Trinidad and Tobago is About to Max Out Its Credit Limit
What’s the Gist?
Just a month after Trinidad and Tobago elected a new government, its people were given bad news: the Caribbean country is in serious money trouble. The country’s finance minister revealed that the newly elected Prime Minister Keith Rowley and his party, the People’s National Movement, have inherited a budget deficit of TT$8.5 billion (over $1.3 billion.)
That doesn’t sound like much? Consider that the government had a TT$6.5 billion (about $1 billion) surplus at the start of the former prime minister’s tenure in 2010.
So within five years, the government went from earning 6.5 billion… to losing 8.5 billion?
That’s right. According to The Guardian, the previous administration’s spending ballooned up by 33 percent over its five-year term in office. That prompted the government to overdraft its checking account balance and borrow money to keep things running. Former Prime Minister Kamla Persad-Bissessar’s administration reportedly “maxed out” the amount of money it is legally allowed to borrow.
Finance Minister Colm Imbert attributed the state of the country’s financial affairs to the alleged corruption and “squandermania” of the outgoing government, claiming that Trinidad and Tobago’s economy was “running on fumes.”
And for a country that still relies heavily on oil and natural gas revenues, the low global price per barrel of oil is not encouraging given the current deficit.
Let’s back up. What if I don’t know anything about Trinidad and Tobago? What should I know?
Trinidad and Tobago is a twin island republic at the southernmost end of the Caribbean archipelago. A former British colony, Trinidad and Tobago gained its independence in 1962. Because of its oil and natural gas resources, it has long been one of the richest and most financially stable territories in the region.
With a population of about 1.3 million people, the country follows the Westminster system of government and has always enjoyed a stable political climate. That is notwithstanding the Black Power Revolution in 1970, which threatened the country’s first independent government, and a failed coup attempt led by a group of Muslim insurgents.
However, there have been allegations of corruption, though no one has ever been convicted or served time for impropriety while in public office. Trinidad and Tobago stands low in the Transparency International Corruption Perceptions Index, with its 2014 ranking being No. 85 out of 175 countries.
Okay, let’s return to present time. What does a deficit mean for the country?
Imbert said the country would reduce fuel subsidies to reduce spending, which would in turn pump up gasoline prices.
The government in Trinidad and Tobago, like many oil-rich nations, subsidises the cost of fuel for its citizens, which helps keep the price of gasoline among the lowest in the world. Many in the energy industry, however, have argued the subsidy is unsustainable given the big hole in the current government budget and encourage wider car use.
The public were not very happy to hear about the looming spike in gas prices. Ishmael, a popular Islamic activist in Trinidad and Tobago, said in a Facebook post that he was concerned the spike in gas prices would burden consumers in areas like food due to the increased cost of transporting goods. Some consumers are already paying more — just a day after the 2015–2016 budget was revealed, some taxi associations announced they will charge more for fares.
For others, like political blogger Rhoda Bharath, the spotlight was on the wrong issue. Rather, Bharath took to social media to show concerns over the government’s maxed out overdraft facilities.
“If the country is hit by a disaster tomorrow, what overdraft facilities does the state have access to to fund a relief effort?” she said in a Facebook post. “Ninety eight percent of our overdraft facility gone. Keep bickering about a reduced fuel subsidy.”
What is the new government going to do about the deficit?
Historically, Trinidad and Tobago doesn’t have a strong track record of punishing white collar crime. But the new government might be looking to shake things up — it announced it is investigating suspicious activities or transactions, and that anyone found culpable will be prosecuted in accordance with the law. However, it also stated it is not on a witch hunt.
Trini news website Wired868 criticized the government, claiming corruption could be addressed more effectively.
“How come nothing in that 41-page budget speaks to recovering money stolen from the treasury or ensuring that big business pays its fair share of taxes?” an article published on Wired868 asked.
And what about the former PM? Wasn’t she responsible for this problem?
That’s certainly what former Minister Kamla Persad-Bissessar’s biggest critics are saying. Persad-Bissessar, who is now leading the opposition in parliament, avoided taking any responsibility for the country’s current financial situation and questioned the finance minister’s claims about the state of the economic.
Persad-Bissessar criticized the budget, that, according to her, contained promises of “mega-projects” without explaining how they would be funded.
Imbert defended his budget, saying it was based on “inescapable facts.”
Satirical websites got in on the budget commentary, and memes soon began to abound, especially after former prime minister’s declaration that she was proud of how her government handled the economy.
What should we expect in the near future?
Members of parliament spend Oct. 9 and 10 debating the budget in session. The sessions were filled with politicking, heated argument over figures and testimonies about widespread mismanagement by the former administration. Whether any of the information presented will translate into legal action remains to be seen.
Brief contributed by Janine Mendes-Franco. This brief was originally published on Global Voices and has been modified for Gistory.
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