Election at time of economic transition

FOR THE FIRST time, the finance minister who presented the budget will not be the one who will present the mid-year review.

That task might fall to Vishnu Dhanpaul, if the PNM returns to power. Or another relatively new face could undertake it if the UNC assumes government.

In fact, it is not even certain the tradition of mid-year reviews under Colm Imbert will continue after April 28. These reviews tend to take place in the months of April, May and June.

What’s clear is that whoever wins the election will inherit an economy already in transition.

In the coming days, the state of our finances will become clearer when, on March 28, the Central Bank releases its latest monetary policy announcement.

The bank’s last update in December detailed GDP expansion of 1.5 per cent during the first quarter of 2024 and a resilient non-energy sector.

Unemployment was 4.8 per cent, compared with 5.1 per cent one quarter earlier.

Headline inflation was just 0.5 per cent, with food price inflation contained at 3.1 per cent.

The reduction in the reserve buoyed financial liquidity, resulting in excesses averaging $6.4 billion amid business loan acceleration.

All eyes will be on the next announcement to see if these trends continue.

Whoever comes to power will benefit from the gains of the tax amnesty measure, which concludes on March 31.

That measure was supposed to run for three months but, under Mr Imbert, ended up running for six. Already it has netted more than $2.3 billion, according to the Ministry of Finance.

However, any revenue that comes in over initial projections may not entirely offset softer-than-expected oil and gas prices, global turbulence because of Donald Trump’s chaotic administration and the effects, locally, of a state of emergency. The latter measure does not include a curfew, but it may have impacted tourism revenues and the final tally of the annual Carnival-related bump.

There are questions about pending Auditor General reports.

Mr Dhanpaul, in a statement of intent mere hours before the dissolution of Parliament, promised no austerity measures. But for whoever sits in the chair at the Twin Towers, Port of Spain, after the poll, avoiding cuts and controlling the cost of living may require leaning more heavily into deficit spending.

The uncertainties surrounding the billion-dollar Dragon gas deal with Venezuela supply a key dimension within the general election campaign.

By signalling an intention to keep the energy portfolio, Prime Minister Stuart Young has underlined the centrality of not only his role in that matter but also a key policy plank of the PNM’s long-term economic vision. That vision cannot be divorced from Dr Keith Rowley’s handover to Mr Young.

However, whether the next administration is PNM or UNC, a bold diversification blueprint will be required to help TT weather ongoing global storms.

Voters and businesses will be studying the campaign trail carefully in this regard in the build-up to April 28.