Home' Trinidad and Tobago Guardian : April 7th 2016 Contents APRIL 7 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG7
Former Finance Minister Win-
ston Dookeran says the current
administration will not be able
to avoid reducing the amount
of money allocated to subsi-
Dookeran, who served as Finance Minister
between 2010 and 2012 and as the Governor
of the Central Bank of T&T between 1997
and 2002, gave his perspective on the economy
in an interview on Monday.
He warned that the cuts must be done
meticulously and not in a haphazard manner.
He said the strategy in cutting should take
into account protection of the public finances.
"They (the government of the day) borrow
to the extent that it is possible to borrow and
they sell assets which they can sell. This is
how they would try and raise the funds to
meet the shortfall resulting from the price of
"That concept is limited in the sense that
protecting the public finances is important,
and it must be done. There is a cost to that.
Unless that is going to be put into a frame
to build or ignite action in growth and activity
it makes no sense. In other words, you re sit-
ting and just cutting everything."
Dookeran spoke to Business Guardian at
his Orange Grove, Trincity private office. His
comments come on the eve of T&T s mid-
year review, and follow signals from current
Minister of Finance, Colm Imbert, that there
would be cuts in T&T s fuel subsidies.
The need to balance the books of the coun-
try would prompt any person holding the
position of Minister of Finance to make a
decision to cut subsidies, Dookeran said.
"Subsidies are about 50 per cent of the
total expenditure. If you have to breakdown
the subsidy you can t, a lot of the subsidy
goes to non-performing enterprises."
While some state enterprises should be
positioned to do export activity, he said there
are some that are receiving a subsidy and are
not benefitting the economy.
As though offering a suggestion as to how
now-performing state enterprises should be
dealt with when it comes to receiving funding,
Dookeran said: "Make a distinction between
what goes to the people, and what goes to
the enterprises. Perhaps you need to straighten
up the enterprises and stop paying them.
There are many companies that do nothing
but they get subsidy, but you want to cut the
people s income.
"You have to rationalise the entire subsidy
programme which is over 45 per cent of the
expenditure. It is basic subsidy---GATE and
all these things---but there are also other
things. You have to rationalise the subsidy
programmes, remove the non-productive ele-
ments and leave the part of the programme
that would maintain the cost of living."
While not specifically referring to the deci-
sion by Prime Minister Dr Keith Rowley to
separate the Heritage and Stabilisation Fund
and to also withdraw from it, Dookeran said
before withdrawing from that account, he
would "be very cautious because T&T s credit
rating would be permanently affected.
"The credit rating determines the interest
rate at which the private sector has to borrow.
The credit rating, as it is dropping now, is
dependent upon how much buffers you have
in the system. The stabilisation fund is the
Special plan for energy
Concerning the energy sector he predicted
further decline is expected and a "special"
plan is needed.
"The productive sector of the economy is
contracting, the energy sector, that is the
most frightening thing that is happening to
us (in T&T). There are challenges with respect
to the gas-based industries."
Addressing the issue of gas shortage, he
said it is not too late to find a solution to that
problem. He suggested there should be "open,
transparent, proactive negotiations" and not
discussion between the energy companies
and the Government s energy agencies. This
would ensure that the problems companies
face are addressed and provide them with
continuity and then save the jobs.
"There is a general problem of gas supply
in the country-that depends on exploration
in T&T. The reason you can t expand more
in the energy sector is because the gas supply
is now constraint, apart from the price.
"You have to find a solution to provide gas
to the existing companies at prices that are
competitive. That is what they did wrong
with ArcelorMittal. They should not have
allowed that company to go. They should
have been provided with gas at competitive
prices. They needed to have negotiations."
When it comes to T&T s financial
resources there is no balance in place, Dook-
eran said. Adding that there is not enough
revenue to support expenditure.
Food processing is an area that T&T has
not done much work on and there is need
for improvement, he said. Entrepreneurship
is not happening because the framework is
not in place.
"Incentive programmes are not there, the
capitalisation of the enterprises are not
Capitalisation can be done through loans
or through equity, he said, by taking the
system in place and making it work.
Referring to shipbuilding and ship repair
as a form of diversifying T&T s economy,
he said there is need to look at the "bot-
tlenecks" which ship building and ship repair
companies face now.
"Bottlenecks could be lack of capital to
do what they have to do, the technology
may be deficient and non-competitive and
thirdly, they don t have foreign markets."
In its March 24, repo rate announcement
the Central Bank stated that the T&T cur-
rency depreciated three per cent. Asked
whether this is likely to worsen, he said: "It
will gradually lose value (in accordance with
Dookeran also called for the completion
of the Point Fortin Highway and said there
was need for the Government to make a
distinction between the management
demands of today as opposed to the struc-
tural requirements of tomorrow.
Overall, inflation is projected to rise given
the macro-economic factors, he said.
"Food inflation would increase because
of the VAT restructuring, as well as the for-
eign exchange cost, which is the bigger cost."
Cut subsidies, but leave
HSF, says Dookeran
PHOTO: SHIRLEY BAHADUR
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