Imbert: UNC will take Trinidad and Tobago into recession

MP for Diego Martin North East Colm Imbert says if the government continues on its current trend, it will send Trinidad and Tobago’s economy into recession by 2026, reversing the three years of economic growth from 2022-2024.

Giving his contribution during the Mid Year Review debate on June 18 at the House of Representatives, the former finance minister quoted from the International Monetary Fund’s June 2024 report.

“‘For the first time in a decade, Trinidad and Tobago is undergoing a gradual and sustained economic recovery. Real gross domestic product is estimated to have further expanded by 2.1 per cent in 2023, reflecting a strong performance of the non-energy sector. Inflation has declined sharply, mainly due to decelerating global food and imported goods prices.’”

Saying the current government’s proposed $9.67 billion deficit budget would reverse that growth trend, Imbert continued.

“We had three consecutive years of real economic growth, 2022, 2023, 2024, and I am certain that they are going to reverse that trend. If not in 2025, because this economy is still running on the momentum that we created, but by 2026, they're going to send the economy into recession. That's what's going to happen.”

He said the IMF’s report further stated, “‘This economic growth is projected to gain momentum in 2024 supported by the non-energy and energy sectors. Inflation is projected to remain low. The current account surplus will narrow, mainly due to a decline in energy prices and energy exports and is estimated at 5.7 per cent of GDP in 2024.

“International reserve coverage is expected to remain adequate at 7.5 months of prospective total imports. External public buffers in the Heritage and Stabilization Fund (the same fund they say we raided) are large at about 20 per cent of GDP. The fiscal position is projected to remain adequate, reaching a deficit of 2.7 per cent of GDP in 2024.’”

Imbert said government would not have taken its current course if it had taken into account the threats posed to TT’s economy as laid out by ratings agencies Standard and Poor’s (S&P) Global and Moody’s.

“S&P said in September 2024 that TT’s economy is heavily dependent on oil gas and petrochemicals. It therefore remains exposed to global price volatility in those sectors while facing declining production in the near term. Moody’s in its December 2024 report said that there are structural challenges based on our reliance on hydrocarbon revenue in the context of a mature oil production profile.”

Imbert criticised Minister of Finance Davendranath Tancoo for not saying how the economy had performed over the past six months since the budget was laid.

“We heard nothing from the minister, I wasn't surprised, in terms of what are the forecasts for oil production gas production and petrochemical production for the balance of the fiscal year.

"What has been the performance of those sectors for the first part of the fiscal year? What is the revenue that the country has received from the oil gas and petrochemical sectors for the first part of the fiscal year and what is the expected revenue for the second part of the fiscal year?”

Imbert called on the government to state how it intended to fund the deficit budget.

“Instead of engaging in vacuous empty platitudes, I hope somebody on that side will tell us how the government intends to finance this huge $9 billion deficit in 2025 in the context of scrapping the TT Revenue Authority (TTRA), in the context of scrapping property tax, in the context of paying huge increases to state sector workers that will amount to a bill of maybe $10 or $20 billion and in the context of their promise to reduce, cut and abolish property and corporation taxes.

Imbert: 'Crazy' expenditure will put TT in 'tailspin'

Imbert said, "The new government has decided to abandon potential sources of additional revenue, and the revenue outlook for TT going forward is very, very dim and dismal.

“They just seem to be on a crazy spree of reckless expenditure while having no source of funds.

"If they do what they say they are going to do, you're going to have a ballooning of public expenditure up to $70 billion a year and you're not going to collect more than $50 billion, and therefore they're going to be putting this country into a tailspin.

I am certain that when the rating agencies come again, we are certainly going to lose our investment grade rating. Certainly as night follows day, because they have no plan.”

He said he hoped the government did not engage in massive devaluation of the dollar.

Imbert said the sources of income proposed by the Prime Minister had been debunked while others being put in train by the PNM seemed to no longer be an option.

“The statements made by the Prime Minister about gas from Grenada, Guyana, Suriname and Barbados have already been debunked by the governments of those countries as nonsense. So there's no revenue to come from gas from those countries.

“There is no gas to come from Venezuela and they seem to be happy and gleeful about that. Members opposite seem to wish to engage in hostilities with Venezuela using deadly force. With the current situation with sanctions from the US and a less-than-pleasant relationship with Venezuela, the prospect of getting gas from Venezuela is nil.”

On the scrapping of the TTRA, Imbert asked how the government was going to get the Public Service Commission to fill positions at the Board of Inland Revenue (BIR) and the Customs Division, something he said it had failed to do over the last 20 years. The functions and staff of the BIR and Customs were meant to be absorbed into the now-abandoned TTRA.

“Consistently there have been huge vacancies in Inland Revenue and Customs and there is nothing that members opposite can do to address that in any meaningful or accelerated way.

"How are they going to get them to do it? It's just pie-in-the-sky, just empty words. So that we are going to find ourselves in a situation where using the traditional bureaucracy, we cannot balance the budget, we cannot fund the deficit, we will have to borrow and borrow and borrow.”

Responding to Tancoo’s criticism of the PNM’s borrowing over the last ten years, Imbert said when the party took over government in 2015, it met an over-inflated demand of $62 billion in expenditure, with a revenue of $36 billion. He said they had been advised to cut expenditure by $36 billion, but this would have been disastrous for the country, so the PNM government borrowed to keep economic momentum growing, as that was the only way to fund that level of deficit.

Imbert also took the government to task for forcing board members at Angostura to resign, causing the company to be fined.

“Angostura was without an audit committee which is a requirement of the law. When you're a listed company and an issuer of a security that is registered with the Securities and Exchange Commission, the law requires you to have at least three directors to form the audit committee.

“When this administration terrorised directors of Angostura so they resigned en masse, the company was left without an audit committee and was subject to, and still is subject to, a fine of $1 million for failing to have an audit committee.”

He said there were other state-owned enterprises which remained without boards.