The next three years are expected to be an extremely difficult period and will be characterised by “market volatility, a low energy and commodity price regime, and consequently reduced country revenues and foreign exchange,” Phase Two of the Roadmap for T&T report has stated.
It noted that the impact of the COVID-19 pandemic has been disastrous with billions of dollars lost and a reduction on up to 50 percent in revenue in some sectors of the economy.
And, as such, the country needs to find ways to earn revenue and cut expenditure to deal with this situation.
“In this respect, consideration must be given to urgent engagement of the gas value chain recalibration to optimise gas and commodity output in the short term,” the report stated.
The report said that targeted revenue can be set at $2 billion for improved returns from the gas value chain.
An additional $1.5 billion can also be targeted through the implementation of the property tax and effectively widening the tax net to provide more equitable and effective methods of tax collection, it stated.
The report also called for:
• Reduction in the level of imports, beginning with a reduction of the Food Import bill through the proposed agriculture stimulus. (Targeted reduction is $2 billion by 2022)
• Accelerated employment of targeted PPP arrangements for infrastructural development as well as leveraging of idle capacity in the public sector. Sponsored parks eg E-idcot, Eteck etc must be fully activated. (The level of activity aimed at here could be $1.5 billion)
• Increase of non-energy earnings using the Exim Bank, ExporTT and other private sector partnerships. (The earnings target here could be $1 billion
• Rationalisation of transfers and subsidies predicated on a unique e identity system to make transfers and subsidies more efficient while protecting the vulnerable and to make state-owned enterprises more self-sufficient whilst carefully considering a divestment programme for non-core assets (Conservatively $1.5 billion)
• Focus on innovation and entrepreneurship to stimulate the micro and SME sector targeting traditional and non-traditional areas. This is the defining moment to change productivity levels and culture to embrace digitalisation, to think, re-engineer and act transformatively and execute differently. This transformation must be anchored in key areas of the public sector led by a multidisciplinary team reporting to the Office of the Prime Minister, the report read.
It added, “The stark reality is that the required liquidity levels are simply not available and debt headroom has significantly diminished. This means that ‘policy choices have to be made’ to transition the country out of a long-term potential debt trap and systemic inter-generational poverty.”
The committee stated that the choices have to be clearly communicated in next week’s national budget in a “frank and forthright conversation with the population.”
“This is a defining moment in which a health pandemic must not be allowed to become an extended economic pandemic but rather becomes a pillar for new behaviour and long-term sustainable growth,” it stated.
The report posited that the COVID-19 pandemic and the unprecedented collapse in energy prices earlier in the year “effectively changed the trajectory of the T&T economy.”
“COVID-19 dealt a monumental blow both to the demand and the supply sides of the economy, causing annualised revenue losses of more than 50 per cent in some sectors. The precipitous decline in energy prices translated into sharply reduced government revenues and foreign exchange inflows with adverse consequences for our cash flows, fiscal balances, country ratings and developmental policy options,” it stated.
“Economic losses are in the order of billions of dollars and will have a multi-year overhang of at least two to three years’ duration, conservatively,” the report stated.
The report stated that a rebuilding of the economy must be initiated making it more resilient in the face of possible future shocks.
“In other words, the legacy of COVID-19 for T&T must be a new economy and a new society. This Phase 2 Report begins with the perception of the economy, not as an engine to give us the standard of living we aim for, but as a set of relationships among individuals and organisations as we seek to improve and secure our standard of living,” it stated.
The report said what this means is that the committee accepts the Arthur Lewis dictum that good economics begins with a concern for the conditions of life under which people live. In other words, the report acknowledges that economics and the policy framework that comes with it are really about people and about people’s lives first and foremost.
In this context it argued that the report supports the stance of the leadership of the country that the response to COVID-19 needs to be a whole of-country response and not merely a government response.
“Whether it is the need to properly support the vulnerable or to transform the economy, there will be clear roles for the private sector as well as civil society. Leaving no one behind is something we have to do together,” the report stated.
The report added that even as we move to get the economy back onto a sustainable track of development, we have to ensure that the social environment within which the required changes must take place is one characterised by cohesion and by a perceptible sense of equity.
“Put another way, the environment created must be one that obviates social tension and builds harmony. This means that social and economic policy must be geared towards removing all the systemic factors that keep some groups in the society from progressing, and must create a framework of opportunity, which will give every citizen or resident of the country the hope that he or she stands a good chance of having a better life in the future,” it stated.
The committee said in the wake of COVID-19 it will be recommending the much-abridged vision statement:
“To be a resilient and prosperous nation built on the pillars of harmony, productivity and ingenuity.”