With three weeks to go before he presents his proposed national budget, Finance Minister Colm Imbert on Monday issued an open invitation to the national community to submit recommendations on the fiscal measures and initiatives they would like to see in the 2020-2021 budget, given “current restricted financial circumstances”. All recommendations, he promised, would be given consideration.
It was a nice touch, which communicated his understanding of the many competing interests that will need to be satisfied and pacified in this budget. However, having engaged the public, he will have to prove it was no PR mamaguy by how he articulates and defends his eventual choices. Budget 2020/21 will certainty test his skill in tightrope-walking.
It goes without saying that this is the Covid-19 budget and will be forever known by the name. The global pandemic has placed it in a season of great unknowns and Minister Imbert must be aware that sensitivity to the interests and concerns of all is critical to public buy-in. As tough as 2020 has been so far, 2021 is likely to be even more challenging. The emergency measures funded during the lockdown through borrowing and a drawdown on the Heritage and Stabilisation Fund cushioned the initial impact of Covid-19 and may even have encouraged a view of temporary sacrifice. However, with the global contraction feeding on itself, not even the experts know where the end of this recession lies, what shape the global economy will be in when it does and what demand will look like in a post-Covid-19 world.
In the context of a shrunken pie, Minister Imbert’s challenge will be to demonstrate fairness in distributing the burden of adjustment to the Covid-19 reality while breathing life into a sputtering economy. Every dollar spent will need to justify itself as an investment.
No matter how small the pie, the Government must protect the most vulnerable. Further strengthening of the social safety net can therefore be expected. With a growing pool of unemployed and under-employed, a bigger chunk of the pie should be allocated to social support, micro and small businesses, and youth. The recent reduction in gang warfare since the pre-election protests has also created breathing space for deploying resources into low-income urban development as an investment in peace.
A core decision for the Government lies in the hard choice to be made between domestic production including for export, and sectors that rely on imports. Given the ramifications involved and the economy’s lack of preparedness, it would be surprising if the Government were to stray far from its norm. However, with five years of administration and planning under its belt, the Government should be ready to unveil its policy on agriculture, State lands and fisheries through its fiscal and expenditure choices for 2021.
In delivering his budget, Minister Imbert will have the benefit of a population attuned to the need for further belt-tightening and sacrifice, but needing to be convinced of the Government’s ability to manage the economy while shifting it onto a more viable and sustainable path beyond oil and gas.