TT debt now $40B, says economist

The total public debt in TT now stands at approximately $40 billion said economist, Dr Dhanayshar Mahabir, who on the eve of tomorrow’s Budget presentation appealed to Prime Minister Patrick Manning to tell the population the truth about its public debt when he reads the 2003-2004 Budget report in Parliament. Mahabir is the economist who also put together the country’s financial report for a Manning appointed Committee when the PNM came into office in 2001. Dr Mahabir said government is spending too much money and warned that if it is not prudent in its financial management, will put the country in serious trouble with the International Monetary Fund (IMF).

Referring to the last Budget, he reported Manning as saying:
“I would like to report to the honourable House that by the end of September 2002, the Central Government’s fiscal balance recorded a surplus of $68.9 million.”
Dr Mahabir said when Manning made that statement, he was referring to the economic report he, Mahabir, had put together, which reported that the deficit for the year was going to be $1.6 billion.
“He (Manning) stated that he actually ran a surplus of $69 million. So from a deficit of $1.6 billion, he turned around a surplus and this is inaccurate,” said Dr Mahabir.
He said the PM as Finance Minister should be careful when making statements in the Budget speech and be accurate since such statements also have political undertones.
Reviewing the PM’s Budget statements again he quoted Manning saying that it was achieved “when you do not have corruption.”
Dr Mahabir said “corruption has nothing to do with it” and by making such statements, Manning is misleading the population to think that fiscal management which ended in September 2002 was far better than it actually was.

He said when a country feels it has a surplus, it means that the public debt is not rising and government’s obligations on servicing the debts may be falling. “You create expectations in the minds of the population, then public servants will clearly want higher salaries and everything else will start rising, the transfer bill will rise, your goods and service bill is rising and your transfers to Statutory Corporations is also rising,” said Dr Mahabir. He said government will then realise it did not have a surplus but a “whooping deficit” on which it must also pay interest rates. As a result, this could lead to government raising taxes at some time or borrowing of more money which further increases the country’s debts to pay old debts. “If government is not careful, the public debt could become so large it will cripple the country because debt servicing takes up all of the revenue,” he said. Dr Mahabir said after studying the IMF report, he and other economists have come to the conclusion that the public debt is now 68 percent of the Gross Domestic Product (GDP) ratio, estimated at approximately over $40 billion in debt. He disclosed that based on IMF information, this means the public debt has risen to as much as $1billion a year and prudent fiscal policies should have brought the ratio down to 62 percent.

“This is because the government is running deficits and if not careful then we will have a very huge debt on our hands which will have dire consequences for the future economy,” said Dr Mahabir. Providing a breakdown of the report for last year, he noted that interest payments on debt servicing was $2.5billion. He predicted that this year, the interest payment on debt servicing would have increased to $3billion. “In other words,” he said, “we are not managing the public debt well. They are making valuable in-roads in lowering of interests costs and taking advantage of refinancing but in the meantime they are borrowing more and the debt stock remains large.” Dr Mahabir felt government needed to spend more on capital programmes. He pointed out that it had spent less than $1billion in capital programmes and asked if they do not have a capital programme, how is it going to do infrastructural work in TT. The economist suggested that government make a clear perspective on the Revenue Stabilisation Fund and what it intends to do with surplus oil and gas revenue. He advised the PM to start looking more seriously at revenue  collections, especially with LNG Trains 111 and 1V projects, VAT and the Board of Inland Revenue. Dr Mahabir urged the PM to try to balance the country’s deficits as best as possible through expenditure reduction measures. On the issue of Transfers and Subsidies, he said government’s Pension obligations have risen and it should try to harmonise the consessions it gives to individuals who are home-buyers and saving toward retirement.

THA pleased with 2002-2003 Budget delivery

THA Chief Secretary Orville London said he is satisfied with the delivery of the 2002-2003 Budget even though not everything of the $742.9 million overall allocation has been fulfilled.
“There were a few problems at the beginning,” he told Sunday Newsday, “but they eventually got off the ground.” A number of projects were earmarked for Tobago last year, including a new Scarborough library, new health centres, the construction of the Scarborough Hospital, housing programmes at Roxborough, Blenheim and Castara, namely the Roxborough Town Expansion project, the Castara Housing Development and the Blenheim Housing Estate 11. Also on the list of promises were a new Mason Hall Government Primary School, a new Scarborough Methodist School and the construction of  a Transportation Hub. He said so far work had begun on most of the health centres and the primary schools.

Other projects such as the Scarborough Library, the Roxborough Plaza and the Transportation Hub needed designs which are now being done. “So what could not be started this year will begin next year and there were some keep backs because some of the projects needed special designs,”explained London. He said, however, they have been re-assured that the projects will get underway as promised, including the expansion of the Crown Point Airport,  and the THA feels comfortable in Government’s Budget delivery. The Tobago Chief Secretary also spoke about the HIV/AIDS awareness programme which was supposed to have started in the sister isle this year. He said the THA was again re-assured that all the necessary medication has been purchased and most of the preparatory work has begun. 

Key promises That Government has fulfilled-
*Work to begin on the light manufacturing estate at Wallerfield
*The creation of a Banking Ombudsman Office
*Restructuring Caroni including VSEP
*Increase in Old Age Pension from $800 to $1,000 a month
*Reduction in Corporation tax and individual tax.

What Government has not fulfilled-
*The establishment of a Credit Union Development Bank
*Expansion works at the Crown Point airport, Tobago
*Expansion of primary dealers in the financial system
*Restructuring of UTC, including the passage of the Vesting Bill 2000
*New fiscal regime for natural gas and adjusting the regime for oil
*Legislation to govern the Revenue Stabilisation Fund
*Environment — legislation to enable the creation of a National Parks and Wildlife Conservation Authority. The bill was introduced for debate but not passed.

TTUTA: Fund education well in budget

President of  the Trinidad and Tobago Unified Teachers Association, Trevor Oliver, is calling on government to ensure that the education sector is well-funded in order to meet the challenges of the 21st century. He is hoping tomorrow’s Budget will cater for well-staffed and equipped schools and that the issue of security at Secondary Schools would be seriously addressed.

As head of the National Advisory Committee on education, Oliver has called for adequate funding for the following areas —
a. Early childhood education
b. Teacher training
c. Rapid acceleration and modernisation of security   
    measures for secondary schools
d. Teacher remuneration and accreditation
e. Well-staffed schools
f. The establishment of school intervention strategy programmes
In the last Budget under Education, Prime Minister Patrick Manning announced: “We will de-shift the Junior Secondary Schools to ensure that all students are provided with five continuous years of schooling with a standard curriculum.”
Oliver said even though this has not yet been fulfilled, government should ensure that the schools are ready and well-equipped when this happens.                               
Manning had also proposed to establish a new tertiary education institution, the University of Trinidad and Tobago which will concentrate on Science and Technology.