By Raffique Shah
September 17, 2016
Anyone who believes that this Government can continue to spend money to fix the country’s many problems the way successive governments have done, seemingly forever, is either a fool or someone who regards us as a nation of fools.
The harsh reality we face is when the good times rolled, most of us, from politicians and the business elites to plebes and philistines, intoxicated by the flow of petrodollars, felt we could and should spend, spend, spend, and let the Devil take tomorrow.
Well, the Devil has taken tomorrow, which is today, and now we must pay the Devil.
Let me first inject some raw data—Central Bank numbers—that might shock readers’ sensibilities. They span the period 1991-2015, 25 critical years in modern Trinidad and Tobago. By 1991, the first oil boom had come and gone. Up until 1970, oil sold for US$1.80 per barrel or less. Following the Arab-Israeli war in 1973, the price increased to US$11 (1974), peaked at US$36 in 1980, but fell to US$20 by 1991.
The next significant increase came in 2000 (US$28), climbing steadily afterwards, averaging US$90, and except for a brief tumble in 2008 (US$60), went as high as US$111 in 2011. From mid-2014, the most recent slide started, and since then the price has fluctuated between US$35 and US$45.
In the 25 years between 1991 and 2015, successive governments collected total revenues of approximately TT$650 billion, of which energy revenues (oil, gas, petrochemicals) comprised $304 billion. To disaggregate energy revenues, between 1991 and 2000 Government earned $24 billion, 2001-2005 $38 billion, 2006-2010 $117 billion and 2011-2015 $124 billion.
On the expenditure side, our governments spent $455 billion, of which $251 billion was expended between 2010 and 2015. Note well that in five years, the People’s Partnership government spent 55 per cent of total government expenditure over a 25-year period. It is this wanton wastage more than anything else—and there were other government sins—that is the root cause of our current economic woes.
Public sector wages and salaries rose from $3.2 billion in 2000 to $6.6 billion in 2010 to $9.4 billion in 2015. Transfers to State enterprises soared from $467 million in 2003 to $2.3 billion in 2007 and peaked at $4.1 billion in 2013.
We know that our governments set aside some US$11 billion (about TT$70 billion) in foreign reserves, and another US$5.5 billion (TT$35 billion) in the Heritage and Stabilisation Fund.
This cursory glance at the national balance sheet shows that for a small country with a mere 1.3 million people that has been richly endowed with resources, we have squandered our way to the brink of bankruptcy. I stress “we” because while the parties and persons who wielded power did the dirty deeds, large sections of the population cheered them on, whether it was the PNM or UNC or People’s Partnership in office.
The few voices that dared to speak out against the squandermania were reviled, spat upon, declared enemies of whichever party was in power. I—no economist, no intellectual—wondered aloud in my writings why government expenditure had to exceed $50 billion a year. Many of us prodded governments to save more, to pursue diversification of the economy, to wean people off dependence on handouts.
Most of all, we condemned corruption and nepotism, the enrichment of the few at the expense of the many, the obscene widening of the rich-poor gap. We called for the corrupt to be brought to justice, but like late calypsonian Penguin’s “Devil”, they and their benefactors “wine in we face”.
And so it has come to pass that the incumbent Government must convince the populace that the party is over, that unless we adjust our lifestyles, lower our expectations, do as the old people in my younger days advised—eat little, live longer—then we are doomed to a fate worse than death.
Cutting back budgetary expenditure from $60 billion to $50 billion will hurt, and disproportionately, the working and middle classes will bear the brunt of such adjustments. That should never be: sacrifices should be shared equitably, meaning those in the higher income brackets giving up more than the lower-paid.
A cardinal caveat I will add: no first-time homeowner who has serviced his mortgage must lose his property because of this crisis. The Government must find ways to rescue such persons—defer payments through State banks, something.
And no citizen must starve, least of all children, the aged and the infirm. Ensure that all staples, especially locally-produced foods, are available, and no one must suffer for lack of medications and other essential supplies.
A huge hurdle the Government faces is convincing trade unions and workers that in order to secure their jobs, they may have to surrender at least one three-year cycle of wage and salary increases.
I shall share my thoughts on this issue next week.