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Tuesday 21 May 2019
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Fiscal responsibility

THE sudden and drastic decline in global crude oil prices which could still continue for the short-term, has raised major concerns for Trinidad and Tobago on its revenue earning potential and implications for its budgeted expenditures. It has emphasised the need for astute overall management of the economy to remain at the forefront of our minds. This therefore calls for greater attention to be placed on sound fiscal responsibility and budgetary management that meet not only current needs but inter-generational needs.

Fiscal responsibility and prudent budgetary management are important to a country’s development not only during times of recession but also during economic boom. In understanding the importance of how, where and on what public monies are spent, there is the accepted understanding that fiscal management, at every aspect of the economic cycle, can impede the sustainability and growth of any economy for years to come. This thinking forces governments to consider the sustainability of their budgetary spending annually and how this spending fits into the overall strategic goals of the nation.

The continual neglect in addressing increases in this country’s transfers and subsides bill and the need for more capital investments affect the optimal allocation of resources throughout the economy and its overall sustainability and also impacts negatively on the country’s competitiveness and productivity. This is evident as the private sector faces shortages in labour – particularly unskilled labour – unavailability of foreign exchange to meet ongoing trade demands, and a host of other issues which haunt the business environment and households.

The objective of being “fiscally responsible” is to create an environment of accountability and transparency and ensure responsible economic spending by governments to secure a sustainable economy, even when this may appear at variance with short-term political interests. It appeared that the Prime Minister, in her address to the nation last Thursday, opted to avoid key issues such as efficiency in Government spending or disclosure of the need for possibly tougher adjustments.

The Prime Minister’s commitment to her Government’s pursuit of a diversification strategy for decreased reliance on the energy product is one that has been articulated before and remains necessary. The current scenario further emphasises that these plans must be more aggressively pursued if we are to shift out of our comfort zone.

What is therefore needed is a candid stocktaking of the country’s current environment with proper plans constructed and implemented to achieve specific economic goals in the medium- and long-term.

Given the significant impact on revenue (12 percent negative variance just one quarter after the budget was approved), and the uncertain economic environment globally, best practice dictates that the Minister of Finance and the Economy critically reviews the budget and prepares new estimates for parliamentary review and approval.

It is therefore imperative and beneficial to the country if the Government provides to the public clear information on fiscal outcomes, expected developments and well-thought-out policies to address any fiscal imbalances and deviation in order to prepare households and the business community in developing strategies for the journey ahead.

The TT Chamber is therefore pleased that the Government will be providing the opportunity for meetings and input from key stakeholders to assist in formulating these policies. The TT Chamber will consult with its membership and is committed to providing a platform for further sharing of such critical information.

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