Imbert: Austerity won't solve covid19 economic challenges

FINANCE Minister Colm Imbert said on Tuesday that devaluation, retrenchment and recession will not help Trinidad and Tobago find its way out of the economic challenges posed by the covid19 pandemic.

Responding to a motion on the adjournment in the Senate by Independent Senator Amrita Deonarine, about the need for the publication of a three-five year economic sustainability plan, Imbert declared, "In the face of the economic wreckage of covid19, the programmes of the past such as devaluation, reduction of public-sector spending, retrenchment, removal of subsidies, wholescale removal of subsidies...those failed policies that were attempted by another government many years ago...are no longer relevant."

Imbert said in global learnings about the pandemic over the last three to four months, "There is a serious warning that the worst thing (for) a country, particularly a developing country such as ourselves, is to engage in an austerity programme." Should TT pursue that approach, he said, "We may very well get a double-dip recession."

He also said,""I want to stress that some of the ideas that are being promoted in the media, in the university and even in here, will simply cause our economy to go into a tailspin from which it will never recover."

Imbert reiterated that Government believes that "we must spend our way out of this recession." Against this background he said the Government has no problem publishing its current three-year macroeconomic framework and its economic recovery plan

He also said, "It is not correct that there is a continuous shortfall in fiscal revenues.

"There was a decline between fiscal 2016 and fiscal 2017, from $44.9 billion in fiscal 2016 to $36.2 billion in fiscal 2017. That was occasioned by a precipitous decline in oil prices in particular and also natural declines in oil and gas production."

But Imbert observed, "By fiscal 2018, the recovery had begun, with an increase in revenue from $36.2 billion in fiscal 2017 to $43.2 billion in fiscal 2018, rising again to $46.7 billion in fiscal 2019."

From fiscal 2020 and continuing into fiscal 2021, Imbert said, TT and the rest of the world are dealing with the covid19 pandemic.

"There are some commentators in TT who seem to want us to believe that it doesn't exist."

He added , "It is easy to be academic about these matters. But this is not the time for academics."

Referring to a September 2020 paper published by the UN Conference on Trade and Development (UNCTAD), Imbert said a "lost decade is not inevitable (if) we make the correct policy choices."

He argued, "Inclusive and sustained recovery will only happen if only governments in the advanced countries not only keep spending for as long as it takes for their own private sector to regain confidence to spend themselves, but also extend financial support to help developing countries tackle the underlying stresses and fractures holding back the recovery as a result of the pandemic."