Can the Rowley/Imbert partnership turn looming defeat into victory?

EPL Infrafred Sauna

“[…] we must get the new digital economy going. Although liquidity is overflowing at the Central Bank, private sector credit is sluggish; unemployment and underemployment are growing and results thus far from the government-sponsored stimulus loans packages to banks and credit unions have been disappointing. […]”

The following is the second part of Budget 2021 commentary submitted to Wired868 by Warren Thompson:

It is no secret that the 5-1 humiliation in Australia in 1975-6 forced the West Indies to find a winning formula. Unable to understand how, with such a wealth of talent available to them, they could perform so disastrously, Clive Lloyd and a nucleus of players put their heads together and did the requisite analysis.

Photo: Minister of Finance Colm Imbert (right) walks to Parliament.
(Copyright Office of the Parliament 2020)

That released the peerless four-pronged pace attack on an unsuspecting world!

Will the Covid-19 catastrophe help Trinidad and Tobago emerge economically stronger? PM Keith Rowley’s Roadmap to Recovery Committee will presumably have put their heads together and done the requisite analysis. Perhaps they have helped the government understand how an economy can suffer from both excess liquidity and declining real GDP.

Benefitting from the committee’s report, Minister of Finance Colm Imbert has come up with well thought out and comprehensive measures designed to stimulate and reset the economy. The incentives are there for all and sundry to access. But as the state continues to wean the population off the freeness of yesteryear, the minister is placing great faith in the private sector to step in to fill the void. The budget statement features multiple references to the issue of the ease of doing business as well as repeated pledges and assurances to improve it.

My suspicion is that investor/consumer confidence is low. If this is so, the minister is acutely aware that that will work against what he is seeking to achieve.

The findings of a research paper published in the Central Bulletin of July 2020 written by Melville and Persad lend credence to my suspicions. The authors developed a measure of economic uncertainty called the EPUtt index. That index rates Trinidad and Tobago’s economic uncertainty as at June 2020 as ‘very high’.

But we must get the new digital economy going. Although liquidity is overflowing at the Central Bank, private sector credit is sluggish; unemployment and underemployment are growing and results thus far from the government-sponsored stimulus loans packages to banks and credit unions have been disappointing.

Photo: The Eric Williams Financial Complex.

On the ground, meanwhile, there is disquiet.

If the results thus far have been disappointing, that is not true of the response. Businesses—SMEs in particular—have complained to and through their respective chambers of commerce that the banks are decidedly not helping the cause. Many applicants are either deemed not to qualify or, when the banks are willing to give some leeway, the terms on offer are too onerous.

Similarly, many landlords have not heeded the minister’s appeal for them to be lenient. Moral suasion simply has not quite worked.

I do not envy the finance minister. He finds himself having both to bat in his crease and at the same time force the pace. Fortunately, we have the example of Greenidge and Haynes who, when the situation demanded it, were often able to innovate and improvise without being reckless. Minister Imbert, too, has shown that he can be quite innovative, as shown with the NIF (the National Investment Fund), which was oversubscribed by a long way.

Similar innovation is now required to kick-start and move the digital economy along. Sitting and hoping for the private sector to come forward is unlikely to deliver the results the government seeks.

Photo: Minister of Trade and Industry Paula Gopee-Scoon (second from left).
(Copyright News.Gov.TT)

Thus, a think tank comprising finance experts, investors, entrepreneurs and technocrats can be put to work. Their mandate must be to produce, and when elicited submissions come forward, approve and fund a series of viable and bankable projects. Of course, their point of departure will be measures proposed by the finance minister to shape and develop the new digital economy. What would be the point of having viable bankable projects and no funds?

During the budget debate, trade minister, Paula Gopee-Scoon, made the government’s position on foreign exchange clear. Priority will be given to food, medicine and intermediate goods for manufacturing. By being more assertive where foreign exchange usage is concerned, and by reducing the size of the budget itself, the government can restrain the demand for foreign exchange, thus reducing the downward pressure on the exchange rate. That should keep the exchange rate stable at $6.78 to US$1.

There are some real benefits to be derived from this forex policy decision. First, it keeps the lid on inflation, which is less than or equal to one. Worth noting is that, whereas in 2019, headline inflation was 1.0% and core inflation was 1.1%, food inflation was 0.6%. But food inflation typically outstrips core inflation by some way.

Second, it would compel individuals and businesses to seek, find and/or develop local alternatives across all sectors. This is critical to engendering greater internal dynamics. It lays the foundation upon which we can build the digital economy.

In his closing remarks, the finance minister set a tight time-frame of two years to establish the digital economy, but the foundation has to be laid now. Things have to reach the ground in a way that they are not currently doing.

Photo: Foreign exchange availability continues to be a problem.

If we are going to consume more of what we produce and produce more of what we consume, then the road and sea networks are vital. I am here referring to the new Point Fortin Highway, the extension of the Churchill Roosevelt Highway to Manzanilla, the proposed Valencia to Toco highway, the sea bridge to Tobago and the water taxi service fully extended to its extremities in Chaguaramas and Pt Fortin. It is imperative that goods, services and people be able to move quickly and efficiently around the country.

In central Trinidad where I live, and in other parts of the country that I frequent, I see the need for a little box drain or a culvert, I see potholes to be fixed and roads to be patched, if not paved. The little bit of cacada that trickles down from such activity will put food on a few tables, pay a few months’ rent, ease some of the disquiet and allow people to start feeling good about themselves again.

How we vote, the calypsonian has said, is not how we party in the Queen’s Park Oval and the Brian Lara Academy. But what the Rowley/Imbert partnership must remember is this: when Lloyd’s pacers roared ‘Howzat?’ what the whole West Indian nation wanted to see was the umpire raise the same index finger that the politicians want to see at election time.

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About Warren Thompson

Warren Thompson is a Tobagonian by birth, a life-long student of cricket by preference and an economist by profession. His formal training came at QRC, The UWI and the University of Wales but the assets/skills of which this father of three girls is proudest come from the School of Hard Knocks.

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