Private sector to gov't: don't borrow to spend

THE catastrophic effect of the coronavirus coupled with the price war between Russia and Saudi Arabia now causing a negative global impact is an indication for TT to start balancing its budget.

“We need to start spending on the basis of earnings. We need to spend what we have, rather than continue to borrow to spend,” president of the San Fernando Greater Chamber, Kiran Singh said.

He was responding to the statements by Finance Minister Colm Imbert that the two external factors had already resulted in an almost 50 per cent decline in revenue, amounting to $3.5 billion.

Singh said TT cannot continue to operate in its present environment of borrowing to spend.

Noting the country has been recording deficit budgets since 2008, Singh said it is still too early to understand the long term impact the declining price of oil and gas and covid19 could have on the economy and it is a matter that needs to be urgently addressed.

Imbert said measures are being formulated to treat with the revenue shortfall including the reduction of the US$60 a barrel price of oil to US$40.

“The Minister of Finance has his work cut out for him. I think we are facing a potential crisis in the TT economy. I think we need to have an early mid-term review of how we intend to deal with the challenges of the dramatic fall in the price of oil and the ongoing economic war between Saudi Arabia and Russia. That would cause many aspects of detriment to our economy.”

He suggested that it is not too late to continue along the path of diversification, focussing immediately on agriculture as the country may not be able to feed itself if these situations are prolonged.

“Our food import bill continues to be astronomical. We have to incentivise the agricultural sector to generate our own food. At one time we were self sufficient. We have a lot of local produce we can exploit and expand and save our foreign exchange at the same time.”

Both Singh and president of the Penal/Debe Chamber Rampersad Sieuraj expressed fears that if the trend continues government may face no other choice but to devalue the dollar.

Sieuraj said tongue in cheek, “at present, there is a devaluation. Let’s face it, there is a black market and when one is unable to source foreign exchange from the banks, there are outside sources you turn to. You may have to find yourself paying as much as $8.50 for US$1, so technically there is a devaluation.”

Both men said their members were already feeling the effect of doing business with the imposition of trade and travel restrictions as a result of covid19.