Trinidad and Tobago
Express
Trouble: No new revenue
LAST Tuesday, an Express editorial justifiably condemned the assault on Ronald Harford by a certain 'multi-purpose minister'; and also rejected the Government's 'tendency to publicly berate, dismiss, attack and rage' against anyone 'who dares criticise its governance'.
Well, on the economy, they could jump high, they could 'wine down low'; they could cuss, threaten to kick, abuse and spew their thousand venoms; they could gather the faithful wherever and fool them to thy kingdom come. Their cardinal sin remains. They developed no new foreign revenue streams when the country needed it most. They didn't even try. After almost nine wasted years, they have left this nation in very deep trouble with an elementary, undiversified, endangered economy. Shame!
No new revenue streams. Our foreign reserves are the lowest in 17 years, US$5.6 billion last month. Worse, those reserves are mainly from foreign borrowings and withdrawals from the HSF! Is this economy on life-support?! Economist Vaalmikki Arjoon says when we factor in US$5.2 billion in foreign debt, our foreign reserves, not propped up by this debt and not including HSF resources, stands at US$400 million. That's half-a-month import cover, folks! See our utter fragility?
Our forex reserves, our lifeblood, are boosted not by earned revenue but artificially by foreign borrowing. And further, when we must use HSF funds, instead of revenue, to boost reserves, are we not using savings to finance imports? We spend almost US$1 billion annually on imports. Will we exhaust the HSF in consumption?! That would be disastrous. We need new revenue streams more than ever to prevent economic catastrophe in this country.
Five years ago, I said 'with reserves, earned and borrowed combined with HSF drawdowns, over US$6 billion vanished under Rowley and Imbert'. How many billions would have evaporated by now? US$12 billion?! And not one single new revenue stream developed?!
Today, businesses and individual citizens suffer from forex curtailment, purchasing power reduced, causing growing grief as enterprises, particularly small and medium, shrink or shut down, increasing joblessness and deprivation in the nation.
And the man at the heart of this disaster, the Finance Minister, shamelessly seeks credit for a recent IMF assertion that 'for the first time in a decade' we are seeing some 'recovery', claiming he exercised 'fiscal discipline'!
Really? When your fundamental strategy has been the insanity of 'borrowing to maintain our lifestyle'? Borrowing for consumption rather than investment for new revenue. Taking the national debt to dangerously above the 'acceptable' percentage of GDP?
And the debt must be repaid in foreign currency from depleting reserves. Imbert developed no new revenue streams, so he must borrow more to pay outstanding debt-US$560 million last year to repay US$550 million due this year-when he should have been borrowing for creating new earning capacity.
And he wants to borrow more, to increase the statutory limit by $10 billion, pretending with empty grandiloquence, he is preparing for the 'current tenuous geopolitical dynamics'.
Nobody's fooled. Election is approaching and the $10 billion will be borrowed and devoured. And like the billions borrowed before, this too will pass through the system like another 'dose of salts'. And no new revenue streams.
They knew what to do from the start. In 2015, they met a 40% drop in earnings of $20 billion, from $57 billion to $37 billion. We needed diversification for new foreign earnings without which this economy will collapse. So, ask them, folks. Where are the new foreign revenue streams? Also ask why, even though you continued to rely on oil and gas, you allowed the energy sector to contract so disastrously?!
Nine years of decline in oil, natural gas and LNG. Gas production remains at a 19-year low, oil at 1930s level. We have a shortfall of 1.1 billion cubic feet per day in natural gas for electricity, downstream plants and LNG demands. Nine downstream plants are now closed and LNG is at just over 60% capacity. We have become irrelevant in the Caribbean. Instead of coming to us, foreign direct investment is leaving. We lost US$913.5 million in 2022, says Arjoon.
And they cling to IMF talk of a 'strong performance by the non-energy sector'. Pathetic. It's an illusion, folks. I have said, and will say again, this is due to re-classification, not diversification. Under the 2017 International Classification of Economic Activities (ISIC), we no longer formally have the energy and non-energy sectors.
We now have ISIC B: Mining and Quarrying, where only upstream activity, like drilling, is categorised; and Manufacturing or ISIC C where downstream activity like production of ammonia, methanol, urea and LNG are all categorised. Forty-two per cent of economic activity previously recorded under the energy sector is now categorised as manufacturing or non-energy, naturally showing growth that the IMF dutifully records.
So, don't be lulled. The inescapable fact remains. The traditional non-energy sector by which we have judged diversification-tourism, culture, agriculture, financial services, etc-are all dead or dying under this Government. They have wasted nine precious years, filled with their utter bogusness and, as the Express editorial says, their 'intemperance and enraged arrogance' against critics. But no new revenue streams. Deep trouble, folks.
Photo: RALPH MARAJ
We have become irrelevant in the Caribbean. Instead of coming to us, foreign direct investment is leaving