As Trinidad and Tobago awaits the national budget, one economist is urging the government to present a bold and realistic plan to drive productivity, strengthen non-energy sectors, and use the fiscal deficit as a bridge to future growth.
Economist Dr. Vaalmikki Arjoon says the budget must focus on boosting long-term economic stability rather than short-term fixes.
00:00Dr. Valmiki Arjun is tonight warning the powers that be that the country's public finances remain vulnerable to the global energy cycle.
00:10Over the last decade, declining oil and gas production, coupled with weak tax collection, have pushed the nation into recurring fiscal deficits.
00:18Since 2016 to fiscal 2024, that overall period, the cumulative deficit, if we were to add up all of the deficits, was about $71 billion, meaning that in that time frame we spent $71 billion more than what was actually earned in revenues.
00:37Dr. Arjun notes that despite a modest 2.5% economic growth last year, the overall economy has declined nearly 17% since 2015.
00:48With foreign investment flows now in negative territory, and debt hovering around 85% of GDP.
00:56Now, while we are seeing another deficit, that doesn't necessarily have to mean it's a bad thing.
01:02It doesn't have to be a fiscal weakness.
01:04It could actually be used as a bridge to future economic stability, depending on how the budget is structured.
01:10What I think is likely to happen, and what ought to happen, rather, is that the budget ought to channel resources into high multiplier investments, areas that will bring us more optimal returns by enhancing non-energy private sector operations,
01:28enhanced by creating the conditions for the non-energy private sector to thrive and to grow.
01:36And that, in turn, was going to help to create more productive jobs, enhance the profitability of the non-energy private sector.
01:42Among his recommendations, increase capital expenditure to modernize infrastructure, digitize public services, and invest in agro-processing and transport systems.
01:54He also urges tighter oversight of government spending and the introduction of electronic invoices to improve tax compliance and transparency.
02:04E-invoicing, instead of businesses at each retail and wholesale point of sale, instead of providing a normal paper invoice,
02:13they provide an electronic invoice that is linked to a database that is connected to the BIR.
02:19So that records all business transactions digitally in real time.
02:23And that will improve tax compliance, especially for VAT, for corporation taxes as well,
02:27because it will help to reduce the under-reporting, because it gives the BIR instant access to accurate sales data.
02:36Agriculture, he says, can also see a boost, helping to reduce the food import bill and strengthen local food security.
02:45That is quite plausible to reduce the food import bill and to support greater agro-processing projects,
02:50to enhance storage facilities, irrigation capacity, and, of course, climate-resilient inputs for the agricultural sector.
02:59I would think that there's likely to be well-designed programs tied to increasing agricultural output and increasing market access.
03:08All of these could help to use quick wins and make us more self-sufficient in terms of being able to supply our own food
03:14and diversify our exports as it pertains to agriculture.
03:19The Economist does not expect any tax or fuel price increases in the upcoming budget,
03:25saying the current administration is likely to pursue more expansionary fiscal policy
03:30to stimulate private sector growth and job creation.
03:34The national budget is expected to present it in Parliament next Monday.
Be the first to comment