Maroc - NEWSDAY.CO.TT - A la Une - Aujourd'hui 08:33

PM sends promising signals on budget deficit

THE PRIME MINISTER confirmed on September 12 that the budget will feature a deficit. That’s not surprising. Nor is it necessarily bad news. "We have inherited some really bad treasury stock," Ms Persad-Bissessar told reporters at the Red House. "We’ve inherited a lot of borrowing as well. I don’t think we can have a balanced budget, so we may have expenditure outpacing revenues." However, the PM tellingly added, "It may not be as bad as you think." A further note of reassurance came when she disclosed the cabinet was working on ways to supplement revenues, saying, "I’ve been in this parliament long enough. There are creative ways of financing deficits and we will utilise the tools that are available." While debt levels suggest room for fiscal manoeuvring may be somewhat limited – and there was also a warning issued this month about a possible softening of LNG prices – Ms Persad-Bissessar’s hints that spending will not be drastically cut bodes well for the stimulation of economic growth. But her promise of creativity further raises expectations that Finance Minister Davendranath Tancoo’s first fiscal package will have to boldly meet. The PM’s buoyant mood contrasted with the doom and gloom of PNM MP Colm Imbert. "I’m hearing it’s $15 billion, could be $20 billion," the former finance minister said of the upcoming deficit on September 13. "If it’s in that range, it means that our debt is going to skyrocket. It’s not good for us, but I thought they had all the answers and they were going to balance the budget, so I’ll wait and see." This divergence was a preview of what to expect in the budget debate. That debate will paper over a reality that is somewhere in-between. Ms Persad-Bissessar cannot afford to drastically slash spending in key areas such as national security and education. Indeed, she has already suggested expenditure in these areas will continue to dominate. Previously, she has also suggested funding in other areas may well be ring-fenced, such as salaries and pensions. Her recent order of the immediate payment of salary arrears to 950 current and former National Insurance Board employees and a salary adjustment as outlined in a collective award for 2014-2016 has whet the appetite of trade unionists awaiting a similar resolution of pending settlements. But the measure was uncosted, meaning it will be left to Mr Tancoo to spell out the funding. With Central Bank Governor Larry Howai this month indicating a slowdown in the economy at the start of 2025 – retail spending, cement purchases and LNG production are all down – holding strain and maintaining expenditure, even into a deficit, may be essential at this stage in order not to deflate consumer spending. What will matter are the areas into which spending is spread and the terms of financing. Yet, all of this means the government needs to walk a tightrope come October. Paradoxically, it needs to be conservative in its approach to changes while unleashing innovation in a way that citizens will feel. The post PM sends promising signals on budget deficit appeared first on Trinidad and Tobago Newsday.