(Trinidad Guardian) Hold strain, vary your taste – and cut that Forex use.
With that advice, Prime Minister Dr Keith Rowley yesterday put T&T on notice that Government’s first priority for foreign exchange will be given to firms or industries that generate reasonable amounts of foreign exchange earnings.
“If the demand for foreign exchange isn’t curtailed we’ll eventually be forced to live with the rate determined by the market. This is where holding strain and varying our tastes come in,” Rowley said at yesterday’s Government symposium on T&T’s economic situation, titled “The Road Ahead.” Attendees included private and public sector leaders, academics and students.
Although it precedes Monday’s 2018 Budget presentation, Government said the session wasn’t about Budget preparations but about brainstorming on T&T’s way forward. However, he said if anything emerged from the session that could go into the Budget the door was open.
But Rowley warned Government’s revenue collection will be tighter in 2018 and “there’ll be some things which the country may want to happen in 2018 which will have to be postponed.”
Rowley said T&T’s biggest challenge was dealing with the deficit and restoring growth following its “very bad economic and financial” situation.
He warned, “The revenue situation facing us in 2018 remains a very challenging one. Government will be taking steps necessary to ensure it will be tightening revenue collection mechanisms.
“The country, out of necessity, should remain open to any and all suggestions to boost revenue levels. We’re hopeful that today, even at this late stage, useful suggestions can still be put forward, if not for Budget, but for months and years ahead.”
He said new expenditure monitoring systems and a new procurement system ahead are expected to reduce expenditure levels.
“But faced with a possible deficit in 2018 – about $18 billion dollars – further expenditure cuts will be unavoidable. There will be some things which the country may want to happen in 2018 which will have to be postponed,” Rowley said.
“This is where the population’s patience will be important. As we position ourselves to do more with less in the future, we’ll have to hold some strain for now.”
Calling for national efforts to prioritise use of limited inflows of foreign exchange, he added, “We will not be going back to the exchange controls we had before 1993, but we’ll certainly not be using up our foreign reserves to keep the exchange rate at levels which will maximise our imports.”
He said when T&T was in a period of favourable foreign exchange inflows,” if the market called for a big change in the exchange rate, we’d use our reserves and put enough currency in the market to keep the rate at a level with which we were comfortable.”
“However, in this period of significant decline in foreign exchange inflows it will be unreasonable and dangerous to use up our foreign reserves as we were accustomed. This would be paving our way into the IMF’s arms – something this government isn’t prepared to do.”
“The only way in which the exchange rate will be held to its traditional level is if we cut back on demand, bringing demand more in line with the reduced inflows. This is where prioritising comes in.”