There is no doubt that the covid19 pandemic has shattered lives and livelihoods across the globe. It has been over a year of managing the crisis and the TT Government has initiated several financial and economic support measures to assist.
In April 2020, the Prime Minister commissioned a pandemic recovery team which put forward the Roadmap for TT Post-Covid19 Pandemic report.
The report focused on addressing and mitigating the hardship inflicted by pandemic, restarting the economy and laying the foundation for sustained economic recovery.
Agriculture, digitisation and digitalisation, stimulating economic activity through construction projects and enabling the energy sector and providing adequate financial support for the services, retail, distribution, manufacturing and other sectors – from micro businesses to larger ones – were admirable objectives. The ease of doing business, building institutional capacity and critical supporting infrastructure, among others were listed as practical and compelling actions to be undertaken.
On August 16, 2021, Finance Minister Colm Imbert said the Government spent over $5 billion in its response to all aspects related to the pandemic.
“For covid, we have crossed the $5 billion mark. We intend to provide as much relief as we can and in the next budget there would be an allocation for residual covid19 relief going forward.”
Where is TT today in achieving the recommendations laid out in the Roadmap to Recovery report? Have the recommendations been effective?
Committee member Vasant Bharath said the pandemic exposed a lot of pre-existing economic issues, mainly an over dependence on the energy sector and over reliance on food imports.
He told Business Day that while the Government handled the health issues of the pandemic fairly well, not enough was being done to promote economic growth.
“I have lamented both privately and publicly to the committee that not enough has been done. The Government in as much as it needed to save lives, which remains a priority, they also adopted a one-pronged approaching in dealing with the health situation but ignoring completely the economic situation,” Bharath said.
He explained that there were many recommendations in the Roadmap to Recovery report that pointed to economic growth which was ready to be executed.
He termed those projects as “low hanging fruits” that could have stimulated growth, which were primarily in the construction sector.
Bharath said, “There was $600 million worth of private 'shovel-ready projects' that were just awaiting regulatory approvals to get going. And from my information that has not happened.
“There were also 527 government projects valued at $3.2 billion that were identified also as being ready to go, not much has happened with that.”
Additionally, he said repayment of debts to contractors, VAT refunds, the lack of systems to assist with the ease of doing business, and assistance to small and medium enterprises were all areas that needed to be addressed urgently.
“One of the biggest problems facing the private sector right now is the ease of doing business and being ranked 105 in the world was not helping us.
“We need to have every competitive edge that we can get to be able to attract investors, not just foreign direct investments but local investments,” Bharath said.
He added that disappointing was the promised $500 million stimulus package for the agriculture sector which was poorly used and distributed.
“Without security tenure you cannot access government incentives and some of these tenures have been expired for over 20 years.
“The Government has talked about introducing technology in a big way to agriculture, they’ve not done anything significant with that as far as I know,” Bharath said.
With the budget set for October 4, the gradual resumption of economic activity and with increased oil prices, will TT be better equipped to handle the forthcoming financial year and looming implications of the pandemic?
It is well-known that covid19 has had a serious impact on the socioeconomic condition of large sections of the population.
Imports, agriculture and in particular rising food prices, increased prices in other sectors of the economy, shortages of foreign exchange, an overwhelmed health sector, unemployment and an unpredictable oil and gas sector remained concerns for the population.
Bharath, a former trade minister and business executive, said TT has a history of promising diversification and feared with the recent favourable price increases in the energy sector, it may be taken for granted again.
“Once there is any uptick of those prices suddenly everything is forgotten because it is so much easier, of course, to rake in the revenues from oil and gas.
“The world is moving away from fossil fuels even though the prices are temporarily high. When you look at what is taking place with shale gas, renewable energy and hydrocarbons, the reality is that fossil fuels are coming to the end of their natural life,” he said.
A budget, particularly in the era of a pandemic, Bharath urged, needed to address growth for the long term rather than just one year.
“A budget should not just tell of the revenue, expenditure, deficit and what is going to borrowed but it should tell where it intends to take the growth of the economy in the long term,” he said.
The International Monetary Fund (IMF) in its July 2021 Economic Outlook (WEO) forecast said the global economy was projected to grow six per cent in 2021 and 4.9 per cent in 2022.
On August 23, in a twitter update the IMF announced that around US$650 billion in special drawing rights (SDRs) was distributed to countries most affected by the pandemic.
In a twitter update, Imbert pointed out that TT benefitted from the equivalent of US$644 million of that allocation.
“TT's foreign reserves have just been boosted by the equivalent of US$644 million, as a result of a global distribution by the IMF of special drawing rights designed to help countries cope with the forex demands of covid19. Our net foreign reserves are now back over US$7 billion.”
Another committee member, economist and a former finance minister, Winston Dookeran said TT’s major issue remained finances in which fiscal deficits persisted and continued to widen and, the balance of payments deficits continued to be looming.
He explained, “This does not spell good news for the country’s economy. The recent inject of the IMF SDRs into the foreign reserves of the country is a step in the right direction and will help us in the short term to build some confidence on the issue of finance.
“This can only be done if the upcoming budget makes a fundamental turnaround and move from measures of survival to measures of growth.”
Dookeran added that some of the proposals in the Roadmap to Recovery report were along those lines but most of them lacked financing sources and, there were very little additional sources that the country could tap into.
“It is of my view that we should use the new window in terms of the SDRs to develop a much more ambitious programme of monetary and fiscal financing in order to move us from the economics of survival to the economics of growth.”