As a businessman for the past 50 years, where managing any business is the same as managing a government, when your overdraft is at the maximum you have to do what is the best to save your business; in this case, it is the country. The Minister of Finance and his team have presented a well-thought-out plan in this mid-year review to save T&T.
The fuel subsidy is an area that has hurt our Treasury the most. Its removal is long overdue and we have to bite the bullet even if it is at a risk of our political future—country first.
Both super gasoline and diesel have gone up and the time has come to carpool, and to prepare ourselves for an additional increase. If after further consultation by the advisers this becomes necessary, then so be it. Better late than never and hopefully through prudent fiscal management, our economy can avoid the pitfalls that have befallen countries such as Greece and Venezuela.
The minister addressed most of the areas hurting our country—foreign exchange, Cepep, labour shortage, need for revenue improvement, reducing the fiscal expenditure from 63 billion to 59 billion and the need to base the budget on a more conservative estimate of the price of oil.
Other areas addressed were online shopping and the implementation of a seven per cent charge, which will not only ease the burden on foreign exchange, but will also protect our local businesses from unfair competition. Local businesses have to pay rent, bank loans, taxes, create employment, etc. If these measures work and the government advisers recommend an increase then we will have to further brace ourselves.
One of the important announcements made was the placing of a cap on the foreign exchange. With all due respect to the honourable minister, that 3.7 per cent increase is happening at the banks, but to pay bills, local businesses have had to find alternative sources of US, which are costing over ten per cent in most cases. This of course has had to be passed on to the price of goods to recoup the inflated cost.
The proposed increase by way of new taxes on alcohol and cigarettes is a sound initiative. An additional consideration would be to evaluate a new surcharge on the sale of alcohol toward the prevention of drinking and driving. This surcharge could fund advanced educational campaigns, like the Arrive Alive Safety Awareness Campaign, which was geared towards sensitising citizens about the dangers of driving under the influence of alcohol. Implementing a system of transport services, at a minimal cost, from bars, nightclubs and other recreational facilities could also be a beneficial move, and is a system employed by other countries around the world.
In 1970, when oil and gas took over as the main engine of our economy, our production and export of coffee and cocoa declined by 98 per cent. Diversification of the economy is a song that is sung every time there is a decline in oil prices. However, as soon as the prices increase, the song and the music stops. The Government needs to set up a bipartisan team to determine a clear diversification strategy so as to migrate our economy away from its dependency on oil and gas.
Apart from diversification using comparative advantage, we can also look at all social programmes, grants, subsidies and either reduce or stop them if needed. We have observed that the minister and his team have approached this situation in phases.
The first phase seems to be softer measures indicating what new taxes will be implemented. The minister has further proposed the idea that there will be consultation with all stakeholders on these important issues, which seems to be the second phase. The third phase seems to be the performance of the first and second phases. These are challenging times and I commend the efforts of the minister.
Balliram Maharaj
CEO ADM Import &
Export Distributors Limited