Addressing our critical challenges

JAI LELADHARSINGH

THE CARIBBEAN Development Bank’s publication, titled “A Policy Blueprint for Caribbean Economies,” presented a vision for regional economic transformation. The effectiveness of these strategies depends on recognition of the importance of building resilience in all aspects of development. The foundations of the proposed strategic pillars are:

* Macroeconomic: promoting economic growth and diversification, building a strong and resilient financial sector, and practising prudent fiscal management.

* Productivity and competitiveness: supporting private-sector-led growth, opening new trade markets, promoting regional payments facilities (and the digitalisation of the economy more broadly), and building first-class and cost-saving infrastructure.

* Human Development: providing quality education for all and relevant workforce skills training; improving citizen security; and targeting conditional cash transfer programmes to the most vulnerable; linking the educational development policies to future economic development spheres.

* Environmental: improving building codes enforcement, insurance coverage, and financial and physical disaster and climate change preparedness.

The advent of the covid19 global pandemic did not assist the Caricom nations, particularly Trinidad and Tobago, in realising economic recovery and businesses were reeling under unprecedented lockdowns, severe loss of business and jobs. However, we are saddled with the realities of economic strategies that have failed to provide the levels of sustained growth necessary to build a competitive business ecosystem and a resilient and diversified economy.

Hence, TT and perhaps the wider Caribbean are saddled with the following challenges in the context of the above strategic pillars. Referencing the CDB’s publication, the existing challenges are:

Macroeconomic

Low economic growth; high debt, low savings and declining reserves; declining trade flows; poor sovereign debt ratings; financial sector vulnerabilities and stability risks.

Productivity and competitiveness

Low rankings in the World Bank Ease of Doing Business Index; large infrastructure gaps and a poorly designed road network; weak governance; inefficient transport links; increasing energy costs.

Human development

High poverty and unemployment; very high youth employment and poor education outcomes; high crime and citizen insecurity; limited data available for designing and measuring effective strategies.

Environmental

High disaster costs; low insurance payouts; insufficient building codes; poor climate change adaption tools.

According to the CDB economist, Justin Ram, the development challenges highlighted above are interlinked. For example, poor human development outcomes have significant impacts on the macroeconomic frameworks via government spending on blanket social programmes.

Low productivity and lack of competitive environments for the private sector to thrive have limited employment opportunities. Furthermore, micro, small and medium-sized enterprises (MSMEs) that would normally employ many workers struggle within a costly environment for doing business.

Low employment levels lead to lower tax revenues, thus reducing governments’ ability to meet obligations towards wages and salaries or social programmes, which are oversubscribed because of unemployment.

These are the stark realities that are staring at us for some time and actions are immediately needed to resolve these existential challenges, which are taking TT towards a declining future. They must begin with a conversation between government, private sector, trade unions, civil society and academia to collectively devise a strategic roadmap for the country.

Building resilience

The CDB suggests that in order to build resilience, there must be specific policy priorities outlined for the policymakers in partnership with relevant stakeholders to bring about long-term growth.

Macroeconomic

Prudent fiscal management; strong resilient financial sector; economic growth and diversification.

Productivity and competitiveness

Private sector-led growth; opening new trade markets; improving the ease of doing business; first class and cost-effective infrastructure.

Human development

Good quality education for all; workforce skills training based on employer’s needs; strategies geared towards significant crime reduction; sustainable programmes to support the poor and vulnerable.

Environmental preparedness

Robust environmental tools; climate change adaption tools; strict building code compliance; credit for recovery lending.

In many ways the policy direction for TT’s economy is a virtuous bottom-up approach to building resilience at the economy and societal levels. It needs to be supported by strong public policy that manages public finances so that savings become a priority. Government should also facilitate private sector-led growth by implementing doing business environment reforms and by ensuring that adequate infrastructure is in place.

At the social level there needs to be social investment, targeted at the most vulnerable so that all residents have opportunities to share the benefits of the new economy.

As the economy improves, households, government and society should be better prepared to deal with environmental or economic shocks that are certain to come in the future.

Jai Leladharsingh is the co-ordinator of the Confederation of Regional Business Chambers