Bharath: Economic confidence is critical

The content originally appeared on: Trinidad and Tobago Newsday

Former government minister Vasant Bharath –

FORMER minister in the ministry of finance Vasant Bharath says the mid-year review needs to address the issue of what meaningful steps can be taken to address a lack of confidence in the economy.

He identified taxation, crime, government bureaucracy, ease of doing business and corruption as issues which contribute to the current economic state of play.

Finance Minister Colm Imbert is scheduled to present the mid-year review of the 2023/2024 budget in the House of Representatives on June 7.

Before that sitting, the House’s Standing Finance Committee will meet on June 3 to approve a $2.3 billion supplementation to the budget.

Among the major supplementations the committee will consider are $570,900,000; $155,677,500; $527, 800,000; $495, 286, 000 and $144,200,000 for the Energy, Works and Transport, Public Utilities, Health and Education ministries respectively.

The $2.3 billion supplementation will be approved by the House on June 7.

On May 28, Bharath said, “The biggest barrier that Trinidad and Tobago is currently suffering is a lack of confidence by the private sector, foreign and local, to invest in the country. Crime, lack of foreign exchange, ease of doing business, VAT (Value Added Tax) refunds, corruption as a result of failed institutions, government bureaucracy and productivity are all serious stumbling blocks for investors.”

If government were able to rectify these issues he said, “The take from taxation would be significantly higher, not just because of greater economic activity but because businesses are more inclined to pay their fair share if they could conduct business without the above-mentioned risks, uncertainty and unnecessary burdens.”

Referring to recent reports of certain businesses owing large sums to the Board of Inland Revenue (BIR) in unpaid taxes, Bharath said this bolsters his argument about efficient systems which can improve revenue collection, encourage investment and instil confidence in the economy.

“It is clear that the BIR requires to tighten up its controls and systems, like most state-run enterprises, but just collecting more taxes from the existing base leaves us a long way short of generating the necessary revenues required to provide high-quality goods and services to a neglected natiion.”

Bharath was concerned that the government could be pinning most of its economic hopes on energy initiatives such as the Dragon gas project and extracting natural gas from the Manatee field.

“Our current gas production levels are 35 per cent below 2015 levels and 1.1 bcf (billion cubic feet) short of what is required to run our plants at Point Lisas, and oil production is at its lowest levels since the mid-1950s.”

As a result, he said, TT has not been able to take full advantage of the inflated energy prices over the last two years caused by the Russian invasion of Ukraine.

“The government has failed to implement any meaningful diversification initiatives, with non-energy exports showing an uptick only because of a manipulation of how petrochemicals are classified.”

Bharath said government’s “economic” policies such as increased taxation, foreign and local borrowing, sale of state assets and withdrawals from the Heritage and Stabilisation Fund, have not generated any new economic activity.

He claimed that what has happened instead is “jeopardising hundreds of businesses and putting thousands of citizens on the breadline.

“In recessionary and difficult economic times, albeit self-inflicted, the government should be implementing counter-cyclical fiscal measures, ie increasing government spending and reducing taxes. ”