Tancoo’s tightrope bets on growth

THE FIRST UNC budget in ten years places faith in growth fuelled by continued investment in the public realm, the unlocking of capital, institutional strengthening and the preservation of the social net. Ambitious are Davendranath Tancoo’s fiscal measures: he foresees returns as early as next February at the Board of Inland Revenue once staffing is boosted there; he expects GDP growth to return by 2026; and the promise of a ten per cent pay hike for civil servants remains alive. By any standard, it’s a bold bet on the economy’s robustness.

The Minister of Finance was never going to undo a decade of economic orthodoxy with one budget. Energy is still a big part of the pie, though it continues its downward trend, at just 20 per cent of revenue. Absent was any sense of a bold blueprint for diversification; token references to agriculture, business labs at universities and renewable energy were, as usual, made. There is again a deficit, but a borrowing spree has not accompanied this as feared. The $3.89 billion shortfall is the lowest in years; the dire opposition forecast of $15 billion did not materialise. Still, there is room for the gap to grow given the optimistic oil and gas price assumptions of US$73.25 and US$4.25.

But Mr Tancoo, who served as a financial adviser in the first Kamla Persad-Bissessar administration and then as shadow minister, for the first time fully inhabited the mantle of the portfolio he holds. His anaphora-laden speech, which lasted three hours and 18 minutes, was a departure from the lugubrious presentations of budgets past in its directness and genuine gusto. There was no overlong harping on the evils of the PNM, even as he noted “deep structural imbalances that trap us in a low growth cycle” and sprinkled strategic jabs.

To study his formula for economic renewal is to discern a case of short-term give and take. Gas prices are down. Education spending is up. Cepep and URP cuts are mollified with a $475 million employment endowment, together with a $310 million fund. Tobago’s allocation is pushed to 6.3 per cent of spending. VAT will be removed from select items; some construction materials made more affordable.

On the other side of the ledger is a doubling of duties on cigars and alcohol. Increased NIS rates could lower pay. Private banks, enterprises and landlords might react to new levies, surcharges and rates applicable to them. All these measures, whose revenues might be tenuous, could be passed on to the market and workers. No mention was made of the Petrotrin refinery’s future. Ultimately, the budget reads like part of a bigger plan; the Cabinet is confidently shuffling decks as it buys time.