He raised the prospect of the Government having to borrow to fund its expenditure and thereby possibly incur strange looks from the International Monetary Fund (IMF). Manning said the Government had last year suffered a $6.9 billion revenue shortfall, while this year’s shortfall is about $7.8 billion.
Saying the country is now in a difficult period, he said any borrowing to fund these deficits would now take the country to a debt-to-GDP ratio of 56 percent.
Mr Manning has been clearly trying to put a brave face on this uncertain and uncomfortable situation.
Mr Manning tried to assure that Trinidad and Tobago is in a better position than countries such as St Vincent and the Grenadines, and St Kitts and Nevis, which he said respectively have a debt-to-GDP ratio of 67 percent and a massive 180 percent.
However, we have several concerns. Firstly, is this a fair comparison to make in comparing Trinidad and Tobago to our much smaller neighbours which each lack this country’s huge energy natural resources?
Secondly, while Mr Manning expects the country’s debt to one day be bailed out by the country’s energy revenues, even these have no guarantee, in a country that only too well knows the pain of boom-and-bust economic fluctuations.
While on one hand today’s oil-prices are relatively high in hovering at about US$70 per barrel, no one knows how sustainable this level is, especially as the US economy continues to struggle to climb out of recession.
Further, locally, Budget documents noted a clear lack in the exploration and development of new oil/gas wells.
He tried to be gallant in vowing not to balk in the face of IMF scrutiny, which he said the country had previously overcome during the global financial crisis.
We are not sure that such bravado by Mr Manning is the most appropriate reaction from a man who leads a Government which in recent years had been warned again and again about its expenditure.
Rather than displays of political machismo, coupled with what looks like sugar-coating of the facts, Mr Manning should really lay out the full details of TT’s economic reality, however harsh.
He must particularly assure that the Government is going to tighten up on its expenditure, so as to invest in productive capacity rather than on very costly projects such as the Tarouba Stadium and National Academy for the Performing Arts.
We note that Mr Manning’s talk of borrowing and IMF scrutiny comes just as the Government is about to impose on citizens the controversial Property Tax which begins next month. Just how bad is this country’s state of finances and public debt, and to what extent is this due to wanton spending by the Government? We would like to know.
At the Laventille meeting, in reply to a member of the public who had complained that the Government was spending too much, Mr Manning warned the man not to fall victim to “the propaganda.” All we can say, is that if Mr Manning is so concerned about “propaganda,” let him fully air the issue of the nation’s finances through a debate in a public forum such as Parliament, at the earliest opportunity.
Manning: T&T still in difficult situation
…but govt not ‘vooping’
By Gail Alexander
Published: 10 Feb 2010 – guardian.co.tt
This country is still in a difficult period, Prime Minister Patrick Manning said on Monday night. Addressing a PNM Laventille meeting, Manning gave a brief insight into the country’s financial situation. He said last year was a difficult year for T&T and the world due to falling oil and gas prices. He told Laventille residents that not only was their area affected by the situation, but all of T&T also. Manning said T&T was passing through a difficult period. “We’re still in it,” he said.
Manning said revenue fell to the extent that when the last budget was presented, a shortfall of $8,450 million was projected. Government closed the year with a deficit of $6,900 million, which, he said, was “still plenty money.” This year, he said, Government expects a deficit of $7,800 million, which, he also said, was “plenty of money.” He said Government had cut back on expenditure and established new priorities.
However, Manning assured Laventille that the area has not been forgotten. Last week, the Finance Ministry met on new priorities for development, including water and roads. He said projects may have to be funded by borrowings and that Government will closely monitor the extent. Manning outlined the status of other Caricom states where borrowings are concerned. This is measured on their debt to gross domestic product (GDP) ratio. The others islands’ statistics ranged from 67 per cent to 180 per cent.
Manning said T&T’s level was only 29 per cent. If T&T borrows for future projects, Manning said the figure may reach 56 per cent which, he said, was “quite tolerable” since T&T has natural resources with which to repay. Manning added, “The IMF (International Monetary Fund) will look at us closely, but they wouldn’t baulk…. there’s a plan for borrowing. Government understands what it is doing. I’ve been in Government for 38 years, I not ‘vooping’—if you watch me, is no daylight between bat and pad. You can’t see the wicket at all.”