Don’t care?

It is either of two things: someone is not communicating effectively that these are among the harshest economic times we have ever faced as a country, or someone just does not care. It is impossible to believe the latter. Since it was labour on show, trade union leaders with their threat of worse to come, must know that some of their bluster is counter-productive. But it behoves all to be aware of some key economy variables which should form the backdrop to all action.

In recent years, we have suffered a decline in energy earnings due to lower prices and falling output.

This has been directly responsible for lower government revenues.

Income fell by 35 per cent to $37 billion between 2014 and 2016.

Total revenue was lower by 24 per cent in the first half of the 2016/17 financial year despite energy receipts being higher in the previous fiscal year. We have also seen our net international reserves drop from $10.4 billion as of May 2014 to $8.95 billion at the end of May, resulting in export coverage moving down from 12 months to 10.

To address the deficit, the initiatives taken by the government included drawing down US$251 million (TT$1.7 billion) on the Heritage and Stabilisation Fund (HSF) on March 16, as well as borrowing domestically to help finance its operations during the first six months. These steps were taken because the government did not, by its own admission, want to stall the economy and cause suffering.

The government had hoped that it would not have to introduce austerity measures. Clearly market conditions in the hydrocarbon market suggests that more aggressive fiscal consolidation measures are required.

Government also borrowed $3.5 billion on the domestic capital market through the issuance of three bonds. The Mid-Year Budget Review pointed out that the new set of borrowing has increased the ratio of public sector debt to GDP from 60.1 per cent at the end of 2015/16 to 61.1 per cent of GDP at the end of March. Generally, the IMF has considered a ratio of 60 per cent as a threshold above which the result is negative growth.

Currently, we are seeing companies such as the Agricultural Development Bank, undergoing wage negotiations with resulting staff protests fully supported by the union. One has to wonder as to the financial state of the company, especially since they are allocated subventions that we are not even sure they receive. Can the company afford salary increases to the tune of 14 per cent at this time? All stakeholders need to exercise care about the positions they advance, especially as the IMF has called for policy changes such as fiscal adjustment, structural reforms to enhance our foreign exchange earnings capacity, procurement reforms, easing the costs of doing business even further, modernising financial supervision and reforms to increase the scope of growth and diversification.

While the unions must calm the waters, and negotiate hard, the government must more effectively communicate and present the true state of affairs, engage the population, lead by example, present a vision, an economic plan on which we all can agree, and get buy-in from key stakeholders. Clearly what is being demanded does not appear to reflect any appreciation of the current economic conditions.

The private sector, especially those operations that are still reaping huge profits, must desist sending people home, and instead must appear to be understanding of the difficulties faced and offer solutions that appear conscious of the suffering of the less deprived. Our key stakeholders must be more mature in the face of extreme challenges: nothing less is acceptable. It can’t be that we just don’t care.