AS if the imminent Covid-19 peril were not enough to compose a nightmarish reality, the year opened with money matters claiming foremost ranking in national concerns. T&T remains self-reliantly embattled against the pandemic rampage. With no Carnival to look forward to, however, the ready availability of Christmas goods and goodies identifies the stuff of last glory days.
Endless full-page ads for supermarket and other shopping proclaimed T&T as a safe and open harbour for limitless imports. It took something akin to a year-end national accounting exercise to reckon with the prospect of imported goods likely becoming no longer as readily available as before.
Media watchers have become used to luckless unfortunates appealing for donations to enable meeting needs for medical help available only abroad. Just the other day, the lead executive of a company dependent on imports was recognised pleading for foreign exchange donations(?) to keep the business afloat.
Foreign exchange, for long assumed to be readily available for the asking, suddenly attained a status once enjoyed maybe only by gold. Shipping companies were taking the stage to announce new rules requiring T&T importers to pay for their goods in US$. Five shippers also set their own exchange rate of TT$8 to US$1.
Businesses, shippers and shoppers, indeed, all of T&T, had been warned. Christmas 2020, with all its short-falling expectations, still earned status as a last hurrah. “It is going to be a very tough 2021,” Finance Minister Colm Imbert had bluntly said in a pre-Christmas message.
“Oil prices are down, gas prices are down, production is down in both oil and gas…The inflows from the energy sector are much less… That is where we get most of our foreign exchange…in terms of foreign exchange it is going to be hard,” he said, counselling down-sized expectations.
The minister declined to suggest that US$ could cost more in TT$ terms. He hung tough on keeping the US1$ exchange no higher than TT$6.80. He pledged to “keep it at the 6.8 level for the foreseeable future”.
Soon, however, the shippers led the way, bidding for a rate of TT$8 to US$1. Here was an out front targeting of the post-Christmas shopping price tags. It would be seen to enjoy the endorsement of a near-alliance of op-ed economic talking heads who have zeroed in on the “overvalued” TT$ as the defining factor of T&T economic management and performance.
In a paper reported on last Christmas Eve, Marla Dukharan, Barbados-based economist of T&T origin, took damn-and-blast aim at the financial/monetary policy upheld by Minister Imbert. The foreign exchange policy upheld in Port of Spain she denounced as “perverse and harmful”, and inevitably doomed to failure, even disaster. “US$ is cheaper to buy just when the country is haemorrhaging US$ at an average pace of US$70 million a month,” Ms Dukharan charged.
Official T&T policy calls for serious review, she argued, warning: “Unless the policy stance of the Government changes, T&T could run out of foreign exchange in about two years.”
The Heritage and Stabilisation Fund, set up to protect this country against the total ruin of foreign exchange depletion is still warm-heartedly championed by Mr Imbert. Over five years, the administration had withdrawn from the H&S Fund nearly US$1 billion. Still, as the envy of less well-provisioned economies, it holds some US$6 billion, with the Central Bank stock of foreign exchange enough to cover six months of imports.
Seen in this light is the bright side of the T&T economy, in which hardly anyone, in or out of government takes undue comfort. Prime Minister Keith Rowley has been quoted boosting prospects to the effect that “the worst is behind us”.
Ms Dukharan has estimated that T&T foreign exchange reserves amount to about 14-15 months of import cover. She has voiced fear, however, that “T&T could run out of foreign exchange in about two years.”
Another op-ed reviewer of T&T economic and related affairs, Mariano Brown, has scrutinised the liability facing the H&S Fund. He concedes that the Fund has replenished itself through profitable investments. But this, he warns, could be just short-term good fortune, and if and when a predicted “market correction” occurs, the value of the T&T fund could fall.
Little hope can be pinned on increased foreign exchange inflows, such as would permit shippers and others dependent on ample supply to operate with confidence in the present and assurance about the future.
Devaluation of the TT$ hovers like a grim threat promising only more economic hardship. But at least one op-ed reviewer, Mary King, has devised an approach that could move matters acceptably forward, without devaluation. Her solution is to reduce local economic activity by reducing government spending to the end of “contracting” the economy. This, too, will cause hardship, but will provide the opportunity to diversify away from excessive State involvement by giving tacit encouragement to the private sector.
The op-ed debates, such as they are, have only just begun.