FINANCE Minister Colm Imbert said Government must reduce the country's long-standing dependence on billion-dollar subsidies on such basic commodities as water, electricity and fuel, if it is to close the gap between expenditure and revenue, and balance the national budget.
Addressing a virtual news conference on Tuesday, Imbert recalled that before the PNM assumed office in 2015, expenditure averaged $60 billion annually under then People's Partnership government. Successive budgets under the PNM over the last six years have annually been around $50 billion.
He reiterated that last year, Trinidad and Tobago recorded a deficit of $16 billion and this year, that deficit is projected to be $8 billion.
After describing recommendations from local economists to balance the budget as ridiculous, Imbert said, "We as a government have to keep looking at the deficit between revenue and expenditure because you can't go on forever spending significantly more than you earn."
Imbert said it would be totally irresponsible of Government to seek close that gap through indefinite withdrawals from the Heritage and Stabilisation Fund (HSF) which as of June 4, stood at US$5.67 billion. TT has eight months of import cover and approximately US$6.8 billion in foreign reserves.
"We have to look at things like subsidies on fuel, water and electricity," the minister said.
He said the last time water rates were adjusted could have been ten or 15 years ago. Imbert could not remember the last time electricity rates were adjusted.
Imbert reminded reporters that during debate on the Finance (Supplementation and Variation of Appropriation) (Financial Year 2021) Bill, 2021 in the House on June 9, Public Utilities Minister Marvin Gonzales said TT's water rates were one-fifth of the rates in other Caribbean countries such as Jamaica.
"As a country, we have to tackle these things. Right now, we subsidise WASA (Water and Sewerage Authority) to the tune of $2 billion." Imbert recalled that Government used to subsidise former State oil company Petrotrin by a similar amount before its closure in 2018.
Observing that the issue of subsidies was something none of Government's predecessors dealt with, Imbert said, "Unfortunately, we have to deal with these issues." He said Government could do what some people suggest and continue to fund the subsidies.
"Let's continue to subsidise fuel, let's continue to subsidise water, let's continue to subsidise electricity. (And) what's going to happen? At some point in time, the money will run out." When this happens, "Then we will find ourselves in this bad place that the economists keep telling me that I should go to...the IMF (International Monetary Fund)."
"We as a government have decided to do our own policy adjustments and things that are reasonable."
While acknowledging that the eventual removal of various subsidies would come at a cost, Imbert said, "I think this is something that is long overdue."
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