1 October 2012

D-Day for Finance Minister…Planning Minister reminds that “growth cannot be achieved without stimulus. “

Austerity versus stimulus, politics versus economics.

Those are the dual balancing acts of the People’s Partnership Budget 2012/2013, titled the “People’s Budget”.

A lot of expectation has been placed on Finance Minister Larry Howai to produce a financial plan for Trinidad and Tobago to, once again, seek a path to economic recovery and growth.

To do that, he had already signalled a few weeks ago that the country should brace for some austerity measures in his maiden budget, which the Express understands was originally scheduled for September 21.

The date was pushed back following the Section 34 fiasco, which prompted a first-ever pre-budget rally by the ruling People’s Partnership and public announcements of budget goodies which are normally reserved for Budget Day.

Last year, former finance minister Winston Dookeran delivered the budget during the 90-day State of Emergency.

Planning Minister Dr Bhoe Tewarie said the Government will offer a mixed bag of stimulus and austerity measures.

In an interview with the Express last Friday, Tewarie explained that there is need for more focused spending, but growth cannot be achieved without stimulus.

In this regard, the Government will maintain a $7.6 billion Public Sector Investment Programme (PSIP) in today’s budget.

Last year, $7.614 billion was spent on the PSIP. From that sum, eight per cent was spent on law and order projects; seven per cent on agriculture; nine per cent on health and hospitals; 35 per cent on economic growth and job creation; 36 per cent on poverty reduction and human capital; and six per cent on facilitation.

Contextually, Tewarie said that 95 per cent of projects identified by the PSIP were achieved and, by his estimation, the Government had done better at implementation during the fiscal year.

“We are now going to focus on more community-centred projects which have more impact and also on job creation,” he said.

He noted that while allocations to ministries in today’s budget may not be as generous, they are more focused.

Unlike past budgets, there are already several known facts:

1. That from November 15, there will be no Value Added Tax (VAT) on food;

2. The deficit will be around $7.5 billion;

3. In dealing with the management of CLICO, Howai will announce that NEL 2, now known as the CLICO Investment Trust, will come into being later this month;

4. More construction projects will be rolled out to kick-start a construction boom;

5. Government’s renewed thrust in the International Financial Centre;

6. That the National Security Ministry budget will be bigger to deal with the crime scourge;

7. That $4 billion has been added to Government’s recurrent expenditure after negotiations with the National Trade Union Centre (Natuc) for a nine per cent wage increase for some 150,000-plus employees for the period 2008-2011. The Government’s wage bill will move from $7.3 billion to close to $12 billion annually, with still outstanding negotiations to be concluded;

8. The PSIP will be $7.6 billion.

At Saturday’s Pre-Budget Rally at Mid Centre Mall, Chaguanas, Howai spoke about the financial state of Trinidad and Tobago—that the country’s inflation rate had steadily declined over the year; that the country’s foreign exchange reserves stood at US$9.8 billion; and that funds in the Heritage and Stabilisation Fund (HSF) stood at US$4.5 billion.

Those figures are comparative to last year’s data in the 2011/2012 Budget, when Dookeran had observed that the country’s financial buffers were in its US$9.7 billion reserves and US$4.1 billion in the HSF.

There remain several outstanding initiatives from Dookeran’s tenure which Howai may revive or dismiss—a National Infrastructure Bank; the Regional Stock Exchange; the public listing of some state entities on the local stock market; a national wind resource assessment programme; a solar manufacturing complex.

Howai has already stated that GATE (Government Assistance for Tuition Expenses), which accounts for some $625 million, will continue but be better managed.

While he did not have official data, Howai said the economy is expected to record one per cent growth in 2012.


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