There was no need for Minister of Finance Colm Imbert to engage officials of the International Monetary Fund (IMF) and the World Bank to provide advice on T&T’s fiscal policy.
This was the view yesterday of developmental economist Dr Ralph Henry and former minister in the ministry of finance Mariano Browne, following Imbert’s announcement on Thursday that World Bank officials are in T&T to assist and advise the Government on pressing matters, including a review of expenditure in all key areas.
Henry said T&T has done a lot on its own and did not require advice or expertise from the IMF.
While T&T’s transfers and subsidies were huge, Henry said, “We don’t need anybody from outside to tell us that we need to look at it. Maybe you are looking at the IMF and World Bank to bless what you know you need to do. We have that problem. It is something very colonial. We don’t think we can do certain things unless we get somebody from outside...from foreign.”
Browne supported Henry’s argument, saying he did not see the need for the IMF and World Bank’s presence since T&T is capable of making its own decisions.
“There is nothing preventing him (Imbert) from crafting policies and then talking to the IMF and World Bank privately. Why bring them in? The only thing that I could read into bringing the IMF in is that he wants to get at the Heritage and Stabilisation Fund immediately,” Browne said.
The HSF has investment worth an estimated US$5.7 billion.
Browne said he was bemused and amused that Government was going back to the IMF and World Bank for advice “when we said these were the people we did not want to go to at all. He (Imbert) is trying to validate that they are doing the right thing and we are consulting. He is also signalling that the ministry does not have the relevant technical expertise. If this is the case, then we are up a real gumtree.”
Browne said to dip into the HSF, Imbert would have to make changes in the law.
“The IMF could help him make those changes quickly. Then he would get additional revenue and US dollars.”
He said some of the decisions taken by the Government have the nation in a state of “uncertainty. The country’s back is against a wall. We have been for quite some time.”
While Browne blamed the People’s Partnership for the state of the economy because of their wanton spending, he said the People’s National Movement has been slow and lacked “political will” in making the right choices.
“We are heading down a slippery slope,” he warned.
Henry said when a country is in financial difficulty and calls on the IMF for help, what they would offer was a “standard package...that would review a reduction in the public service, minimum wage legislation, privatisation of some state agencies and devaluation of its currency.”
In the 1980’s when National Alliance for Reconstruction leader and former prime minister ANR Robinson turned to the IMF for help due to a fiscal crisis, the population did not welcome the news.
“The problem was the message. Unfortunately the NAR had to introduce austerity measures which citizens objected to. They introduced VAT, cut salaries of public servants by ten per cent and removed COLA (Cost of Living Allowance). Robinson was put between a rock and a hard place.”
He said Imbert, on the other hand, has far more flexibility than Robinson did.
“But at the same time the population must see that the Government is doing things to create new possibilities. You must have a facilitating environment to encourage investment, flow of funds and new businesses. If you just focus on cutting and slashing you lose track with things that you should be doing to expand the economy and get different sectors going again. You spread a lack of confidence across the board. That is something we cannot afford.”
Henry said Government has to create a sense of hope for its citizens.
“That is even more critical than thinking where you can cut and what you can do to reduce this and that. There are resources available to us in our system right here. So we don’t necessarily have to borrow from abroad or have the IMF or World Bank identify sources of credit from outside.”
Predicting further jobs losses will occur, Henry said Government needed to have an institutional arrangement to encourage growth in other sectors, which the population was not seeing.
From here forward, Browne said, T&T must craft consistent policies to redirect the country.
“We have to re-invent the way Government does business and make it far more lean and efficient. We also have to treat with the way our business sector operates, as well as our trade union movement. This is an opportunity not to be wasted and it does not come from the IMF and World Bank, it should come through leadership.”
Browne said the decisions Imbert made in the mid-year review should have been taken last October.
“He is making decisions in piecemeal.”
Don’t raid the HSF—Dookeran
Also weighing in on the issue was former central bank governor and finance minister Winston Dookeran.
Dookeran said while it was good to have an independent review of what the options are in order to navigate the country’s financial challenges, “such a review must be anchored in an assessment of what is the total framework within which the problems are to be addressed. It led me to believe that what they are doing is not seeking an analysis of the new framework but a justification for what they have placed on the agenda.”
Dookeran said Imbert’s announcement did not outline a framework, but spoke about the disaggregation of the HSF, which was established in 2000.
He said touching the HSF should be a last resort.
“The Government should not raid the fund at this stage.”
He also cautioned that cutting back expenditure would not necessarily generate growth.
“The end result is not to cut the cloth to fit the Government, but make sure the Government designs a programme to fit the country and its people.”
Dookeran did not see a problem with Government seeking loans to revitalise the economy.
“The issue is how would it be channelled and whether it would be channelled to support local consumption or whether it would be channelled to create capital. That is the kind of framework that must be outlined.”
If measures are not put in place, Dookeran said, citizens’ confidence in the economy will continue to be eroded.
Yesterday, president of the Public Services Association, Watson Duke, said now that the IMF and World Bank are giving the Government advice, he hopes public servants who are owed $2 billion in backpay will be paid.
“The PSA is on the war path. We will remain on that path unless this debt is cleared.”
If the money is not paid, Duke said, public servants will begin to demonstrate.
“We are not going to sit down quietly and watch Imbert drive a dagger through the heart of the public service destroying the lives of thousands.”
Duke said retrenched workers are now committing suicide and “every time the Government fails to protect a fragile society they are driving people to do the unthinkable.”
Budget shortfall
In delivering the mid-year review on April 8, Imbert revised the 2015/2016 $63 billion budget to $59 billion, pegged on a budgeted oil price of US$35 per barrel and a gas price of $2 per mmbtu.
He also indicated that there was a $15 billion dollar gap between T&T’s current revenue of $44 billion and total expenditure at $59 billion.
Last December, Prime Minister Keith Rowley mandated Imbert to cut the operating expenses at every state enterprise, statutory body, ministry and in the Tobago House of Assembly by seven per cent.