Soft landing or hard reality

I’ve decided to break with tradition on this one.

Over the past several weeks, I’ve seen common sense get into some serious bust-ups with special interest agendas, with common sense being soundly trounced each time. I suppose this is alright when the ladies of the Mothers’ Union are trying to decide which colour tablecloths are best for Sunday afternoon tea. Not so much for matters such as property tax and how to treat with successive downgrades from two credit rating agencies.

The Opposition powered its way into government partially on an axe property tax ticket. This is the same Opposition that decided in its last year of government the tax was necessary and announced plans to resume said tax. The same Opposition, which has now revved its machinery to fight the tax again. The same Opposition that has all the while demanded that government find ways to raise revenues. The same Opposition, whose several members own property abroad, for which they are happy to pay taxes. It is enough to leave your head spinning.

Meanwhile, the Opposition’s response to the Standard and Poor (S&P) and then the Moody’s downgrades has appeared almost gleeful. From the social media commentary, I fully expect one day, some day in Parliament, somebody is going to yell across to the government side, ‘Neh neh ni boo boo!” Such is the level of discourse.

Journalists are tripping over the pile of Opposition members and aligned interests that have suddenly become “available” to comment on the economy. Very many of these same people used to avoid us as though we had red eye. The economy is a disaster of epic, biblical proportions even, if the Opposition is to be believed.

This, I suppose, is all in the name of political expediency. After all, it was former prime minister Basdeo Panday himself who said politics had a morality of its own. Political parties have their mandate. And that is to survive, hopefully long enough to get their swing at the bat of governance again.

But does this “morality” justify what we’ve been seeing and hearing lately? The emotive words and gestures designed to do one thing, to grab common sense by the throat and choke it to death? It makes it hard to tell what’s real anymore. I seem to remember, though, that this Opposition, was a government of record budgets, each one larger than the last, despite the advice of experts. I also remember this Opposition as a government that experienced oil prices peaking between US$90-$114 a barrel. This same Opposition as government was euphemistically upbraided by the IMF for “underinvesting” in the economy. This is the Opposition that as government settled massive back payments to the public service, which the current government now has to borrow to honour. Talk about kicking the can down the road.

In this light, it is more than a little disingenuous to pose as though the economic problems joyfully being dished up on every morning talk show with a side order of schadenfreude are solely the result of the current government’s inability to manage.

The facts are, and yes, I am getting to the facts, that a credit rating is not an ultimate indication of the growth path the economy will take. It is a measurement of the government’s willingness and ability to repay its debt.

The expert I initially consulted with for what was supposed to be the original piece, Marla Dukharan, RBC Caribbean’s Group Economist, explained more fully that the rating matters to investors who buy bonds or treasury bills because it tells them what level of risk is involved.

She said the rating was also useful to those who had exposure to the government or who wanted an independent assessment of the fiscal or other developments in the country.

Some of the fiscal developments that both S&P and Moody’s have noted are the country’s increased debt burden to GDP. Both also say that the measures taken by the government to reduce this debt have, so far, proven inadequate.

However, both ratings agencies indicate that their outlook for the country is stable.

Moody’s said: “The stable outlook reflects our expectation that Trinidad and Tobago’s economy will modestly recover in 2017- 2020 on higher natural gas prices and production, supporting deficit reduction and the stabilisation of the debt burden.” So, is the matter serious? Yes.

Does the economy need work? Of course. Are things going to get better by the Opposition panicking the populace? Not so much.

I asked Dukharan to give the public as accurate a picture as possible of the implications of the downgrades. She said firstly, it made it more costly for government to borrow money, particularly in US dollars. This, at a time when “we are faced with weaker fiscal revenues and the need to borrow is greater, it increases the pressure on the Government’s finances”, said the economist.

Government’s response is critical.

Dukharan said it can choose to reduce expenditure and/or raise revenue. Both will have impacts on the public according to the level and the severity of the measures instituted. For his part though, the Prime Minister Dr Keith Rowley has signalled that government is taking the “soft landing” approach to the economy.

In a Tuesday night speech in Diego Martin, Dr Rowley lambasted unnamed critics at the University of the West Indies and elsewhere for advising the government to devalue the dollar, “cut the public service by ten thousand”, to slash subsidies and transfers and to reduce overall expenditure in the economy.

Such a massive decrease in government involvement could lead to the economy’s collapse and a severe reduction in the living standards of the country, he concluded.

He is not wrong. The dislocation involved in simultaneously cutting jobs from the country’s largest employer, reducing or doing away with all of this country’s government subsidised services and devaluing the TT dollar will be traumatic to a population that has become accustomed to easy living.

Dr Rowley said it is concern for the population that has his government easing it into the changes that need to be made.

It is good that the government cares about the country. But will care be the thing that kills it? I have worked in media since 2002 and every year since, I have heard experts telling governments that they needed to cut spending on transfers and subsidies and diversify the economy. It was a tune being sung long before that.

But just as the job of a political party in Opposition is to return to government, the job of the political party in government, is to stay there.

Which political organism in its right mind would deliberately bring hardship to a voting population, even if it was for the long term good of the country? They all remember the National Alliance for Reconstruction.

For the 40 and under crowd, this is the government that tried to enforce IMF conditionalities on a TT public during its term in office from 1986 to 1990. It cut public sector wages, jobs, Cost of Living Allowance and several social sector programmes touching off some of the largest labour protests this country had since the 1930s. This was also the government in charge during the 1990 coup attempt.

Imam Yasin Abu Bakr has always maintained that beyond the Jamaat land issue, hardship brought to the people was one of his reason for staging the insurrection. For its trouble, the NAR received a sound drubbing at the 1991 polls. It was decimated in Trinidad, holding on only to its Tobago seats. As one of my former editors has remarked, “Trinidadians do not do austerity well.” Just as panicking the population is not going to help, coddling it is not going to prevent it from having to face difficult realities sooner or later.

The realities are this: the country’s proven reserves are depleted, diversification is still in its incipient stages, according to several international agencies, the country’s dollar is overvalued. Meanwhile, this country’s National Insurance system may not be able to support another generation of pensioners and if several reporting agencies are to be believed, all of this (and more) is likely to come to ahead around 2030, less than 15 years away.

The Prime Minister himself remarked that whatever we earn, the priority dollars are dedicated to repaying debt. That means less money to invest in improvements in healthcare, education, social programmes and the like. With the debt to GDP ratio climbing, that’s serious.However, everybody just keeps kicking that can down the road. We are going to run out of road.

And while the Government and Opposition engage in public tit for tat, the public remains uninformed as to the gravity of the situation we are facing.

As a journalist, it is my job to provide the information for them to make proper judgements. In as straight and unbiased a fashion as possible. I’ve been listening to my radio, my TV and watching my social media over the last few weeks though, and this time at least, it was hard to remain a disinterested observer. Not with what is at stake.