RBC economist: TT saved only US$2.6B over 100 years

Dukharan was speaking to the issues of “Connecting Citizens with their energy resources” forum held yesterday at the Trinidad and Tobago Chamber of Industry and Commerce, Columbus Circle, Westmoorings while doing a critical review of the Trinidad and Tobago Extractive Industries Transparency Initiative’s (TTE ITI) 2014 to 2015 report launched last year.

Dukharan was speaking to transparency and its importance.

She noted that the Heritage and Stabilisation Fund (HSF) had gotten to approximately USD $5.7 billion before it was dipped into last year.

Asking if anyone actually knew how much the country had contributed to the HSF, Dukharan noted the country had only saved US $2.6 billion despite producing oil for 100 years.

The fund manager, she said, had generated the rest to get the country to where it was before it was dipped into.

In a 2016 study done by a former central bank economist, she said, it was found that spending all the country’s energy revenue creates macro- economic volatility.

“The paper found that the optimal level of saving for energy revenue is 80 percent,” she said.

Dukharan said she was pleased there were efforts to establish a revenue authority to improve tax collection but, “to me it is very disappointing of that US $2.6 billion that we saved that brought us to $5.7 billion we are dipping into it without having an acceptable level of tax compliance. We are not collecting that taxes that are due to us whether from the energy sector but particularly from the non-energy sector.” TT was among countries that did not escape the resource curse citing an extract done from a 2012 study that showed countries like Canada and Botswana had escaped the that “resource curse” while countries like TT and Venezuela who had not escaped the resource curse or the paradox of plenty.

“The study found that resource rich countries on average contrary to what we might expect have had worse economic development than countries poor in resources. One reason for this paradox of plenty as we call it in economics is that there is a well-established high correlation between resource abundance and corruption,” she said.

“There is a tendency for oil in particular to impede democracy.

This is why transparency is so important in TT ,” she said.