Wired868 Wired868 for smart sport news and opinion
The next general election at its latest is now one year away. It should be incumbent on the contesting parties to tell us how they will manage the economy so that the country will keep its head above water financially.
Cutting government expenditure is one way, but that immediately raises the touchy issue of the transfers and subsidies doled out by government. Our governments have consistently run away from reform of this form of management of the economy.
Their political roles were reversed at the time.
(Copyright Power102fm)
Neither the Government nor the Opposition is likely to level with us about expenditure cuts in the course of campaign 2025.
Before coming directly to the salaries and back pay recommended by the Salaries Review Commission (the SRC increases) for the country’s political leadership among others, it is useful to remind readers that a significant part of government expenditure is repayment of debts incurred to permit the government to spend, regardless of the entrenched annual budget deficits (a bland phrase for perilous management).
For 2024 to 2025, the projected deficit is TT$5.1 billion and it may turn out to be even more.
The foreign debt liability and its consequences were candidly described in an affidavit sworn by the Minister of Finance in June this year, in the course of the litigation concerning the establishment of the Trinidad and Tobago Revenue Authority (the Revenue Authority).
He stated that “the government cannot continue to sustain budget deficits by increasing government borrowings and government debt much longer.”
After describing the risk of a downgrade in the country’s international credit rating, the Minister’s testimony then sets out that the government had for over the past 15 years maintained and increased the level of its expenditure through borrowing, often from foreign lenders.
This has led to “debt service obligations for the government in excess of the equivalent of TT$1 billion per month, with a significant foreign component which must be met by outflows of foreign exchange”.
“This,” he stated, “has a negative impact on the country’s foreign exchange reserve balances and import cover.”
First and foremost, therefore, the fragile situation with government expenditure as described by its own Minister of Finance, is the reason why the government has grossly abused the power given by the people with its decision, announced by the Prime Minister on Thursday last, to accept the SRC increases for itself.
Put simply, the Government intends to grab the hefty SRC increases, even while it has the country going downhill financially as it borrows to meet recurrent expenditure and is obligated to pay back many of those debts with foreign exchange—for which the ordinary citizen is scrunting.
Photo: Office of the Parliament 2024
Interestingly, Adrian Leonce, MP for Laventille East and a junior (non-Cabinet) minister, had been reported as saying “he did not think it was going to happen” that the government would adopt the SRC’s report proposing salary increases and backpay. (See Trinidad Guardian 19 November 2024.)
Apparently, the factions eyeing future political leadership within the governing People’s National Movement (PNM) have united behind the Prime Minister to grab the SRC increases.
The Minister of Finance says that the new statutory Revenue Authority will be responsible for a dramatically more efficient collection of taxes and its operations will reduce the gap between actual tax revenue collected by the government and potential tax revenue estimated to be in excess of TT$5 billion.
Consequentially, the Government expects that the budget deficit will be reduced.
The woeful track record of statutory authorities may leave many skeptical that the mission of the Revenue Authority will be achieved. Meanwhile regarding the other potential source of salvation—the geopolitical risk of Venezuelan natural gas becoming available to boost our energy sector production and government revenues, which will reduce the deficit—may be poised to tilt against us.
The final investment decision, which we know has not yet been made, is intertwined with that risk, which arises out of the hostility of the United States to the regime in Venezuela.
(Copyright Alva Viarruel/ AFP 2016/ Wired868)
What will the Prime Minister learn differently when he meets decision makers from the United States in the course of his visit to Barbados next week, in connection with the subject of international financial support for less developed nations vulnerable to climate change known as “the Bridgetown initiative”?
Prime Minister Dr Keith Rowley gave a superficial description of our country’s state of narco-infiltrated crime to the media on Read more
My intended topic this week was a further examination of the rumblings over leadership succession within the People’s National Movement Read more
Prime Minister Dr Keith Rowley has put his political leadership of the People’s National Movement (PNM) into play, but he Read more
In August this year, I expressed concern that our country might go broke. A month before, commentators had been calling Read more
Another big pappy resigned last week but of course that was in foreign. As with lame duck US President Joe Read more
The autocratic nature of our politics is most memorably captured in the sordid 1962 episode featuring Dr Patrick Solomon, minister Read more
Martin G Daly SC is a prominent attorney-at-law. He is a former Independent Senator and past president of the Law Association of Trinidad and Tobago.
He is chairman of the Pat Bishop Foundation and a steelpan music enthusiast.
