In my view, the fact that one of the first of­fi­cial de­ci­sions made by Prime Min­is­ter Stu­art Young was to se­lect new Min­is­ters of Fi­nance and Na­tion­al Se­cu­ri­ty is both an in­di­ca­tion of the im­por­tance of those min­istries and of the need for change in the man­age­ment of the econ­o­my and of the crime sit­u­a­tion.

The ap­point­ment of Vish­nu Dhan­paul as the Min­is­ter of Fi­nance is a mas­ter­stroke, as he closed off his 34-year ca­reer in the pub­lic ser­vice on De­cem­ber 31, 2020, as per­ma­nent sec­re­tary (PS) in the Min­istry of Fi­nance, where he served as the se­nior PS for sev­en years and as PS be­tween 2009 and 2020.

He start­ed work on T&T’s bud­gets in 1991, un­der then Min­is­ter of Fi­nance, Wen­dell Mot­t­ley and Mr Dhan­paul would have worked with Min­is­ters of Fi­nance Bri­an Kuei Tung (1995 to 2000), Ger­ald Yet­ming (2000 to 2001), Patrick Man­ning be­tween 2001 and 2007 and Karen Nunez-Tesheira from 2007 to 2010.

Mr Dhan­paul al­so worked un­der Fi­nance Min­is­ters Win­ston Dook­er­an and Lar­ry Howai be­tween 2010 and 2015 as well as for­mer Min­is­ter of Fi­nance, Colm Im­bert from 2015 to 2020.

That means T&T’s lat­est min­is­ter of fi­nance would have worked with eight min­is­ters of fi­nance dur­ing his ca­reer as a pub­lic ser­vant, sev­en of whom are still alive to opine on his tech­ni­cal abil­i­ty and work eth­ic.

As a bright, young pub­lic ser­vant, he was al­so giv­en in­ter­na­tion­al ex­po­sure by serv­ing on the ex­ec­u­tive board of the In­ter­na­tion­al Mon­e­tary Fund be­tween 1999 and 2001 and on the World Bank Group’s ex­ec­u­tive board as an al­ter­nate ex­ec­u­tive di­rec­tor be­tween 2010 and 2012.

I be­lieve Mr Dhan­paul would have been se­lect­ed as the Min­is­ter of Fi­nance, part­ly be­cause of the work he did as the chair­man of the com­mit­tee that was tasked to over­see the se­lec­tion of a pre­ferred bid­der for the re­fin­ery at Pointe-a-Pierre.

That com­mit­tee re­port­ed to Mr Young, as the sub­stan­tive Min­is­ter of En­er­gy.

At the post-Cab­i­net news con­fer­ence to an­nounce the se­lec­tion of the Nige­ria en­er­gy com­pa­ny Oan­do, Mr Young went out of his way, it seemed to me, to as­so­ciate Mr Dhan­paul with the re­quest for “ad­di­tion­al due dili­gence,” which was con­duct­ed by the firm, Dun & Brad­street.

Mr Dhan­paul was al­so chair­man of the eval­u­a­tion com­mit­tee, whose de­lib­er­a­tions re­sult­ed in the se­lec­tion in Sep­tem­ber 2020 of Pa­tri­ot­ic En­er­gies and Tech­nolo­gies Com­pa­ny, an en­ti­ty es­tab­lished by the Oil­fields Work­ers Trade Union to bid for the re­fin­ery.

The new min­is­ter of fi­nance came to the pub­lic’s at­ten­tion as a re­sult of a pre­sen­ta­tion he gave at the Spot­light on the 2021 Bud­get, on Sep­tem­ber 28, 2022, at the Hy­att Re­gency. The pre­sen­ta­tion was provoca­tive­ly ti­tled ‘Where the mon­ey gone? Mys­tery or mis­chief?’ and Mr Dhan­paul re­vealed, for the first time I be­lieve, the ex­tent to which the Gov­ern­ment’s ex­pen­di­ture is manda­to­ry as op­posed to dis­cre­tionary.

