Rowley: Oil price shock no anansi story

The Prime Minister said Monday that the collapse of West Texas Intermediate (WTI) prices into negative territory was "not an anansi story."

Such an event was unheard of in his lifetime, Dr Rowley said in an address during the first meeting on the government's covid19 roadmap to recovery team. "This is real." Given the vulnerability of the energy industry to oil shocks and its uncertain future, he asked, "Where do we go and with what do we diversify?"

The key to rebuilding TT in a future post-covid19, he said, lies in the rebuilding of the productive sectors, creating employment, boosting manufacturing and trade in the services sector, improving revenue collection and reducing unsustainable expenditure. The solution is not spoon feeding the population and turning the country into a welfare state.

Rowley warned the team that in their effort to set goals to put the country back on track after covid19 is contained, to resist the temptation to turn the country into a welfare state, lest the country be led into bankruptcy and persistent poverty.

“Throwing billions of dollars into unproductive subsidies, increased social welfare, increased pensions and massive grants is an unsustainable approach which will further wreck the economy, and any chance we have of balancing the budget in the future.”

He said excessive handouts will destroy the progress that the country had made in saving and generating income over the past four years.

“Any suggestions that we should increase existing welfare, which already costs us almost $4 billion a year and we increase contributory pensions when the NIS is already in deficit and heading for insolvency, seriously limit the use of these options if the goal is not only survival but sustainability.

“Experience has shown, time and again that efforts to spur growth through massive increases in government spending could result in wasted resources, domestic inflationary pressures and unwanted expansion in imports without significant domestic output."

Rowley said, in the short term, the emphasis must be on recovery by first keeping the country afloat.

He suggested that TT try to pursue “quick wins for jumpstarting economic activity in key sectors,” while at the same time encouraging the public to keep in mind whatever health regulations which would be in place once the stay-at-home regulations are relaxed. He added that public, private and civil society must all unite in the attempt to rebuild the country.

“In terms of the private sector, the emphasis must be on removing constraints to private investment and initiatives that are integral to the achievement of the objectives on the road map.”

The Government sector must become a more agile partner, removing unnecessary bureaucracy and enhancing its execution capability to directly stimulate and enable development.

“It is to be expected that we may not all agree on everything but we would be much better off if together we examine all our possibilities,” Rowley said.