Frank Barsotti

“As the gap between reality and expectations widens, a gap in the credibility of the government also emerges. Its failure to deliver what was promised, as well as the cost of providing it, is indelibly printed on the public mind to the exclusion of the good that it may have done.”
- A Premchand, Public Expenditure Management

The Prime Minister in his role as Minister of Finance began this presentation of his three hour plus Budget with a description of the economic performance of the country. There were no negatives.

The economy had doubled since 2001 when it was $55 billion, to $114.5 billion in 2006. Job creation had been good with 14,400 new jobs been created annually moving the unemployment rate down to 5 percent the lowest in the nation’s history. So that we are closer to a state of full employment to day.

Public debt as well as foreign debt was both reduced and the Direct Investment over the past 5 years was close to US$6 billion. These good figures have enabled the authorities to increase the Heritage and Stabilization Fund to close to $17 billion.

In addition to the exemplary performance of the economy, the Minister of Finance has not been exposed to Fiscal stress during the preparation of the Budget since adequate revenues were always available.

Furthermore, the International Monetary Fund’s staffers on their recent visit to the country had made congratulatory remarks about the operations of the economy and this would have improved the confidence of the offices of the Ministry of Finance and the Central Bank.

The Credit worthiness of the country is quite good so that if it were necessary to borrow funds it would not be a problem.

But, there is one difficulty, which has raised a problem with the glowing picture and that is the presence of the Ryder-Scott Audit report on the reserve situation. This audit was commissioned by the Government as they say for the purpose of informing their energy section policy. Quite simply the report has revealed that the reserves to production ratio is 12 years.

The Prime Minister has apparently not become upset by this finding and has explained in the Budget Statement that the position was known for sometime and the Government has taken steps to stimulate exploration which is on going on land and marine areas.

He has also said that the information does not affect in any way the priority projects, which are set to come on stream in the short term, naming the projects in the statement.

Although the Prime Minister’s reaction has been calm other people has reacted differently. The Congress of the People leader has indicated that the report should be sent to Parliament for its consideration. The UNC also agrees with him.

Furthermore, Errol McLeod, President General of the Oilfield Workers’ Trade Union has also expressed keen interest since his estimate of the reserves to production ratio is somewhat less than the Audit Reports figure of 12 years. He also indicated that the Report had been concealed and he would very much like to obtain a copy.

The fact is that the economics’ of the petroleum industry have changed since the first Ryder Scott Report in 1974 and that would interfere with any comparison with the present findings.

Since Trinidad and Tobago is now a gas economy it is essential that we study the Ryder Scott Report closely to ensure that the country is in a position to take all the steps that would be required to offset the Report’s revelations. Petroleum companies are not likely to be laissez-faire over the report and would harden the terms of future negotiations over exploration and production of new gas fields.

Most people believe that policy making for energy should be more transparent since Trinidad and Tobago is a gas based economy. One expert has stated that we should move our position in the Extractive Industries Transparency Initiative in which we are a “candidate country” and become a “compliant country”.

Since many other countries are fully compliant and since the Initiative is well supported by the World Bank and the Fund, Trinidad and Tobago could find it beneficial especially since the country is so dependent on energy.

There has been a great deal of talk about diversification of the economy. This is a very old recommendation, which for very many reasons has never been implemented satisfactorily.

Targeted for special attention the following industries have been proposed for the private sector with special government supports. The industries are music and entertainment, Printing and Packaging, Merchant, Marine, Fish and Fish processing, Yachting and Food and Beverage. Let us hope that this time there will be some real follow up action so that the initiative will be successful.

Since the manufacturing sector has performed well it has been rewarded in the following fashion. The initial allowance has been increased from 60 to 75 percent enabling manufacturers to obtain new machinery and retool and improve their plants

But implementation continues to worry manufactures as well as many other people in Trinidad and Tobago. One commentator, a senior official of the Co-operative Credit Union League, Dr Winferd James said that promises you get in abundance.

He suggested and I agree with him that an independent monitoring body should be set up to analyse the implementation of post budget. I believe that because of the frequency of the complaint about implementation this is a step that the administration should contemplate seriously.

It could be done with the assistance of the University of the West Indies, which would source the people to do the work and report to the Prime Minister so that the necessary action could be taken to improve our implementation.

The call for diversification of the economy has also focused reserved attention on the agricultural sector. The allocation to agriculture is now $1.2 billion, which is said to be more than 50 percent larger than that of 2007. Given that implementation takes place the intent is clear. There will be a serious effort to increase production and productivity.

Emphasis is going to be put on marketing and an Agricultural Development Commission will also be established to advise the Minister of Agriculture on the development of Agriculture in the country. Alongside these measures a large number of other initiatives have been set out, all designed to impact the sector.

Doubts have been expressed by some people on the movement to establish 16 large farms. This is a seriously complex undertaking and our capacity to implement this measure is questionable. More will have to be said also about the joint venture with Cuba. The use of technology and the human resource to do the tasks meaningfully will have to be identified.

Former Caroni (1975) workers have been given two-acre plots for cultivation. Serious concerns have been expressed about this as well, since it is well known that all of Caroni (1975) land is not well suited for the production of food crops and can only successfully produce grasses.

Once again the problem of successful implementation arises and this appears to be the serious constraint on the new emphasis on agriculture. Significant training will have to be done to improve the knowledge of new formers in the technologies associated with a dynamic agriculture,

There have been improvements in Tobago. But, it appears that much more work has to be done to complete certain large projects and to start others, which have been identified. In addition there is the implementation of the long delayed, Scarborough Hospital as well as the commencement of work on the Airport.

It does appear that the sea-bridge difficulties have been solved with the introduction of the T&T Spirit and the T&T  Express. Now, for a solution to the air-bridge difficulties. Implementation is the main problem holding back progress in Tobago, which has apparently being performing somewhat better under the House of Assembly.

I urge the Administration to give more attention to Maintenance perhaps even setting up a Ministry. They have much more to be done today and under performance have will certainly be more costly.

What is actually required now is work on a change of attitude if we are to be successful in the critical task of economic development.