Eye on the Economy

Prime Minister Dr Keith Rowley had a one on one interview with CNC3 journalist Khamal Georges which was broadcast on Sunday. Rowley responded to questions on a number of national issues. The following are some of his responses on the state of the economy:

Q: Is the Government being honest with citizens when it says that the economy has turned around?

A: The data in Trinidad and Tobago is not entirely satisfactory and adjusting and re-adjusting of data leaves us in a situation where at one point if you use data that is available to you at that time you could come to a particular conclusion and when the data is corrected you get a different picture.

...In 2013 the size of this economy was $174 billion; the growth to GDP by 2016 given our loss of input into our economy from various sources that economy had shrunk to $140 billion odd dollars. It was the country losing in areas where we were earning. Now we are up to $158 almost $160 billion so we are going in the right direction and that is what we need to be concerned about.

Like it or not oil and gas are the major drivers of our economy. There are a lot of conversations as to what we should have done when we were children, what we should have done in the ‘60s, ‘70s and ‘80s. Those are nice conversations but in terms of what we are dealing with now and what we are grappling with now the economy of Trinidad and Tobago is largely driven by its fortunes in oil and gas and unfortunately this period is not a good period, hasn’t been a good period since 2014 and we just have to manage our affairs responsibly and focus on getting the best out of those inputs from hydrocarbon as well as focusing on other areas that can add to the basket called the GDP.

..the problem this Government has been grappling with ever since we came into office was low price and low volume, we made some improvements on the volume side but not sufficient. When we came into office the volumes of gas being produced was 3.1 billion mmbtu per day we need 4 billion mmbtu. That means we were 900 million stop short. We have been working on that and whatever you think of the lopsidedness of the economy and the overdependence on energy we had to work on that because that was where the earning was. We now got up to about 3.75 which is still below the 4 billion we need.

Q: When will we see the economy kick into the next gear?

A: Every budget that we’ve presented had within it a development programme of some sort, we have had to stabilise it. WE have been successful there, our inflation of one per cent is not to be sneezed at, our unemployment rate even though a lot of that employment is Government support for unemployables is down at approximately 3.5 to 4 per cent that is not to be dismissed because it could have easily been 12 or 18 per cent as we’ve had before.

Forex

The Central Bank puts and supports the exchange rate as it is now by putting the State-earned US dollars into the system. In countries where the Government does not have a supply of foreign currency, how do they make out? We have an industry here that brings a rent into the treasury...so people do find ways outside of the normal exchange rate to do things but that is not the economy. We don’t have a black market economy in Trinidad and Tobago we have some elements of black market. I am sure but what we do have is currency supported largely by Government’s earnings and what we have to do is to determine what are the priorities that that foreign exchange would be used for. We have to buy medicines, we have to pay public debt, we have to buy food..those things are paid for by foreign currency; a devaluation does not increase the amount of foreign currency you have.

Those who have access to foreign currency are the beneficiaries of a devaluation and some of the voices you hear calling for devaluation they know why they calling for devaluation, it is not in defence of Trinidad and Tobago, a devaluation overnight can hand them more millions of Trinidad and Tobago dollars.

...We tried to make sure that foreign exchange goes to the area where it can make the best contribution to the manufacturing sector so we started to make foreign exchange available through the Export Import Bank and only yesterday (Thursday) the Cabinet increased the amount of monies that have been made there.

Greatest success

Preventing Trinidad and Tobago from collapsing in the period 2015-2016 given where we were on becoming the Government of Trinidad and Tobago I think would be our greatest success. I don’t know that this country has fully appreciated the bankruptcy that we inherited in 2015. In September 2015 we were running a budget of $60-odd billion dollars of expenditure with revenues of about $38 billion. That was a recipe for disaster if we had panicked or taken bad advice.

We took a decision that while we were an IMF candidate that we will not take our country down that road and that we will take our own bitter medicine prescribed by ourselves for ourselves and some of that is what is being criticised now but that is what saved us from a worse situation.

Greatest failure

That we have not been able to engineer the growth that we anticipated that we should have been having now but a lot of it has to do with external forces because we are in the external market; for example we’ve been budgeting gas at $3 per unit but because of external forces the gas which is our main revenue contributor is now rooted as at just over $2 so whether we like it or not our main revenue earner in the external market has been there at low price.

You could say we too reliant on gas but that is what we have; that’s what it is, but what we did do we had tremendous success in revisiting the energy environment and putting our energy sector in a much better place now than in 2015. I am comfortable that the energy sector in Trinidad and Tobago has a bright future. We’re looking at US$5 billion in investments, we are now looking at access to gas deals that we didn’t have before and even though the price is low and the volumes are increasing slowly we are in a better place in terms of being able to make the most of what is available even in a difficult market.

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Just before the half hour the Dow was UP 50.46 at 29348.10.

Just before the half hour the Nasdaq Composite Index was UP 31.81 at 9388.94.