Home' Trinidad and Tobago Guardian : September 12th 2013 Contents Budge---to move, push, nudge,
shift. This commentary was
written before the 2013/2014
budget announcement, so it
is not a pronouncement on
what is but rather a view of
what should be.
Despite numbers that may suggest small
amounts of economic growth over the past
year and projections of around two percent
growth in the coming year the reality in simple
English is that our economy is at a standstill
and has been so for quite some time.
There has been growth resulting from base
effects. This is where the circumstances from
a prior year have not recurred and so provides
a natural rebound to the economy. There may
also have been some actions that have con-
tributed positively to the economy. However,
by and large, we are moving to slowly and too
incoherently to achieve what I will term escape
velocity from our economic malaise.
I often use the analogy of a jumbo jet. When
it is flying at a high altitude, it will encounter
air turbulence, but it is moving sufficiently
fast and high enough that it can zip though
the obstacles without a problem.
However, when travelling at low altitude,
the same turbulence can cause the plane to
crash. This is the dangerous path that we have
been on for the past five years and continue
to be so for the foreseeable future. As we use
up our limited "fiscal space," are we setting
ourselves up for a bigger problem down the
road at the onset of the next and inevitable
This economy needs more than a budge or
push. Zero to two per cent growth in gross
domestic product, while better than negative,
is not where we need to be at this time, given
our aspirations. I have repeatedly suggested an
economy of our size and a country with our
aspirations should be targeting at a minimum
consistent economic growth of five per cent.
If we cannot achieve that in one year, surely
we should have a plan and timeline on offer
to achieve this and be held accountable to it.
Let me suggest that none of the plans that
have been put forward so far in T&T are likely
to take us there. The simple reason is that we
lack a clear-focused objective. Every successful
country, company or person first set out to do
one thing and do it better than anyone else.
Here in T&T, we have set out to be everything
from oil and gas exporters to fashion designers
and everything in between. These may all be
good sub objectives but it lacks an overarching
context and framework. The mantra of achiev-
ing "developed country status" is not and never
was the answer since this is an outcome rather
than an objective.
In other words, we have spent the better
part of 15 years chasing after the pot of gold
at the end of the rainbow. It does not exist.
A developed country happens when we get
there because the benchmark for development
changes all the time. If we had set out to achieve
something focused and tangible, we could have
been much better of at this stage.
When there is no single-minded focus,
everything is disjointed and ends up being sub
par. If we want sustainable economic prosperity,
then that is the first thing that has to change.
We have a number of pressing needs. The
issue of unacceptably high levels of crime is
into its second decade; corruption (white-collar
crime) is yet to be effectively addressed; our
health care system remains wanting; our trans-
port infrastructure inadequate to suit our aspi-
We are unable to produce enough sustainable
employment and, in the end, extend subsidies
and make-work programmes that only exac-
erbate the other issues raised. Attempting to
fix these issues in silos as is the prevailing pre-
scription will take us down a path to nowhere.
Consider this in the context of the just-pre-
sented 2013/14 budget.
We can achieve great things with a clear-
focused objective. Back in the 1960s, Singapore
had one resource of note, deep waters that
gave rise to a trading port. The country focused
on becoming a transport hub for South East
Asia and everything was built around that
A world-class port was built and a world-
class airport and a world-class internal transport
infrastructure were obvious parts of the mix.
Yet it was not just any airport: the objective
was to be a "sanctuary" for passengers. This
represents a clear sub objective that fit within
the overall theme of being a transport hub.
Clarity of purpose is the key point to note.
Many a politician have suggested to us that
T&T is ideally located to connect North and
South America. Now compare our ports. After
decades of trying, is it world class, is it properly
located, and is our cargo handling capability
sufficient? How about security, especially in
terms of the drug trade? Then, of course, there
is/was a diesel racket relating to the fuelling
What about our airport, think back to first
of all Project Pride and then the fiasco and
scandal associated with the building of the
airport itself. What about our immigration and
customs staff, how do you rate them? The
issues with our national airline are well doc-
Imagine we are told we can become a
north/south hub, but our national airline only
flies in one direction from T&T.
The first order in terms of a solution to our
economic problems in T&T is to increase the
level of aggregate demand in our on-shore
economy. The challenge is to formulate a clear-
focused objective towards achieving this. Aggre-
gate demand is defined as the total demand
for final goods and services in the economy
at a given time and price level.
In the case of Singapore, by becoming a
transport and trading hub, a number of services
was created that included logistics management,
financial services, and tourism. Even where
manufacturing was involved, it is due in part
to the quality of the infrastructure of being a
transport hub. In other words, the solution,
which eventually encompassed many sectors,
was born out of a single objective.
In T&T, we are trying to develop many sec-
tors at the same time, but the overarching
objective is missing resulting in a mismatch
of ideas and many lost opportunities. In the
past we have transferred revenues earned from
the off-shore economy (the petrochemical sec-
tor) to the on-shore economy by running what
was termed the "energy deficit" and utilising
subsidies to stimulate demand. This is both
artificial and unsustainable and we are feeling
the effect today.
At the end of the da, government spending
and consumption as a percentage of the overall
economy has to fall. By itself it would represent
a decrease in aggregate demand and without
any other game in town, we continue to see
ever expanding budgets and deficits to perpe-
As the Caribbean economies remain under
challenge and with gas prices around the world
being impacted by oversupply our exports have
not expanded at the required pace, and with
our penchant for imported goods, the net effect
is a further reduction in the level of aggregate
In the past few years, more it seems out of
desperation rather than any real hope, there
has been an appeal to the business sector to
increase their investment in capital goods. The
figure of $7 billion in investment spending
coming from the private sector has been a
recurring theme. Interest rates have been pushed
to record lows in order to accommodate this
It has not happened to the required size and
scale and it puts the economy into a cycle of
dependency on fiscal injections from the State.
Over the past three years, I have maintained
that a sustainable increase in consumer demand
is the key to increasing our levels of onshore
aggregate demand in our economy.
We have attempted to achieve this to some
extent through record low interest rates that
prompted consumption especially in motor
vehicles and also maintained the demand for
This by itself is insufficient as both result
in leakages via imports. Developing our on-
shore service sector is key, but as it stands,
our population is lacking both in terms of size
and overall affluence to sustain this sector.
A clear focused objective that targets an
increase in aggregate demand over the short-
and medium-term with a population size that
can sustain this level of demand is the require-
T&T s economy needs a proactive immi-
gration policy more than it needs a budget.
What we seem to get is a budget just to budge
it. Ian Narine is a broker registered with the
Securities and Exchange Commission.
BUSINESS GUARDIAN www.guardian.co.tt SEPTEMBER 2013 • WEEK TWO
Time to do more than 'budge it'
PHOTO: EDISON BOODOOSINGH
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