Prime Minister Dr Keith Rowley speaks at a post-Cabinet media conference at the Diplomatic Centre, St Anns, on Thursday. – ROGER JACOB
With just about two weeks to go until the Government presents its eighth budget, the Prime Minister says there are considerations for increasing the minimum wage to assist citizens in the lower income bracket struggling with the increasing cost of living.
However, Dr Rowley says an increase can have the unwanted effect of increasing inflation. The minimum wage is $17.50, and Finance Minister Colm Imbert in August said an increase was being looked at.
“I don’t want to pre-empt the Minister of Labour and the Minister of Finance on this but I would say we are considering it because it is the waterbed effect: you squeeze one side and the other side bulges but we really are cognisant that people on the lower end of the earning spectrum need some relief but that relief, you have to be careful that it doesn’t threaten their opportunities.
“The best thing we have been able to do in managing this kind of problem is to manage inflation, keep the value of the dollar in your pocket at a level that it does not become worthless.”
Speaking at a post-Cabinet media conference at the Diplomatic Centre in St Ann’s after Cabinet’s three-day retreat, Rowley said globally, people have to deal with the rising cost of living.
He said locally, Government subsidises utilities, noting there are many parts of the world where this is not done.
Rowley said the main driver of TT’s inflation was food importation.
“..So much of our food is imported, and even when we produce local foods, the enthusiasm to consume it is not there, so we are trying to encourage that.”
He said the Ministry of Health was leading the campaign to encourage healthy eating but citizens do not seem interested.
“We eat a lot of processed foods, a lot of the inputs on the food itself is imported and has to be paid for with foreign currency and in an environment where there is some shortage or slow availability of foreign currency, there are upward pressures in prices.”
He said Government was also encouraging youths to become involved in agriculture and in projects to grow more fresh produce locally.
He said when his administration took office in 2015, VAT was lowered from 15 per cent to 12.5 per cent. However, he said, those who needed relief the most did not benefit.
“I am convinced by the examination I have done and by keeping my eyes and ears on the ground, that made no contribution in the broad sense to the people who were looking for relief. The bulk of that two per cent that we took off VAT was kept by those engaged in selling things.”
He said during the pandemic, Government borrowed $3 billion to pay VAT refunds and admitted the collection system for VAT was not efficient.
The Prime Minister said at the retreat, every ministry and its priorities were discussed.
“One of the reasons why we had to do this is to ensure that we keep our feet on the ground and our thoughts close to our skulls, understanding that the country’s resource base is not as bountiful as it was in an earlier time, and therefore decision-making going forward, while we are quite happy with how we have been able to bounce back after the covid lockdown and shutdown and economic contractions…but as we motor into the future, we have to keep our eyes on the speed limit because every citizen of the country, not just the Cabinet, but every citizen ought to be aware that the country’s resource base is not what it was at our peak of 2007/2008.”
However, he said the country’s non-oil revenue was growing.
He said Imbert presented graphs at the retreat to show the economy’s progression since 2014. He announced that post-budget, Government intends to engage the public in a discussion of the country’s finances.
“We want to educate the population, sometime in the not-too-distant future after the budget in the coming weeks, alongside the Minister of Finance, we will do a spotlight on the economy…to indicate where we are, where we are going and where we can go and indicate where there are issues, how we are treating with those issues that arise.”
He said the economy remains heavily dependent on the oil and gas sector even as international prices were returning to 2018-2019 levels.
“We are guided and influenced and affected by the international marketplace, that is why we’re relying on the Minister of Finance to discuss with the Cabinet the projections going forward for the gas market, the petrochemical market and, of course, the crude oil market…we are able to have an idea of what it holds for TT and that then gives us an idea as to what we can do in sustaining what we are into or improving or increasing where we might need to be cautious or careful where we might need to.”
Rowley said he would leave it to Imbert to announce the budget date. “It does look like we will maintain a deficit budget, and from that budget, we have to determine how we treat with our debt and our level of borrowing.”
He said even with a deficit budget, Government will move ahead on its national road rehabilitation plan, saying crushed rock for repairs will come from the National Quarries, which was removed from the purview of the Energy Ministry and placed under the Works and Transport Ministry earlier this week.
He said earlier in the day, Cabinet approved the appointment of a new board for the company and 80 road repair projects were under way.
Rowley said negotiations for the restructuring of Atlantic LNG were progressing well and legal teams have now been tasked with finalising documentation.
“We are very close to inking in the restructuring of the Atlantic LNG business, we did engage in negotiations for a number of years with the principals in that…I can tell that the (legal) teams have done significant work and we are very close. I am looking forward to it being by the end of this year and you will be advised when that is taking place.”
He said Government was also looking at means to sustain and increase the supply of gas.
“We have installed capacity of four billion cubic feet of gas but now we’re only using on a daily basis in the order of 2.7-2.8 billion cubic feet and we have spent a lot of time and initiated new policies firstly on sustaining that new level, the reduced level that we are living on now and also looking towards increasing that within our border, on our border and across our border.”
Referencing the Dragon gas deal with Venezuela and the Manatee field deal with Shell, Rowley said, “I can tell you that in both instances, in some instances alive and well in the case of Manatee, the Manatee project is sanctioned and well on the way where our 27 per cent of the on-border gas, we are taking steps to have that gas come to us as early as it can.”
The Manatee field is a part of the Loran-Manatee field, with Loran located in Venezuela’s waters.
He described the Dragon gas deal as a “huge diplomatic boulder we have been pushing up a hill since 2018.”
But he said some progress has been made, and he hopes that “by 2024, we may be able to work our way out of the strictures on the Dragon matter.”
He said there were also discussions on how Government could encourage interests in the “small pools” left behind within the country’s borders, including tax incentives.
“Because we are now using aged fields and small pools and depleted fields and in some instances, untested areas, we have to do so much more now to stay in the same place, and we are committed to doing that.”