‘Abracadabra?’

By Dr Marlene Attzs
Economist. Email: marlene.attzs@gmail.com

Budget 2022 read on October 4, 2021, was both one of the shortest and simultaneously the longest in our national budget history— short in terms of the budget’s lack of details to get the national economy out of the rut it continues to face, yet ‘long’—both to the time it took to be delivered, almost four hours, and the number of pages, approximately 167.

To be fair, under normal circumstances, the details of each Ministry’s plans and programmes for the upcoming year would be unveiled in the debate that normally follows the reading of the fiscal package, the Budget.

The year 2021 continues to be unusual since there was no debate this year owing to political shenanigans. So once again, we the people of Trinidad and Tobago received the ‘short end of the stick’ as we were deprived of details on the likely plans that would impact on our economic state of affairs for the next fiscal year.

Based on what was presented for fiscal 2022, we know that there will be another budget deficit given that the Government will spend more than it is earning. While there wasn’t much information on what would constitute Government’s expenditure for fiscal 2022,  mention was made of incentives to boost the SME (Small and Medium Enterprises) sector to support youth development programmes including reinstating youth camps and a national youth service system, a reduction of the tax rate for significant exporters of local goods, incentives for new home ownership and attention to the environment via a number of measures to promote renewable energy and reduce the national carbon footprint.

While all the above are useful initiatives, once they are realised, the prospect of another fiscal deficit and the persistently high debt that is looming over us all, continues to be causes for concern.

I’ve added the proviso of “once they are realised” since we seem to have a national deficit on policy implementation. Yet again, the budget read earlier this month gave little update or account on what progress has or has not been made from year to year, in relation to what the Government says it was going to do as part of fiscal 2021 versus what actually was accomplished.

All we know is that deficits persist, and debt is incurred without any real information provided to citizens on how the state of affairs affects citizens Joe and Jane.

Much of the current economic challenges being faced have been ascribed to Covid-19. The truth is that Covid-19 and the lockdown measures served only to deepen the deficits, not cause them.

Trinidad and Tobago has been running fiscal deficits and increasing borrowing (debt) for many years. The near collapse in energy prices in 2014, coupled with a decline in gas production has worsened government revenues, notwithstanding very slight upticks in 2017 and 2018.

The only solution to this growing, and unsustainable situation is for a carefully crafted and incremental approach to reducing government’s expenditure—high subsidies to state enterprises remains an issue.

Another issue mentioned in Budget 2022, and one to which many citizens can relate, is the issue of food prices. With much fanfare the Minister of Finance announced an increase in the number of food items that are now VAT free.

The extended or revised list included items such as soya chunks, soya minced, ground dhal, cheese slices, table butter, pigtail, ham slices, turkey slices, chicken lunchmeats, bologna, roti skin, soup (packaged), geera (crushed or ground), vegetable/soya bean oil, olive oil, coconut oil, canola oil, ghee, and peanut butter.

Let’s face it, lower prices on these now zero-rated items, and many others, will not be seen any time soon. The fact is there is a global supply chain crisis that is affecting the supply and delivery of food internationally—many persons who watch or listen to international news might have picked up on this for some time. Trinidad and Tobago is not immune to this global supply chain fiasco since much of what we consume is imported; some of what is manufactured locally e.g., roti skins, relies on imported inputs.

The long and short is that any challenge to global food supply chains will continue to result in higher prices in the local supermarkets. That has been the case for many months and this scenario is likely to continue well into 2022.

Contemplate for a moment the various layers of our current national circumstances: rising Government debt, persistent budget deficits, rising food prices and its impact on the cost of living for many of our citizens, rising levels of poverty and unemployment, the education deficits that many continue to face and of course, increasing crime.

Maybe the Minister of Finance has a few tricks up his sleeve, but alas, I think we might need a magic wand to get out of the rabbit hole in which we find ourselves.  Abracadabra!

That’s just my point of view.