It’s astonishing that the Government continues to formulate its approach to governance based on such a fragile premise.