Economist Indera Sagewan-Alli is not optimistic Government can bridge the $21 billion deficit between expenditure and revenue by selling national assets and raising taxes.
In her contribution to the OWTU's post-Budget symposium at the union's headquarters in San Fernando, Sagewan-Alli warned citizens not to be fooled and contended that the real budget deficit is $21 billion, not $1.8 billion.
“The minister speaks to a deficit of $1.8 billion and that gives us a sense of, wow, it is a relief, we are moving away from deficit budget. But the real deficit is not $1.8 billion. The real deficit is the difference between $63 billion of expenditure and the $41 billion of revenue that the Government is hoping to generate, so there is actually a real deficit of $21 billion and I want you all to take stock of that,” she explained.
The economist, who described the budget as being “interestingly crafted”, said Imbert was proposing to deal with the shortfall through the sale of national assets.
“We are selling our assets in order to maintain a national expenditure of which over 50 per cent is in transfers and subsidies and a larger part of what is left is recurrent expenditure, not expenditure that is going to contribute to growing the economy, and that is cause for concern,” she said.
She added that there was no guarantee Government will generate the intended revenue: “I want you to reflect on the Prime Minister and his very sobering words when he said post budget, ‘To remember these figures given to you are based on assumptions, assumptions over which we had little control over’.’’
Sagewan-Alli said she was grateful to get information on the state of the economy, but added: “We have no control over what happens to the price of oil. We have no control over what happens to the global supply of oil and gas. We have no control over the global geo-politics. We have no control over those things. Those things have major control over us, because without it , we are in trouble.”
She called on Government to move citizens away from State dependency, adding that exorbitant expenditure on various sectors will not necessarily trigger results.
“For the last five years on average we allocated close to $8 billion per year to national security, so when you multiply let's say $8 billion by five, eight fives are $40 billion—$40 billion spent only in the last five years. Where are we with crime? So is it really about spending more money?” she asked
Sagewan-Alli said T&T has developed an unsustainable model based on State spending.
“I want to be optimistic but I have to tell you having done this type of analysis for quite a while, my level of optimism is quite low in terms of what to expect.”
She said she did not think the establishment of a Revenue Authority would generate $5 billion as expected: “If you have a decline in the economy, one where your productive sector is not generating revenue, from where are you going to collect the increase in revenue?
“We need to have growth in other sectors—in agriculture, in maritime services, in tourism. We have to engage in robust analysis in order to determine where we have comparative and competitive advantage and we have to go there.”
She said students who benefitted from the Government Assistance for Tertiary Education (GATE) should have a responsibility to repay their loans so children from upcoming generations could also benefit. She also expressed hope that Government will engage in widespread consultation with the citizens before embarking on its policies.