Home' Trinidad and Tobago Guardian : September 27th 2015 Contents RHONDA KRYSTAL RAMBALLY
Two economics lecturers are warning that
T&T could find itself heading to the Inter-
national Monetary Fund (IMF) within the
next few years. One said within two years;
the other said three to five years.
Dr Roger Hosein and Dr Daren Conrad, of
The University of the West Indies, St Augustine
campus, delivered presentations on T&T s
economic state last Wednesday. They offered
their suggestions, one of which was structural
reform of the economy.
The budget presentation is expected to be
read by Finance Minister Colm Imbert on
Hosein said, "I see this economy in for a
rough 60 months. I think we are in troubling
times and regardless of what anybody says,
I think the economy s fundamentals look very
troubling and worrying."
He was, however, optimistic that oil prices,
according to trends, would move up to around
US$50 to US$60 a barrel in 2016 from its cur-
rent US$45 a barrel.
But, Hosein said, if T&T continued to focus
on oil and gas and failed to diversify its econ-
omy, it could find itself heading to the IMF.
He said, "Unless we diversify the Trinidad
and Tobago economy, within three years time
to five years, we could be going to Washington
to meet some of those guys in the lovely suits
who sometimes come to visit T&T. They vis-
ited us for a period in 1986 to 1989. They re
called the IMF."
However, Conrad disagreed with his col-
league that oil prices would increase. He said
he did not see oil prices going beyond $50 per
As a result of the declining oil prices, T&T s
revenue shortfall was around $7.1 billion.
Conrad said the debt to GDP ratio was 59
per cent according to the Central Bank bulletin
of February. He said it was growing so fast
that it could soon reach 80 per cent or even
90 per cent.
"That is problematic."
Like Hosein, Conrad called on the Govern-
ment to leave the labour market alone and
"stop hiring people to do nothing."
They were speaking at a lecture hosted by
the Department of Economics and Trade
Development Unit, UWI, St Augustine.
The lecture was part of The UWI Research
Expo and was titled Key Macroeconomic Con-
siderations for the Next Five Years.
Conrad spoke on the topic, The Reality of
the Current State of the T&T Economy, where-
as Hosein spoke on Pre-Budget Macroeco-
Hosein said the new administration came
into office with the popular vote, which meant
that the population wanted change. He said
the five years ahead were "a golden oppor-
tunity" for the new Government to recalibrate
"Prime Minister Rowley has a golden chance,
coming in the aftermath of one government
that created a crisis between 2002 and 2008,
in terms of bad macroeconomic policies from
a transfer and subsidies perspective, and a
follow-up government that continued and
exacerbated that trend."
He said the budget had a moral and eco-
nomic responsibility to focus on structurally
reforming the economy.
Don't cut VAT
Touching on VAT, Hosein said the focus
right now should not be on VAT reduction
but on finding model ways to enhance gov-
ernment revenue intake, rather than focusing
on measures that could possibly compromise
the inflow of revenue.
Hosein offered this advice to Imbert, "Let
the tax machinery and the plans for improving
the tax machinery go ahead, but do not
approach a reduction of VAT this year until
we are satisfied that sufficient changes have
been made, so that when the VAT is in fact
cut, we know that the impact will not be a
fall in revenues."
He said, "I think this Government has cre-
ated the environment for change and came
into power because an environment of change
existed. It may be an appropriate time to con-
sider reinstating the property tax and finding
parallel means of enhancing non-oil revenues."
Hosein said the State should at some point
move to a substainability budget index where
expenditures were more closely aligned to
In this way, he said, it would reduce the
dependence and effect on the State and the
economy of fluctuating, volatile energy sector
He said the country needed to find mech-
anisms to increase foreign exchange earnings
since international reserves had the capacity
or the tendency to be eroded within the next
three to five years because of the inertia in
Hosein said the State also had a responsibility
to correct any imbalances in the foreign
exchange market and the dilemma faced by
the business community. If not addressed, he
said, "these can have implications for business
confidence in the country and the cost of
credit to producers in T&T."
Meanwhile, Conrad described the issue of
VAT reduction as "real trouble."
"When I hear talk about cutting VAT, I am
getting scared because that means our revenue
base is going to shrink even more and we
might have to go to the IMF within the next
two years, not three. And when the IMF comes,
we don t get off easy."
He said, "VAT is one of those things that
I was always happy about because everybody
used to talk about it when it was implemented,
but every subsequent government...nobody
touched it because they know if they touched
that then we have significant shortfalls in rev-
enue. So we are going to have to look at leaving
that in place."
He said lowering VAT could create added
Conrad said there was the need to review
property tax. But before doing so, the State
needs to ensure there are proper mechanisms
for collection. Conrad said that was the reason
why reform of the system was so critical.
He said, "We really need to look at property
tax. We need to reform it, but that should not
be undertaken until we find the proper mech-
anism for collection."
He called for diversification of the economy.
"We need to develop the non-energy sector.
It is a long process but you can start it. If we
don t diversify then all these fancy things...we
will have to give them up."
Economist predicts cuts
in social programmes
Conrad predicted there would be cuts in
social programmes. He also said when these
cuts were made, there would likely be some
"We don t have social development pro-
grammes, we have social welfare programmes.
You get money and you re just not accountable.
We have handouts in this country."
Sunday Guardian www.guardian.co.tt September 27, 2015
T&T could face IMF
if Govt fails to reform
• rationalise government expenditure;
• maintain the level of expenditure but
focus more on capital expenses;
• raise fiscal revenue inflows, perhaps by
re-introducing property tax.
• lack of diversification;
• size of public debt and persistent
" I think this Government has
created the environment
for change and came into
power because an
environment of change
existed. It may be an
appropriate time to
consider reinstating the
property tax and finding
parallel means of enhancing
" When I hear talk about
cutting VAT, I am getting
scared because that
means our revenue base
is going to shrink even
more and we might have
to go to the IMF within
the next two years, not
three. And when the IMF
comes, we don't get off
Links Archive September 26th 2015 September 28th 2015 Navigation Previous Page Next Page