CENTRAL BANK FINGER ON THE FOOD TRIGGER

The Bank’s heartening view of our economic prospects, in which it projects real GDP to grow in excess of ten per cent, "mainly on the strength of the energy sector," has been determined largely by substantial additional revenue from increased LNG exports from the recently opened Atlantic LNG Train IV, and increased production of methanol and ammonia production.

As the Bank has pointed out, ongoing expansion of public sector construction activity "will be the major catalyst for continued strong non-energy growth."

Another major contributory factor to the country’s projected continued economic growth is that the outlook for international crude oil prices indicates an ongoing strong foreign reserves position "which argues against any major weakening in the exchange rate".

Such reassurance is both timely and necessary to the average layman as only in December last year, the TT exchange rate, which is pegged to the US dollar, slipped by three cents against the US dollar. Unfortunately, however, the phrasing does not appear to rule out the possibility of another, though minor, downward readjustment in the exchange rate in 2006.

The nation’s annual bill for food imports has for decades been too high, even an energy rich one as Trinidad and Tobago. Ironically, the high prices paid for crude on the international market, while boosting the strong foreign reserves position and contributed to our relatively high standard of living, have also nudged upward the cost of food and other imports and been a factor in domestic inflation.

It is either we plant substantially more food crops or stimulate increased food by direct financial assistance and expose farmers to new technology..

But the Bank’s cautionary note that "demand-driven inflationary pressures" were likely to persist this year, given a projected expansion in the non-energy fiscal deficit and income tax relief granted in the last Budget, should not be taken lightly.

In turn, the Bank’s advice, or was it a warning, that it would continue to target an inflationary rate of no more than five per cent and revisit this target in mid-2006, based on the present trend in food prices, should be of major concern particularly to those who live on fixed incomes.

Any uncomfortable rise in food prices would effectively erode such incomes and contribute to a drop in the standard of living of the bulk of the population and cause an understandable sense of unease among those who live marginally above as well as below the poverty line.