FINANCE MINISTER Colm Imbert is out of wiggle room. Debt soars like an ominous vulture, foreign exchange is increasingly difficult to come by, and the Government continues to borrow to buy time.
An uncharacteristically sombre Imbert recently disclosed that Government must borrow more than was expected. Additionally, he announced more money will be withdrawn from the Heritage and Stabilisation Fund (HSF) to pay salaries in the public service as well as keep abreast of other fiscal commitments.
The Government has already borrowed $3 billion and siphoned $2 billion from the HSF to keep 90,000 public sector workers paid as well as stay on top of debt servicing. Other reports suggest the figure extracted from the fund could be as high as $15 billion over several years. A portion of these funds also goes towards keeping lumbering albatrosses like WASA, T&TEC, etc aloft. Fairly soon they'll be hung around our necks.
The embattled minister pinned most, if not all, of the blame for our economic troubles on the pandemic. He listed instances of shortfalls in anticipated income, including both tax revenues and receipts from oil and gas companies.
Assigning blame for our economic mess to covid19 is like a career thief hiding among opportunistic looters. It's an idea, though, warmly welcomed by the PNM peanut gallery. Supporters lead the chorus in the "It have economic problem everywhere" chant. The truth is more unforgiving. TT was on the ropes long before covid19 came on the scene.
The Finance Minister appears to be riding the wave of the pandemic. Imbert is hoping it will wash away several years of gross negligence and dereliction of duty to forestall our existential doom.
There's a twin objective here, though. The Government is firing a shot across the bow of the unions. Labour rabble-rousers are already agitating for salary negotiations. This eternal quest for more money is predicated not on performance but on the cost of living, passage of time, and what’s going on by Courts and Standards.
Watching the disaster unfold, several economists sounded alarm bells. Former deputy Central Bank governor Terrence Farrell raised the spectre of cutting jobs in the public service and increasing utility rates as must-do measures.
Dr Farrell isn't the only one calling for decisive manoeuvres. Other noted economists and former finance ministers weighed in on the grim outlook for TT's fortunes.
A common complaint from those in the know hinges on the minister's apparent disdain for opinions other than his own. Nothing's wrong with not having all the answers. It is a grave liability, however, when you shut out those who might have at least some of them.
Dr Farrell and his economics have been dismissed by the Government as outdated relics. There were obligatory boasts about nebulous “investments in our people” and infrastructural projects to take the country forward. This deflection is designed to appeal specifically to those who don't understand how the economy works – or in our case doesn't.
What the Government's response also confirms is something many of us already suspected: there is no actual plan to salvage the economy. The administration is still hopelessly anchored to a flawed expectation of a return to buoyant oil and gas revenues.
Using funds from the HSF to keep the country on an even keel isn't improper or immoral. Doing this with no concrete strategy for economic recovery – that's another matter altogether.
We aren't on the precipice, we've already fallen off it. This Government continues the same perverse deficit financing for which it mercilessly skewered the People's Partnership. The minister speaks about “billions” like it's bubbles in a bathtub. All the while, public debt as a percentage of GDP stands at a towering 80 per cent. The only discernible plan is to continue borrowing until we can "see clearly again," as Minister Imbert said we could in only a few short years ago.
There are few people who want public servants to lose their jobs, and no one wants to pay higher utility bills. These adjustments bear their own consequences. With more people on the breadline, consumption will fall further, imperiling a business sector already gasping for air. Higher utility rates will squeeze households currently buffeted by steadily rising food prices.
Economics, however, is all about trade-offs. TT must chew on which fate is worse in the long run – short to medium-term pain or an irretrievably damaged economy. Imbert's gamble appears to be pointing us inexorably in the direction of the latter.