PRIME Minister Keith Rowley and his Finance Minister Colm Imbert have been peddling the myth that it is through their manful resistance and economic wizardry, respectively, that this nation has not gone to the International Monetary Fund (IMF) for support.
But this abject self-lionisation is only grist for the gullible. The truth is unforgiving. These two have been utterly irresponsible.
They ought to have known that our energy sector earnings have dropped permanently. This necessitated two main courses of action: cutting expenditure and both earning and saving foreign exchange. On the former there has been some action. The budget was reduced from $63 billion to $50 billion by 2018. But on the latter and most critical—earning new foreign exchange—there has been absolutely nothing: zero, nada, zilch.
We are in trouble folks. Our economy needs foreign exchange the way the human body needs oxygen. We need it to import most that we eat, drink, wear, and use in our homes, schools, hospitals, offices and factories. We don’t produce much here. And all that we manufacture needs foreign inputs. So without foreign exchange we have neither economy nor society and would collapse into failed state status.
So what has been responsible for the facade of stability that allows the boast from the top two? It is our foreign reserves which, as I previously pointed out, has been the principal factor keeping this economy afloat during the last four years. But, irresponsibly encouraged by Rowley and Imbert, we have been consuming our reserves without replenishment, not thinking of the children, improvidently living off the wealth accumulated during our energy boom years.
For almost a decade after 1999 the gas price moved from US$2 to US$7 per thousand cubic feet, with oil crossing US$100 per barrel several times. We were the leading supplier of LNG in the western hemisphere, accounting for nearly 80 per cent of US imports. Foreign Direct Investment (FDI) flowed in to make us the world’s leader in ammonia and methanol. We built reserves, established a Heritage and Stabilisation Fund (HSF) and increased budgets from $12 billion in 2000 to $63 billion in 2014.
But those days are gone forever, a fact Rowley and Imbert choose to ignore. But the evidence is abundant. We have had the closure of Arcelor Mittal; two of the Methanol Holdings Ltd (MHTL) plants; the coming closure of the Yara ammonia plant; and the possibility of Atlantic LNG train one being shut down, all constituting a massive blow to our ability to earn foreign exchange. Add also, the closure of the Petrotrin refinery, which has forced us to now spend US$250 million annually to import fuel we once produced! Yet we have this pitiable attempt at self-vindication by the Prime Minister and his ministers for their “restructuring” of Petrotrin, claiming the Heritage company has made a profit of TT$725 million. This is yet another despicable attempt to deceive. For, the exploration and production arm of Petrotrin, renamed “Heritage”, has always been profitable.
Rowley and his ministers therefore cannot escape from the biggest blunder in the history of Trinidad and Tobago that they made by shutting down the refinery. And with tragic irony, they are so desperate to restart it, they have virtually given the facility to OWTU/Patriotic, “a US$700 million favour” says the Prime Minister, after 76 other bidders vanished. Today, Imbert has admitted with longing but no shame, that “When the refinery is restarted, there would be no drain of foreign exchange to purchase imported fuel.” Only in Absurdistan!
So people, foreign exchange outflows now exceed inflows. Our reserves have consequently dropped precipitously. Between September 2015 and June 2019 they declined by 33 per cent! From US$10.459 billion to US$6.993 or 7.9 months of import cover, the country’s lowest since December 2007.
But those figures, by themselves, don’t tell the entire story. Because, the massive US$2 billion foreign borrowings over the last four years, have been added to the reserves, providing an artificial boost, like the recent borrowing, taking the reserves to US$7.024 billion by August 2019.
When you remove the borrowed money, our real, earned reserves are down to approximately US$5 billion from the US$10 billion in 2015. This will drop much further in election year 2020 when imports will increase exponentially. And with no new foreign exchange coming in, this is a frighteningly precarious position. The IMF has warned that, at our rate of consumption, we would be down to three months import cover by 2021 or earlier.
Our economy is therefore heading for the IMF hospital. And when we are put on life support, the Diego Martin duo, Rowley and Imbert, would have to shoulder significant blame for our plight. Because, during their tenure, the most critical five years in our modern history, with our increasingly dire situation in open view, they took no steps to protect our economy by incubating new streams for foreign earnings. Rowley has found diversification “annoying” and, as his budgets reveal, Imbert has treated the matter with equal contempt.
So folks, it is your foreign reserves, our accumulated financial security, that have saved the day for T&T thus far. Therefore when Rowley and Imbert claim they are getting the job done, that it is their courage and skill that keep us from going to the IMF, it is nothing but a big lie.