ECONOMIST Marla Dukharan said she is expecting a $20 billion budget deficit for the 2020/2021 budget which will be presented by Finance Minister Colm Imbert on October 5.
She was responding to the announcement of the budget date in an e-mail response to Newsday. In April, Imbert said the 2020 budget deficit for the year was set to be an unprecedented $15.5 billion made up of the previously-calculated deficit of $5.3 billion plus $10.2 billion on expenditure/losses due to covid19.
Dukharan said while she expected an actual deficit of $20 billion for the upcoming budget, though she predicted the Finance Minister will not report at the accurate number "because he always includes one-off capital transactions which are financing items and not revenue." She said she also expected both a smaller budget for fiscal 2020/2021 and some adjustment to the exchange rate "if they do the right thing.
"I do hope they embark on some ease of doing business reforms. Also we need a medium to long term socio-economic development strategy. Have we ratified Vision 2030? Is it being executed?"
She added: "The Government has some political capital and time/runway before the next election to take the difficult measures now. I do hope they use it."
Economist Dr Indera Sagewan told Newsday she expected the revenue projection in the budget to be extremely low.
"All round there is an economic crisis. So the anticipation is that revenues from all major sources are going to contract significantly, from energy, non-energy, individual taxes, all government sources of revenue are going to contract."
She said she expected the level of expenditure to reflect this contraction. She pointed out in 2020 the fiscal deficit was $15.5 billion "and we survived."
"So there is an expectation that Government's budget for next year will reflect the reality of the economic climate which is significantly contracted."
Sagewan stressed Government will have no choice but to increase social sector support. She said there has to be saving of lives both from the health challenge of covid19 and the economic challenge as well.
She said if ,in the next fiscal year, covid19 comes under some degree of control it will be a year for fiscal stimulation. She added that, more than ever, the private sector will be constrained to be the engine of economic growth and therefore Government will have to play that role.
"If Government chooses to put that into expenditure we will therefore be seeing a very large fiscal deficit projected and will not be seeing an equivalent projection with respect to revenue. What we will be seeing is the mechanisms with which the Government will seek to meet the shortfall in revenue. And I anticipate that will be possibly through drawdowns from the Heritage and Stabilisation Fund (HSF), further efforts at sale of assets, and of course increasing the public debt.
She said if there is more borrowing or drawing down of the HSF ideally this needed to be done not just to artificially maintain current living standards but to be used in structural investment that would redound to sustainable economic growth and development.
She recalled the Prime Minister in his acceptance speech election night said the next two years will be extremely difficult years but Government has a plan to ensure the "clouds clear up thereafter." She predicted budget 2021/2022 would chart the course towards that recovery even as Government attempts through social programmes and expenditure to maintain the country.
Sagewan also listed areas she would like to hear the budget speak to: agriculture, as Government has spoken a lot about it and food security, and the Finance Minister during the election campaign committed $500 million stimulus to the sector which she expected to be over and above the normal allocation; tourism, which is seriously challenged; and the digital economy and how Government intended to move TT into an age of digital entrepreneurship.
She said on one hand being the Finance Minister was not a job to be envied due to the fall out of covid19, but it was also a job to be envied as it allowed a finance minister and a government with vision and innovative ideas to craft a way forward for TT even in challenging days.
"As bad as covid is there are opportunities for creative minds to seek it out. So really it is a governance opportunity that we have upon us."