Govt to tighten belt

This is one of the ways Government hopes to curb inflation, Minister in the Ministry of Finance Conrad Enill stated Tuesday. He was piloting the Variations of Appropriation Bill in the Senate.

Enill said one of the concerns of the Government was the growing rate of inflation.

He said Government was taking several steps to ensure that this situation did not continue unchecked.

He said Government firstly intended to dampen demand by tighter monetary policy, one of the consequences of which would be higher interest rates to cut consumption and increase savings. Secondly, Government would attempt to scale down construction. And thirdly, he said, Government was also taking steps to stimulate agriculture.

He said while food prices were the main drivers of the seven percent inflation rate, there were also significant increases in the costs of rent, construction materials, pharmaceuticals, leisure and entertainment.

Conrad said while in most developing countries it was not unusual to see inflation in times of rapid growth, Government’s challenge was to ensure inflation did not get out of control.

Enill said the causes of inflation in Trinidad and Tobago were an increase in demand, agriculture supply bottlenecks and markups by wholesalers and retailers. He said the increase in demand came from both the private sector — which had buoyant demand as a result of higher incomes; and the public sector as a result of Government’s expenditure increases in several areas, including public housing construction. Meanwhile, Enill said agriculture output had been sluggish because of floods, and competition from higher paying jobs. He said agricultural imports from regional sources did not fill the gap.

Enill said Trinidad and Tobago’s Caricom neighbours had not fared any better in inflation. He said the increase in energy prices and the construction activity in anticipation of World Cup Cricket had led to an inflation rate of seven percent in Barbados, 8.2 percent in Guyana and 11.2 percent in Jamaica.

Enill said the local economy continued to register strong growth in 2005. The energy sector output expanded by 10.9 per cent while the non-energy sector had a growth of four per cent, reflecting a 8.1 percent increase in the construction sector and a 8.6 percent increase in the manufacturing sector.

Enill said the unemployment rate fell from 8.4 percent to eight per cent in 2005, with the largest gains in construction (11,100 jobs), comunity, social and personal services (3.400 jobs) and the distributive sector (2,300 jobs).

He said the manufacturing and agricultural sectors lost 3,200 and 1,000 jobs respectively.