Tancoo’s tenuous tenacity

AT THE VERY start of his June 18 spending review, Finance Minister Davendranath Tancoo stated, “On April 28, Trinidad and Tobago voted to reject the PNM and hit the reset button.” And yet, nothing in the rest of Mr Tancoo’s 40-minute presentation suggested a reset. The minister reaffirmed economic orthodoxy: deficit financing remains not only unavoidable but, it seems, ideal; budget supplementation remains on par with previous levels. It was as though the PNM, not the UNC, had authored the biggest details of the minister’s presentation.

There is an aura of tenacity attending Mr Tancoo’s decision not to rock the boat. Instead of slashing expenditure, his $3.1 billion supplementation is in line with previous levels of mid-year adjustments. Colm Imbert increased spending mid-stream by $2.3 billion in 2024, by $3.9 billion in 2023, by $3 billion in 2022 and by $3 billion in 2021. It is telling that this level was maintained. But it is also telling that it was not superseded. The new minister is saving his fire for the budget due in the fourth quarter.

That the $3.1 billion supplementation pushes the deficit to $9.6 billion is another mirror with the previous administration. It underscores the vital importance of government spending as a means not only to cover recurrent expenses but also to stimulate economic growth, develop infrastructure and boost development overall. It acknowledges, despite Mr Tancoo’s allegation of PNM “economic sabotage” as it relates to unspecified arrears, that deficits are a central tool in fiscal management.

Of relevance here is the fact that it is an open question whether the government’s oil and gas price projections of US$66 and US$5 per mmbtu will hold given the dramatic escalation of tensions in the Middle East, which could drive prices up. Conversely, the prospect of a global economic meltdown could damage vital trading interests, close markets and distribution routes and pave the way for even bigger threats, such as nuclear proliferation.

Mr Tancoo senses, correctly, that slashing the deficit solely by cutting spending amounts to making ordinary citizens pay for the failure of the state to diversify and bolster revenue streams. And so, he has walked a tightrope in which he maintains course, while promising “more comprehensive and impactful reforms” in the next budget. His spending review was, thus, both pessimistic and hopeful, apolitical and partisan, matter of fact and poetic.

But the solutions needed to aid the middle class, revamp business, and raise purchasing power remain outstanding. Mr Tancoo suggests they are coming down the road. He might be given a bligh for his mid-year review. But patience will wear thin if, come his first budget, he cannot deliver the reset voters wanted.