Last Wednesday, Sport Minister Shamfa Cudjoe rebuffed the public’s tepid response to the Government’s 2022-2023 budget.
“Everybody wants everything for nothing,” Ms Cudjoe said. “Everybody wants everything but (is) willing to give up nothing.”
Despite a robust backlash, the Sport Minister has stood by her words.
She got tempered support from three senior economists the next day, as Drs Dave Seerattan, Darren Conrad and Marlene Attz discussed the budget at a virtual forum hosted by UWI’s Department of Economics.
Dr Attzs pointed to a dependency syndrome resulting from 60 years of government intervention through subsidies, transfers and state assistance that have masked the real cost of goods and consumables in TT.
Dr Seerattan declared the fuel subsidy unsustainable in the long term and noted the burden on the treasury that additional financial assistance represented.
Between 2000 and 2020 alone, the fuel subsidy reduced the cost of fuel by more than half, costing more than $31 billion. Finance Minister Colm Imbert announced in the budget presentation that the subsidy would be capped at $1 billion per year, with more emphasis on social grants and direct assistance to underprivileged citizens.
Unfortunately, rising fuel costs have an immediate impact on the pockets of the body politic, particularly in an economy still reeling from the impact of 30 months of covid19 lockdowns.
Politicians cannot hold themselves above the creation of a national culture based on government handouts. It is no secret either that TT has been a running example of both the bounty and the crippling effects of Dutch disease, the economic consequence of an over-reliance on lavish revenues from natural resources.
Studies suggest it is the strength of governance institutions that makes the biggest difference in successfully managing its impact.
The disconnect between staggering revenues and minimal national effort, coupled with slackness in accountability in state make-work projects, grants to stakeholders and other handouts, has created an expectation of government bailouts as a norm, not just when times are tough.
The state’s inability to sustain any significant effort at diversifying the economy while continuing to rely on petroleum-sector rents is troubling.
Mr Imbert has been sensibly peeling the fuel subsidy away over the last three budgets, but the government has more to do to in monitoring value of each dollar it spends in social interventions, by insisting on accurate reporting in individual distributions and spending by beneficiary organisations.
The Heritage and Stabilisation Fund, a useful backstop, should not be viewed as a replacement for sound financial management of the returns from the diminishing resource of oil and gas available to this country.
And pushing against the economics of Dutch disease and the psychology of dependence demands more will than any government has been willing to invest so far.
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