We need an efficient and uncorrupted TT

THE EDITOR: Fiscal decentralisation is currently a considerable issue of practical importance for developing economies and is advocated by the World Bank, as it breaks “the grip of central planning that has bedevilled efforts to improve economic performance” (Oates, 1998).

I noticed that fiscal decentralisation rose from the growing disenchantment with the public sector due to the expansion in central governments’ roles through stabilisation and income maintenance and redistribution, resulting in inefficiencies and corruption (Tanzi, 1995).

Therefore, I believe that many governments consider decentralising the public sector to stimulate a more efficient economy because, at a smaller level, each stakeholder will assume responsibility for their roles in smaller geographical locations, to aggregately address macroeconomic instability together with efficiency and equality issues.

For example, TT’s local government is responsible for addressing infrastructure, road works and drainage issues within communities, as well as tailored interventions providing development training and literacy programmes in Blanchisseuse and in other communities to address inequality, as evidenced by its 40.30 Gini index. Therefore, I agree with Vo, 2009 where some countries move towards decentralisation because it gives an opportunity for local fiscal policies “to provide a range of services to local communities.”

Fiscal decentralisation is needed to provide incentives for better macroeconomic performance and management, as the constraint being placed on local government allows a deeper appreciation of macro contexts when involved in macroeconomic output. Additionally, it can address TT’s corruption levels as the country has already suffered an unhealthy drop in its rank from 78 to 86 on Transparency International’s Corruption Perception Index from 2018 to 2020.

I believe biased political agendas contribute to TT’s disturbing corruption levels as political spending pressures distorts governments’ control over expenses through alignments with key interest groups, to satisfy their self-interests of being re-elected, rather than maximising the nation’s welfare. This problem is further exacerbated by the level of fiscal indiscipline that exists in the economy.

Throughout TT, and by extension the Caribbean, I observed that in times of increased income significant revenues are consumed in the economy, especially during “election season,” resulting in low savings, thereby incurring increased borrowings to finance unexpected shocks, eg covid19, thereby heightening the debt-to-GDP ratio to a worrisome 82.7 per cent as at fiscal 2020.

I believe that with the enforcement of proper fiscal discipline via fiscal rules and a greater implementation of fiscal decentralisation, the Government can reduce unwanted, excessive expenditures, fulfil mandates, and effectively respond to unexpected shocks by allocating expenditure to most efficient uses, and ultimately promote economic efficiency and tackle corruption challenges.

SHIVANI MAHASE

Sangre Grande