UNC’s first budget faces test of delivery

Ryan Hamilton-Davis and Andrew Gioannetti

WHEN Finance Minister Davendranath Tancoo steps into Parliament on October 13 to deliver his first budget, he will do so with the weight of a manifesto, a mandate, and a mountain of expectations.

The five-month-old UNC administration, elected in a landslide in April, has spent the better part of its tenure laying the groundwork for what it calls a “people-first” transformation. Now, the numbers must speak.

The budget will not be a blank canvas. It arrives in the wake of a mid-year review that signalled a deficit, and in the shadow of a sobering assessment from S&P that warned of thinning fiscal buffers and limited room for error.

Prime Minister Kamla Persad-Bissessar has been candid about the country’s financial constraints.

She has also been clear about her priorities: children, low-income households, national security, and economic diversification. But ambition must now contend with arithmetic.

Independent Senator Dr Marlene Attzs, an economist and senior lecturer at UWI, believes the deficit could exceed $9 billion. That figure, she says, is not surprising given the collapse in energy revenues after the 2014 – 2016 oil price shock and the structural weaknesses that followed.

But she insists the real issue is not the size of the deficit – it’s what the government does with it.

“If we borrow, we must buy economic reform,” she said. “The gap should be put to good use: protect the most vulnerable, yes, but – crucially – fund structural adjustments that lower economy-wide costs and build non-energy earning power.”

Attzs wants to see capital spending directed toward export enablers like customs modernisation, digital services, agro-processing and creative industries. She also calls for a medium-term fiscal framework that shows how today’s deficit bridges to tomorrow’s growth.

Conrad Enill, former finance minister and diplomat, agrees that a modest deficit is almost unavoidable in a first-year budget. He considers a two to three per cent deficit of GDP manageable, provided it is tied to investment rather than consumption.

“The most successful administrations act immediately where the social need is urgent,” he said, “but anchor everything in a disciplined medium-term framework.”

The UNC’s manifesto, now adopted by Cabinet as the official policy framework, is ambitious.

It promises a ten per cent baseline wage increase for public servants, the creation of 50,000 jobs, the operationalisation of the Couva Children’s Hospital, the restart of the student laptop programme, and a reduction in the food import bill by $2 billion.

It also sets targets for $1 billion in agricultural exports and a five per cent contribution to GDP from agriculture.

There are pledges to revive state energy assets, modernise tax administration, and strengthen crime-fighting institutions.

Some of these promises are already in motion. The Couva Children’s Hospital, dormant for years, is expected to open by year-end following $10 million in upgrades. Wage negotiations have begun, with the Central Bank and BIGWU agreeing to a six per cent hike for 2021–2023. NIB workers have received retroactive adjustments, including a nine per cent increase. And the student laptop programme was restarted with the procurement of 18,000 devices for SEA students.

But the government’s early momentum has collided with systemic challenges.

Crime remains a dominant concern. The state of emergency (SoE), implemented in July and extended through October, has reportedly led to a more than 40 per cent drop in the murder rate. Yet Attzs warns that temporary dips won’t move the needle for investor confidence.

“Security is an economic variable,” she said. “When serious crime falls credibly and persistently, it serves as a boost to the economy. Risk premia ease, business hours stabilise, tourism and nightlife recover.”

She argues that security spending must be treated as investment, not routine allocation.

“We should frame security spending as an investment with KPIs, not a yearly transfer,” she said. “Funding should be explicitly tied to reforms that unlock desired results.”

Enill sees improved security as a catalyst for private investment. “When citizens and investors feel safe, costs decline, confidence rises, and private investment follows,” he said. “A good budget doesn’t just allocate money – it aligns trust with purpose.”

The UNC’s campaign was built on urgency: fix what’s broken, deliver what’s overdue.

But both economists caution against overpromising in a first budget.

“There is the risk of front-loading promises that outstrip cash flow,” Attzs said.

“Economically, overpromising can further widen the deficit, raise borrowing costs, and crowd out private credit.”

She offered blunt advice: “Under-promise, over-deliver.”

