ECONOMIST Dr Vaalmiki Arjoon on Friday questioned the reasons advanced by Finance Minister Colm Imbert in the 2021 Mid-Year Review that Trinidad and Tobago would not stop borrowing to fund salaries and the provision of basic amenities like water and electricity.
Arjoon also questioned why Imbert was insisting that TT approaching the International Monetary Fund (IMF) for funding is not on the cards.
In presenting the Mid-Year Review in the House of Representatives on Wednesday, Imbert said countries only go to the IMF when they run out of foreign exchange and cannot service their foreign debt.
"Since our foreign reserves are still in the vicinity of approximately US$7 billion and our Heritage and Stabilisation Fund (HSF) is still in the vicinity of US$5.7 billion, we have more than sufficient foreign exchange at this point in time and there is no reason to go to the IMF for financial assistance."
Imbert said, "We are certainly not going to make structural adjustments such as retrenchment, removal of subsidies and devaluation at this time." He also said if TT stopped borrowing, it could not finance the fiscal debt, pay salaries, finance education, health care and provide water and electricity to citizens at the current rates. Speaking in the Senate on Friday, Imbert said, "There is no gainsaying that because of the reduction in revenue as a result of covid19, that the fiscal budget deficit for fiscal 2021 would be significantly more than was originally anticipated. That is simple mathematics." He continued, "We are looking at a shortfall of approximately $5 billion in revenue, mostly from the energy sector.
Imbert said Government has largely succeeded in maintaining expenditure close to $50 billion since 2016. "However, in preparing the 2021 estimates of expenditure, an effort was made to make a further reduction approximately down to $48..$48.5 billion." But he said, "Unfortunately because of the various demands of the various ministries for goods and services, salaries and wages, we have to take it back up to the $51 billion level." Sticking to the point that Government will not be approaching the IMF for funding, Imbert said armchair economists conveniently omit to tell the population that countries must accept certain conditions and make policy adjustments to access funding from the IMF.
Imbert said, "People must understand that it is not right to just glibly say that we should go to the IMF. We in this government have sought to do our own restructuring without the imposition of IMF conditionalities."
Arjoon said the projected $5 billion revenue shortfall which Imbert projected, together with the additional $2.9 billion increase in expenditure which Government was seeking through the bill, could make the deficit comparable to last year's deficit of over $16 billion.
"Naturally, with a $48 billion deficit over 2016 to 2020, we hadn’t saved and therefore had no choice but to borrow substantially and withdraw from the HSF (Heritage and Stabilisation Fund). Arjoon said, "It is therefore highly likel
