The 2021 budget has been read, debate on it continues, but in the main it has received good reviews from the private sector and many members of the national community.
The T&T Guardian headline of October 6 read, “Not so Bad” and it encapsulated the general feeling that the Minister of Finance, Colm Imbert’s budget was, all in all, not a bad effort.
You see, Minister Imbert was faced with four basic challenges:
He had to present a budget in the face of great uncertainty caused by the COVID-19 pandemic in which forecasting is all but impossible.
He was also presenting a budget in which he has drastically falling revenue from his major source, the energy sector, rising debt to GDP and as a result limited fiscal space to operate in.
He also has high levels of non discretionary spending dominated by the large size of the public sector and the unsustainable levels of subsidies and transfers.
Imbert’s budget also came at a time when the economy was already fragile having had negative GDP growth for the last six years, again on the back of declining commodity prices.
The assessment that the minister’s budget was not so bad I feel is a fair one. He has projected a small reduction in expenditure with the proposed spending levels at just over $49 billion. This is at least $2 billion less than the 2020 estimates.
On the issue of revenue generation he has set an optimistic target of just over $41 billion therefore projecting a deficit of just over $8 billion. This is half of the size of the 2020 deficit, although to be fair, the $16 billion deficit in the last financial year was mainly as a result of the increased expenditure associated with the COVID-19 fight and plummeting of revenue from the global shut down.
The Minister’s budget has also begun to address some of the transfers and subsidies but not in a sufficiently systematic way and he is still trying a measured approach to the issue.
Imbert’s budget clearly points to increase tariffs for both electricity and water, two public utilities that are loosing money on an annual basis and which government has to reduce the transfers it gives to them.
We have since learnt that WASA has initiated the process to seek an increase in its tariff. He has also fully liberalise the fuels market, removing any risk of government having to once again subsidise fuel prices, should global oil prices rise.
But the Minister has not dealt with reforms to government pension inclusive on the need for a contributory pension plan for all workers, not dissimilar to what happens in the US system.
The country cannot afford the continued provision of pensions to workers and people who never worked in a formal job but received a grant of $3,500 a month.
The NIS system is in an increasingly difficult position and has to be addressed and we as a nation continue to pretend that we can drink champaign on mauby money.
We are setting up the people in their 30s and 40s with this lack of action on pension reform and will ask the children who are entering secondary school today, to bear a burden that they ought not to be tasked with.
Imbert has identified some of the matrices that he sees as unacceptable and must be addressed to make it easier to do business in T&T and, in doing so, it is the first step forward. He also gave a timeline of two years to get it right.
Imbert also promised to privatise the Port of Port-of-Spain, increase public/private sector partnerships in projects.
On the revenue side he promised to implement on a phased basis the property tax, I hope this is the start of some sanity returning to the country and I have already stated that the UNC’s position on this is unsustainable as is their continued refusal to support the revenue authority.
The voters have spoken and yes both the property tax and the revenue authority were campaign issues. So often the leader of the Opposition Kamla Persad-Bissessar told us Vox Populi, Vox Dei, she must accept that the voice of the people has been heard and with suitable amendments the Revenue Authority Bill must be passed.
This budget was also a change in approach and tone for the Minister of Finance. Often accused of not being prepared to listen to reason and of seeing the private sector as almost the enemy Imbert seems to have made some adjustments.
At a post-budget event hosted by the T&T Manufacturers Association (TTMA) Imbert was asked if he had taken a more embracing approach to the private sector.
He admitted that his stance had changed and acknowledged that the old ways were not needed at this time.
“Yes we just decide got try a different approach. Because this is not an easy situation we are in at all eh. The private sector keeps telling us if you give them incentives there will be investment and growth so let us see. I trying.” Imbert told journalists.
For certain the Minister’s tone in presenting the budget appeared to be less strident, even though the government had less than two months ago been re-elected to power.
It is encouraging that this apparent catharsis has occurred in Minister Imbert because what is needed more than ever in the country is an esprit de corps.
The country needs all sectors to work together including government, private sector, civil society, labour and of course the opposition.
This is a time when our collective future is challenged in a way not seen since independence, when attempts to open back the economy fully could lead to an increase in sickness and death and where shuttered global demand has made many of the country’s commodities at best marginally profitable.
Often it is style and communication which this government lacks and it is hoped that the purgation would extend to other MPs and the Parliament in general.
At the end of the day the success or failure of this budget will depend heavily on implementation. It will depend on whether the government and its apparatus have the capacity to implement the measures.
The call for an improvement in the ease of doing business will not be easily achieved. Privatising the port for example will not solve the issue of the tardiness of the customs and excise division. The plan to reduce the time for approval will not occur without the adoption of new ways of doing things including digitalisation.
So the Minister has made a good start but the proof of the pudding is in the eating and unless as a country we do what has to be done including legislative changes we will find ourselves in continued trouble.
The road ahead is difficult and we must all be vigilant, less we fall by the wayside.