Economist: Talk to IMF about persistent fiscal deficit

WITH the persistent negative economic performance, economist Dr Roger Hosein has suggested it is time for the government to consider bringing in someone like the IMF for a conversation.

Expressing concern that since 2007 the country has been running at a persistent fiscal deficit, Hosein said, “What really bothers me is that even though we are using this persistent fiscal deficit, we have been unable to generate economic growth."

He spoke to the media after a Rotary ceremony for the district governor and induction ceremony at Freebird Restaurant, Pointe-a-Pierre over the weekend.

“Here we have an economy that is running a fiscal deficit and accumulating massive debt, yet still the economy is unable to come of out of the state of depression that it is persistently in.”

In 2016 the economic growth rate was -6.3 per cent, -2.3 per cent in 2017 and -0.2 in 2018 and while the size of the negative growth has seen some improvements, he observed it is still negative.

“We remain an economy that, regardless of all the policies we have tried, we are unable to come above zero.

“It means the State would have to take a reflection on the policy intervention they are using, and maybe it is time we now consider bringing in someone like the IMF to sit down and talk to us a bit more. Maybe the IMF, via an independent audit of the economy, through their surveillance in Article IV, can help to identify structural gaps that maybe we are missing.

“In closing the structural gaps, we can improve the TT economy for the wider benefit for all.

"As it stands, I cannot say I am happy with the economic performance being persistently negative. I think the last time I saw three successful negative growth numbers like that was in 1987/88/89, so this is taking us almost 30 years back and it has me deeply troubled.”

Hosein said if the State continues improving and maintaining fiscal discipline in terms of keeping expenditure down and augmenting that with some support from an economic standpoint, from the decision-makers, policymakers and the IMF, then an above-zero growth rate may be possible by mid-2020

Hosein also made a case for Venezuelan migrants to be added to the local labour force, which he said could bolster GDP by as much as $10 billion. He suggested a three-year programme in which the Venezuelans can be added to the labour force, particularly in the agricultural, service, export and manufacturing sectors.

“Our labour-force participation rate in 2018, using the existing data, is the worst it was since 1991, and therefore if we can bring this labour force participation rate up from about 58.7 per cent closer to 65 per cent, then we would have been able to increase the GDP in TT substantively.”

Hosein said instead of the universal worker programme where registered Venezuelans can get a permit to work in any sector they want, they should be given sectoral worker permits to work only in specified sectors

"This could be brought into a more formal structure with the scope for something of a diaspora institute, through which the diaspora can be attracted to invest in the E-Teck parks.

“You know how lovely it would be to the economic development process in TT and for the earning export revenues and foreign exchange if we were to get between US$200 million to US$1 billion from the diaspora, pumped in the TT economy?

“The time has come now where we need to look at all our resources, wherever (they) may exist, and bring all to bear to initiate and motivate change in our country.”