Home' Trinidad and Tobago Guardian : September 3rd 2015 Contents Former Finance Minister Wen-
dell Mottley says not enough
has been done to prepare the
population for what to expect
should there be further declines
in the price of oil and the
potential repercussions of reduced tax revenue
on the economy.
Last week Monday, China stock markets
declined resulting in subsequent fall of shares
in the London and New York Stock Exchanges.
The price of oil dipped slightly under US$40
per barrel but returned to US$40.
Speaking on Friday, at the Powerful Ladies
of T&T networking session held at the West-
moorings headquarters of the T&T Chamber
of Commerce, to discuss the economy, Mottley
said deep structural changes have taken place
that "have disadvantaged our terms of trade
and lost us our competitive advantage."
He added that it (the declining oil prices)
has led T&T to shortfalls of its crucial earnings
of US dollars. Recalling when he was Minister
of Finance between 1991 and 1995, Mottley
said T&T has been in a situation of falling oil
"The economy started to slip in the early
80s and never turned around until 1994. That
is how long these structural oil depressions
last---almost a decade," said Mottley, who
studied economics at Yale and Cambridge.
"Mottley said that what is going on in the
global energy markets today was a "structural
change and not just a little dip" and that these
structural changes were happening both in
terms of the supply and the demand for ener-
gy.Mottley said T&T has billions of dollars of
wealth and room to borrow, but he recalled
the decision by George Chambers, who was
Prime Minister between 1981 and 1986, to
delay the necessary adjustment to the sharp
decline in energy revenues and the link
between the delay and the International Mon-
etary Fund programme in the late 1980s.
"Just as Chambers met the shock, that he
was going to get bailed out with an increasing
price of oil within his time, if you call the
timing wrong ... you could be left short and
be into a nine-month programme again," the
He also warned about the dangers of with-
holding investment, saying that it can do
more harm to the economy.
"In the business community and in the
money-classes, there is a very cynical, wide-
spread view that irrespective of the electoral
outcome, that we are going to use up our sav-
ings and try to keep everything nice for every-
body and when we have consumed those sav-
ings and borrowed up to the hilt the economy
"Those money classes with that cynical
view are acting on that cynical view in pro-
tection of their own businesses and economic
interests. That action on their part is going
to terribly complicate economic management
come September 8."
He predicted that the next administration
holding the reins as government would have
tough "disciplined" choices to make and would
have to work hard.
Describing the disciplined choices as a test-
ing of economic resolve, he said: "That testing
is going to take place in an atmosphere where
I certainly have not seen much preparation
of the population for the real fact of where
we are. That is something which everyone
should be concerned about."
Also speaking at the networking event was
Mariano Brown, who served as minister in
the Ministry of Finance between 2007 and
2010. Browne said T&T s energy supplies have
declined, and its reserves are not increasing.
He said T&T is in "difficult" territory.
"We are faced with a challenge in the
energy sector as we speak: first of all there
were maintenance problems and now we have
invented a new term called curtailments. The
real English translation is shortages. The high-
est earning plant in T&T is Atlantic LNG,
which has four trains. It could have been six,
but we have no gas to operate 5 and 6."
Referring to China, Browne said it is going
through a contraction and the rate of growth
in China is between 5.0 and 7.0 per cent and
no longer the 10 per cent. He said that T&T
companies are in the same position as Brazilian
and Australian companies since those com-
panies are experiencing declined returns on
their respective stock exchanges. Browne said
local companies have not responded to those
Highly critical of the Central Bank of T&T
and its handling of the foreign exchange short-
ages, Browne said it is "surprising" that with
declining global markets and volatile oil prices
the exchange rate is hovering between US$6.34
"If there is greater demand than there is
supply, the price will change. Clearly, the
Central Bank is attempting to hold the
exchange rate. If you don t have confidence
in the system and you can t get foreign
exchange, that builds demand. Any business
requires foreign exchange because we are
importers. Even the things we export we have
to import. The reality is that our forex system
is in crisis."
Trends are showing that T&T should move
to trading with the South rather than the
North, he said. Browne suggested that another
aspect of what T&T should be looking at is
its IT infrastructure since, he said, the rest
of the world has moved on in terms of not
using paper to do business.
"We haven t done it in the public service
and our businesses are lagging as well in that
area. There are many business challenges
which we face as we move on, the least of
which is forex and forex which comes from
our energy sector.
"We have two difficulties declining energy
prices and declining outputs. It has to be
addressed by increasing exploration activity.
We are not in control of our exploration activ-
ity. The dividend from NGC ought not to have
been used as it was this year, to make good
the shortfall in the Government s revenue
"Neither ought we to have used the pro-
ceeds from the sale of Clico s Methanol Hold-
ings to make good the shortfall in our expen-
diture that is what has taken place."
Browne said T&T has increased its debt to
GDP ratio from 24 per cent in 2009/2010 to
just about 49 per cent now.
"In terms of our ability to repay our loans,
that is something we need to keep in focus
because as long as we have the shortfall we
are going to be in a difficult position. We can-
not maintain our expenditure profile at the
level we are at now. That requires fairly serious
decisions on how we move forward and it
requires fairly serious decisions about what
we will invest in."
Critical of the number of state enterprises,
he said, they were a drain on T&T s resources
if they were not operating at a profit.
Browne said: "If the State enterprises were
operating as private sector operations then
perhaps we could understand but they aren t
and they are another drain on our resources.
"Those are the type of issues that we face
as we move forward: those are the difficulties
that have not been addressed. Whoever is
successful at the polls would face a very dif-
ficult decision. The development programme
including the mass transit system has to be
paid somewhere and somehow."
Regarding diversification he said there is
never enough being done. He added that
comparing the economy now with 50 years
ago "you will find that agriculture was six
per cent when it used to be 19 per cent. You
will find that oil and gas which was at 30 is
a lot higher. You will find that services have
increased significantly but the structure of
the economy is still not geared towards export.
A small country has to export to survive."
Browne said neither the Government nor
the Opposition is addressing the "reality" of
the state of the economy "like they ought
to."He added that the country needs to look
at what needs to be done as well as "reality
of what is coming."
"The energy sector businesses understand
their own business; they know where they
are in the world. They are based in T&T and
they need responses in the T&T setting. The
responses that are required in T&T are no
gas and that requires more exploration."
Concerning the price of oil, he said: "The
price is likely to be more jagged, where before
we had a V when the market went down
and then it went up. We are likely to have
a bathtub ---the market has gone down and
is likely to stay down for a long time before
Finance Minister Larry Howai, delivering
the feature address on day one of the Tech-
nology and Innovation for the Digital Econ-
omy conference, stated that providing broad-
band services is one way of deepening T&T s
"The provision of high-speed broadband
services throughout T&T could be the single
most important goal on our national ICT
plan and certainly is a significant part of our
overall diversification drive."
He added that the Government recognised
that access to high-speed broadband services
is a significant driver of economic growth
and development "where the corridor of ben-
efits of job creation are increased standard
of living for all our citizens."
Howai said: "In pursuing the Government s
National ICT objective of developing an inno-
vation-driven knowledge economy ,the Min-
istry of Finance and the Economy engaged
the services of the World Bank group to advise
on how best to realise our ambitious vision
of universal broadband access using a Public
SEPTEMBER 3 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
COVER STORY | BG5
Mottley: Monied class cynical,
Browne: Forex system in crisis
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