Deficit Budgeting and more: Key Takeaways

In a recent interview on the set of Altos, Stephen de Gannes, the Chief Executive Officer of the Trinidad and Tobago Chamber of Industry and Commerce (TTCIC), provided valuable insights into the country’s 2024 budget.

The conversation touched upon various aspects of the budget, including deficit spending, the business community’s perspective on minimum wage increases, the allocation of funds to the social sector, and efforts to combat crime.

Deficit Budgeting and Economic Strategy

De Gannes began by explaining the concept of a deficit budget, emphasising that it occurs when projected expenditures exceed anticipated revenues for the year. While acknowledging the cautious approach taken by the Minister of Finance Colm Imbert in estimating revenues, he speculated that there might be additional measures to balance the budget later in the year.

Deficit budgets are generally not favoured as they imply spending beyond means, but de Gannes suggested that the Minister might have some strategic plans.

The Chamber had actively participated in the budget preparation process by submitting recommendations to the government. “The Ministry of Finance actually invited several people to send in recommendations several months before the budget. We did as well, and we were thrilled to see that some of them were accepted in as much that he also consulted with us verbally to talk about some of our recommendations and ask why we had made some of those recommendations.”

The areas that had been accepted were related to education, crime reduction, and food security. “Some of those recommendations actually were the schools area where we talked about contributing to the increase in tax benefits for schools. We also suggested something for crime in that area, tax savings for companies that donate in those areas. We also talked to him about food security, which is something that he did mention a little bit of in there.”

Minimum Wage Increase

A significant feature of the budget was the $3 increase in the minimum wage. De Gannes provided a balanced perspective on this decision, acknowledging that while it represented a 17 per cent increase, it might not be sufficient given the current cost of living.

He highlighted the importance of considering the dollar value of the increase for workers. Furthermore, he pointed out that the impact on businesses would vary depending on the size of the organisation and its labour costs.

“Is that the largest part of the expenditure in that organisation? Probably not. So, you have the cost of goods, you have cost of shipping and things like that that you would be absorbing, that you already are not changing…Where we start looking at is where you have a smaller establishment, maybe three or five people and their turnover is not so great.”

In smaller establishments, where the wage factor weighs heavily on expenses, they may be forced to pass that on, but in larger industries, “they may try to absorb it because no one really wants to—they do not want to make less money, of course, but you do not really want to be passing on hardship to the consumers at this stage.”

Social Sector Allocation

The government allocated a substantial portion of the budget, approximately $5 billion, to the social sector and social protection programmes. De Gannes commended the government’s efforts to support the less advantaged members of society, particularly initiatives like providing housing for street dwellers.

He stressed the importance of evaluating the effectiveness and value for money of these programmes while also addressing youth unemployment and its potential role in reducing crime rates.

He commented: “Social programmes also affect youth. Crime is fuelled by youth that do not have anything to do. So, if we can concentrate some money to give people hope, just something to do, something to challenge them that they will be able to grow with, I think that will also cut down on crime. That will cut down on gang activity because then you do not have a lot of empty bodies that are just looking around for something to do during the day.”

Crime Prevention

The conversation touched upon the issue of crime in Trinidad and Tobago, a matter of great concern to the public. De Gannes emphasised the need for a multipronged approach to tackle crime, including strategic spending on resources such as additional police vehicles and training.

“We do need more vehicles. We need training and the government did talk about bringing in additional people…it is not just the addition of more recruits, the screening of those people and the training. If we do that properly, we can look forward to seeing a better response and hopefully then clamping down on crime. If we deal with the social aspects, again, we are trying to reduce that. You need to attack it from many different areas.”