As Trinidad & Tobago moves into election mode (the last elections were held on May 26th 2010), Prime Minister Kamla Persad Bissessar’s government seems to have been surprised by the most recent survey of the economy by the international agency Moody’s (as reported in this newspaper last week) which has downgraded the country’s credit rating from stable to negative.
The agency has been extremely critical of the government’s recent financial policies, suggesting that it has not taken the opportunity of relatively good economic and financial times particularly to focus on an effective fiscal strategy, and to make decisive efforts to diversify the economy beyond its traditional dependence on oil and gas. And the continued lack of diversification is said to lead to a maintenance of an economic strategy that ensures that the government “wages, subsidies and transfers” – in other words extensive government expenditure – continue to remain a major force of the country’s economy and, we might add, some measure of social stability.
The government, in turn, has argued that given the global economic downturn since 2009, and the decline in oil prices, the measures which it has taken have inhibited any extensive economic decline; and it seems to reject Moody’s suggestion that there should have been, by now, a decisive effort to use the substantial resources of the Government’s Heritage and Stabilisation Fund established during the last major oil price boom, to shift economic strategy to encouraging substantial economic diversification.
In effect, Moody’s will have been reminding the government, and the country as a whole, that Trinidad has gone the way of a major oil boom in the 1970’s, as symbolized by the then slogan “oil can’t spoil”, only to subsequently find itself descend into economic difficulty and depression. And indeed the concept of a Heritage and Stabilisation Fund, invented when things moved upwards again, was intended to ensure that there were alternative sources of investment and revenue-generation that could ride out expected periodic lows in oil prices, or international recessions.
Moody’s current assessment of the economy, and more particularly of government’s economic strategy, has naturally come as a gift to opposition parties now in the throes of electoral campaigning. And in response, Minister of Finance Howai has taken the opportunity to indicate that Trinidad & Tobago is not alone, noting that “South Africa, Russia, Bahrain, Japan and Costa Rica were also downgraded by Moody’s.” And he has insisted that the government has made a major effort to attract investment beyond the oil sector, while continuing to attract companies wanting to engage in oil and gas exploration.
That the main People’s National Movement opposition has attempted to take advantage of the external criticism of the government’s economic strategy would not be surprising, and certainly not at this particular time. The opposition has, in fact, previously been concentrating not so much on the issue of the resources available to government which are, as pointed out by the Minister of Finance, substantial, even given the decline in oil prices; but rather it has been focusing its campaign on what it claims is the illicit use of the resources, involving substantial corruption; and in this they have been joined by splinter forces from the People’s Partnership (PP) electoral and governmental coalition.
Accounts indicate that over its five-year period of government as many as twenty four MP’s have left the government side, including Jack Warner, considered a major strategist of the last election, now leading his own Independent Liberal Party. And in addition, the PP coalition has lost 15 Ministers, as a result of actual dismissal or of resignation.
PNM leader Keith Rowley’s characterization of Moody’s appraisal as representing “a day of shame” for Trinidad & Tobago, seems therefore to be intended to keep his party’s focus on that aspect, as probably more productive in terms of gaining voter support. For while the PNM may well consider Moody’s critique as welcome in putting pressure on the PP, which it has criticized for wanton and unexplained expenditure, the force of Rowley’s campaign seems to be directed not so much on policy criticism in the sense of ineffective or inadequate public investment, as on that of alleged extensive and continuing corruption involving camp-followers of, essentially, the traditional UNC.
In that sense, it is doubtful that the line of economic policy implemented by the PP will, even after Moody’s critique, be the foundation of the opposition’s attack on the government. There is, indeed, not much indication that the PNM proposes much of a change in economic strategy, as it does a change of style and positioning vis-à-vis the manner in which government policy is conceived, and on the issue of corruption. And while the country appears to be much concerned with the level of crime, including the number of murders, there seems little indication of major differences in approach to the issue, or to the nature of law enforcement which appears to be more of a public issue.
The PNM appears to believe that there has been a loss of transparency in governmental decision-making, rather than a difference in the objectives of decision-making. And it is interesting in that regard, that a controversy now exists over which party first promised the construction of a major overpass in the Port of Spain area, intended to facilitate the effective movement of people of the capital city.