Enill, too, stressed the importance of managing expectations.

“Honesty is the best strategy,” he said.

“Managing expectations early creates room for steady delivery later.”

Both advocate for a disciplined, medium-term fiscal framework.

Attzs recommends publishing a roadmap for reducing deficit and debt, with funded priorities and transparent execution.

“Each new programme should have a cost, a financing source, and a start/finish date,” she said.

Energy remains a cornerstone of the economy, but its reliability is waning.

In August, the Ministry of Energy finalised negotiations with Exxon for seven ultra-deepwater blocks.

On October 8, the US Office of Foreign Assets Control granted TT a limited license to begin talks with Venezuela on the Dragon gas deal.

Yet both Attzs and Enill caution against banking on future energy revenues to fund current spending.

“Energy optimism must be tempered by fiscal realism,” Enill said. “Expenditure should align with confirmed, recurring revenues, while new energy income should be used to reduce debt, build reserves, or invest strategically.”

Attzs added, “Using tomorrow’s anticipated revenues to fund today’s recurrent bills invites a stop-go cycle that hurts everyone, especially the most vulnerable when energy prices fall.”

The UNC’s manifesto acknowledges this risk, placing heavy emphasis on diversification. It proposes investments in agro-processing zones, renewable energy, AI-driven innovation hubs, and creative industry development. Attzs believes the budget must move beyond rhetoric.

“Diversification becomes real when it moves from speech to a line item,” she said.

She recommends export accelerators, foreign exchange facilitation, and youth-first job pathways in sectors like digital services, specialty foods, and reef restoration. “Let’s fix the bottlenecks that suffocate business,” she said. “Customs digitalisation, time-bound approvals, and FX allocation rules that are boring, neutral, and visible.”

Enill agrees, noting that “specific, measurable projects” in renewable energy, agro-processing, and SME innovation would make diversification credible.

Given the constraints, what’s realistic in the first year?

Attzs suggests a smart sequence: protect the vulnerable with targeted transfers and clear administrative backlogs, while fast-tracking shovel-ready capital projects like port digitalisation, school repairs, and crime-fighting infrastructure.

She also urges the government to report on promised tax administration upgrades, especially following the repeal of the TT Revenue Authority.

“This would provide the business community with assurance that the Government is serious about improving operations at the BIR (Board of Inland Revenue),” she said.

Housing, she believes, can move quickly by completing near-finished units and clearing the backlog of applications.

Enill sees room for quick wins in pensions and small grants, but warns that housing and tax reform are multi-year undertakings.

“Diversification becomes credible when specific, measurable projects are funded,” he said.

Both stressed the importance of institutional credibility.

Attzs recommends publishing quarterly budget execution reports, procurement pipelines, arrears reports, and SOE performance dashboards.

Some manifesto items, if pushed too aggressively, could strain debt.

Attzs warns that large tax cuts implemented before widening the base and improving compliance “can blow a hole in revenues.”

“The test is simple,” she said. “Does the measure pay for itself through growth/compliance, or does it lock in higher debt service?”

Enill echoed this caution.

“Expenditure should align with confirmed, recurring revenues,” he said.

Attzs also cautions against booking near-term fiscal relief from energy or financing deals like Afreximbank.

“These are financing, not revenue,” she said. “They add capacity only if used for bankable projects with returns.”

Instead, she recommends showing them as part of the investment pipeline with realistic timing windows and a pathway to sustainable non-energy streams.

Every budget tells a story – not just of numbers, but of philosophy. This one must walk a tightrope: deliver relief, signal discipline, and build trust.

Attzs believes the budget should be organised around three principles: protect the vulnerable and stabilise safety; unblockgrowth through infrastructure and youth employment; and commit to the future with a credible fiscal framework and investable projects.

“That mix gives citizens relief and safety now, gives young people credible non-energy ladders into work, gives firms clarity and fewer bottlenecks, and gives markets confidence that the numbers add up – and will keep adding up,” she said. Enill agrees. “The people of TT don’t expect miracles,” he said. “They expect progress they can measure and believe in.”