Left to work magic with an estimated $15 billion Covid-related financial hole, Finance Minister Colm Imbert may settle for keeping the engine of the economy running while idle.
Since bold strokes are not expected from the administration it would not be surprising if the thrust of Budget 2020/21 is to stay the course, albeit at a lower level of activity supported by a mix of debt and draw-downs on the Heritage and Stabilisation Fund (HSF). Hopefully, before new draw-downs are approved, the government will keep its promise to separate the funds and insulate heritage savings for future generations before the HSF is overwhelmed by stabilisation demands.
In current circumstances, treading water amounts to the same thing as kicking the can down the road. With the world changing rapidly around us, Trinidad and Tobago seems unable to detach itself from its dependency on oil and gas despite knowing the high cost of this addiction.
While the current economic reality dictates that T&T max out the sector’s potential, planning requires that we ensure that the future around the corner does not materialise as a big truck coming straight at us.
While we ignore the imperative for policy shifts, the global oil and gas powerhouses are on the fast-track to change. The example of BP’s pivot from oil and gas to renewable energy is pointedly made by economist Dr Terrence Farrell in a column published in today’s Express. That signal of change is huge, considering BP’s dominance in the global oil and gas industry. The message to be taken is that the future belongs to those who understand and take control of the forces of change and not to those who risk suffocation by burying their heads and waiting for the sandstorm to pass.
It is likely that what T&T faces is more a crisis of imagination than of stubborn unwillingness to change. Perhaps our economic history has not equipped us for the task or given us the self-confidence to dismantle the Plantation Economy even if we did manage to adapt it to great national benefit with the value of going downstream. A telling indicator was the Prime Minister’s dismissal of diversification some time ago when he complained about repetitive talk about diversification when T&T’s economic reality is one of oil and gas. It was a disappointing comment from the country’s highest office-holder with the prime responsibility for leading the country through choppy waters in a world of change.
Whether we wish to accept or not, our economic reality is that we are dependent on a commodity subject to forces beyond our control, is a finite resource, and whose future value is being written over by the global movement away from fossil fuels towards renewable energy.
We can milk oil and gas for all it’s worth but must not fool ourselves about our perilous position. Even if we were to shift now, we would already be late and behind the curve. Still, better late than never.
Finance Minister Imbert noted that he had only recently received the final report from the Road to Recovery Team. Let’s hope it contains some nuggets towards transformational change.