This recession did not creep up on us like the proverbial thief in the night. It was long in the making.
In fact, from as far back as the global financial crisis of 2008-2009, when Clico collapsed and the price of oil plunged from a brief high of US$140 a barrel to US$30, informed, patriotic citizens were warning governments: to go easy on the wild spending, to set aside more savings in the Heritage and Stabilisation Fund, to wean the population off dependency on subsidies, and, most of all, to diversify the economy from its over-reliance on oil, gas and petrochemicals.
Those who dared to speak out, who tried to inject sobriety into a society that was immersed in the stupor of oil dollars, were deemed prophets of doom and gloom.
While predicting oil and gas prices is risky business, the advent and rapid development of shale oil and gas in the USA since 2000 was a portent of the changing face of global energy.
Between 2008 and 2012, the USA ceased being our biggest market for gas (LNG). Fortunately for us, other markets in South America, Europe and the Far East still paid well.
But in October 2014, the price of oil plunged from US$90 to US$45 a barrel and remained there. And based on Saudi Arabia’s stance at the OPEC meeting in Vienna last week, it may well go lower—US$30, US$20, who knows?—before it stabilises or rebounds.
In the face of such stark realities and grim prospects, the PP Government increased spending, scraped the bottom of the NGC barrel for every available dollar, sold off some of the family jewels (FCB and PPG-NGL shares), extracted everything it could from the Central Bank, and, on top of that, borrowed beyond the $70 billion debt ceiling it established in 2011.
Note well that this looting of the Treasury and mortgaging of the nation took place when oil prices averaged US$90.
The spending spree intensified: laptops for all secondary school students, including the boys and girls who specialise in bullying and fighting.
The GATE programme, which was intended to broaden the base of young academics and professionals who would help build the country, was opened wide to include many who were not receptive to tertiary education.
A billion-dollar children’s hospital was constructed even as the paediatric wards in existing institutions remained under-utilised and health facilities were left under-staffed, under-equipped and short of vital medications.
And rest assured that, based on precedence, many people who love freeness will expect the Prime Minister to don a Santa Claus suit and traipse around the country sharing trinkets to the natives!
All of this nonsense has brought us to this sorry pass where the Government has to raise the debt ceiling to $120 billion, nearly 70 percent of GDP, just to run the country.
Had the previous Government—and Mr Patrick Manning’s before that—exercised restraint in spending our money, we might have been able to better weather the perfect economic storm and the recession that Central Bank governor Jwala Rambarran grandiloquently declared last Friday.
People like me who lived through the first oil boom when crude prices surged from US$1.80 a barrel in 1970 to $36 in 1980, and heard Dr Eric Williams boast “money is no problem” know only too well that oil dollars could be a big problem.
By 1981, with prices receding to around $20, prime minister George Chambers called for the tightening of belts.
“Fete done! Back to wuk!” Chambers advised a people who had become the Sheiks of the Caribbean.
Nobody heeded ‘Georgie’. The fete continued. By 1987, the NAR Government had to cut allowances and freeze wages in the public sector, and Selby Wilson introduced VAT.
The middle and upper classes who had wallowed in some wealth ended up losing their new cars and abandoning houses they could no longer pay for.
It was bad. Thousands lost their jobs. Businesses collapsed, among them insurance and finance companies. People lost their shirts, almost literally.
We witnessed the fall of the oil-giant, and it was heart-rending.
Now, I don’t expect this recession to be as bad or to last as long at that one did—seven years. We have some savings and elbow room to manoeuvre in. And once we share the sacrifices we must make equitably (not equally), then we can pull through and hopefully emerge from it stronger, wiser and better positioned to face the future.
Prime minister Dr Keith Rowley has an opportunity to lead the nation in a time of crisis.
I am, however, very angry with those who led us down this trip to nowhere, this descent into hell. What hurts even more is that they will continue to live in luxury as the masses suffer the consequences.
How I wish they could be in jail instead.