Finance,notsnakeoil

Acountry's finance minister is expected to be a balanced, responsible individual with self-confidence enough to face the truth about the country's economic condition under his watch. He is certainly not expected to create false impressions about this fundamentally critical aspect of national life, constantly painting a picture rosier than the reality to shore up his own image and win empty partisan applause. In every official word and action dealing with the national budget and the country's economic condition, you should be the minister of finance, not a snake oil salesman.

This beleaguered nation with its fragile, elementary economy continues to be subjected to the hollow boasting of Finance Minister Colm Imbert, desperate to surface as a hero, now claiming a glowing performance based on a recent IMF report. The new estimates show marginal growth of 2.5 per cent in 2022 with a GDP of $153.3 billion, and continued growth projected at 3.2 per cent in 2023, bringing the GDP to $158.1 billion. A mere fleeting picture that places us nowhere near the economic performance Imbert met in 2015. And the Government had little to do with the growth, which comes mainly from increased energy revenue from high prices produced by Vladimir Putin's invasion of Ukraine. Leading economist Dr Vaalmikki Arjoon reveals the true picture.

Using a graph, he points out IMF data showing the economy declined by over 19 per cent from 2015 to 2021, with real GDP falling from $185.7 billion in 2015 to $149.6 billion in 2022; and that the present performance takes us back to 2006 levels. This is the extent of the economic decline during Imbert's eight wasted years as finance minister.

And Imbert is again attempting a ploy used in his 2018 mid-year budget review, quoting IMF estimates that the contribution of the non-energy sector in 2022 was almost 70 per cent of GDP, trying to say subliminally, 'See, how great I am. I have done diversification.' But my 2018 column, 'Masqueraded growth', responded to his claims that year, pointing out that under the International Standard Industrial Classification of All Economic Activities (ISIC), we no longer formally have the energy and non-energy sectors.

We now have ISIC B: Mining and Quarrying, where only upstream activity is categorised-for example, the extraction of oil and natural gas; and Manufacturing or ISIC C, where downstream activity like the production of ammonia, methanol, urea and LNG are all now categorised as manufacturing! Forty-two per cent of economic activity previously recorded under the energy sector can now be categorised as manufacturing or non-energy. Any wonder the latter would have such boosted 2022 figures for T&T? Obviously, the IMF would be using the ISIC re-classification and would not be lulled. It has found it necessary to repeat its call for 'economic diversification' for the umpteenth time. Here, Imbert has failed for the past eight years, presenting eight budgets with loads of verbiage, all lacking vision and direction and saying one thing essentially: 'I'm waiting for energy prices to rise'. Well, Putin did it for you in 2021-22. But no more. With interest rate-hikes globally, international trade and economic activities have slowed, dampening energy demand and prices. Besides, the world is overcoming the Putin effect as I have pointed out, with Europe, for example, now producing 40 per cent of its energy needs from renewables and importing LNG from the US, the world's largest supplier. No surprise therefore our energy revenues fell from $6.4 billion in December 2022 to $1.7 billion in January 2023. Without Putin's high prices, we will soon start borrowing massively again, with projected expenditure now increased to $61 billion this year and with local and general elections coming, bringing the inevitable dole-outs and hand-outs to get votes. Expect a massive increase in net national debt, which in September 2021, already stood at $126.6 billion, 85 per cent of GDP, way above the 70 per cent described as 'acceptable'.

We could have benefited more from Putin's invasion. But under this administration, gas production has fallen 30 per cent since 2015, with oil and LNG declining 34 per cent and 37 per cent, respectively. Obviously, the prime minister and his energy minister have travelled uselessly hither, thither and yon to meet energy executives. Gas production remains at a 19-year low, oil production at the 1950s level, and with no meaningful increase coming soon.

With prices for oil and gas, ammonia and methanol already lower than forecast, expect a 2023 budget deficit larger than anticipated. We certainly will not reach near that $56.2 billion in revenue projected by Imbert last September. Are we heading for a double-digit deficit this financial year? Is this the reason why, in this mid-year review, Imbert gave information only on the revenue position for the first half of fiscal 2023 but failed to give a revenue forecast for the rest of the year. It would certainly have spoilt his rosy picture, exposing the fraudulence.

Folks, the economy is the foundation of a society. Putin's invasion of Ukraine gave us a mere temporary reprieve from slipping down the precipice into darkness. The respite is over. Danger looms again! We are in dire need of a real minister of finance. Enough of this snake oil salesman.

Obviously, the prime minister and his energy minister have travelled uselessly hither, thither and yon to meet energy executives. Gas production remains at a 19-year low, oil production at the 1950s level...