He said in the pre­sen­ta­tion that any ad­min­is­tra­tion is man­dat­ed to spend about $3.5 bil­lion a month, or $42 bil­lion a year on di­rect charges from the Con­sol­i­dat­ed Fund—which in­clude pub­lic debt, pen­sions and gra­tu­ities for pub­lic ser­vants, per­son­nel pay­ments to Pres­i­dent’s House, the Ju­di­cia­ry and the De­fence Force—and manda­to­ry ap­pro­pri­at­ed funds.

My col­league, Asha Javeed, re­port­ed that Mr Dhan­paul said ap­pro­pri­at­ed funds in­clud­ed per­son­nel ex­pen­di­ture for pub­lic ser­vants, goods and ser­vices, and cur­rent trans­fers and sub­si­dies. Cur­rent trans­fers and sub­si­dies in­clude di­rect sub­ven­tions to state en­ter­pris­es, the To­ba­go House of As­sem­bly, as well as so­cial grants com­pris­ing old age pen­sions, pub­lic as­sis­tance grants, dis­abil­i­ty grants and food cards.

Trans­fers and sub­si­dies, Dhan­paul said, al­so in­clude salary-re­lat­ed sub­ven­tions, as the state pays the salaries of many state en­ter­pris­es and statu­to­ry boards as well as their debt ser­vice re­quire­ments.

“With­out col­lect­ing $1 from the Board of In­land Rev­enue, the Min­istry of Fi­nance knows that for the next month, we are fac­ing a bill of $3.5 bil­lion; with­out earn­ing $1, the Gov­ern­ment has to spend $3.5 bil­lion a month,” said the then PS in the Min­istry of Fi­nance.

Manda­to­ry spend­ing

If about $42 bil­lion (or about 70 per cent) of T&T’s to­tal an­nu­al ex­pen­di­ture is manda­to­ry, what wig­gle room does the ad­min­is­tra­tion that will be formed af­ter next month’s gen­er­al elec­tion have in re­duc­ing ex­pen­di­ture?

This col­umn has a sense that whichev­er po­lit­i­cal par­ty forms the Gov­ern­ment af­ter the April 28 gen­er­al elec­tion, is go­ing to face a dif­fi­cult econ­o­my that may re­quire the im­po­si­tion of poli­cies aimed at ad­just­ing the stan­dard of liv­ing of a sig­nif­i­cant per­cent­age of the pop­u­la­tion of T&T.

While the re­quire­ment for ad­just­ment is not im­me­di­ate, one of the main is­sues fac­ing the do­mes­tic econ­o­my is the long-stand­ing fis­cal im­bal­ance, which ba­si­cal­ly means that the coun­try is spend­ing more than it is earn­ing.

In the 17 fis­cal years be­tween 2009 and 2025, T&T re­port­ed fis­cal deficits in 16 of those years. The on­ly ex­cep­tion was in 2022 when there was a fis­cal sur­plus of $1.33 bil­lion as a re­sult of wind­fall prof­its en­joyed by the do­mes­tic econ­o­my as a re­sult of the Russ­ian in­va­sion of Ukraine.

By my cal­cu­la­tion, in the pe­ri­od be­tween 2009 and 2025, the coun­try has spent—or would have spent as we are ap­proach­ing the mid­dle of the 2025 fis­cal year—about $104 bil­lion more than it earned in that 17-year pe­ri­od, ac­cord­ing to the Re­view of the Econ­o­my doc­u­ments.

The 2024 Re­view of the Econ­o­my re­veals the na­ture of T&T’s fis­cal prob­lem:

• To­tal ex­pen­di­ture for 2024 (pre­lim­i­nary) is es­ti­mat­ed at $57.50 bil­lion;

• Of the $57.50 bil­lion in ex­pen­di­ture, $10.46 bil­lion (18.2 per cent) goes to wages and salaries;

• Of the $57.50 bil­lion in ex­pen­di­ture, $6.24 bil­lion (10.85 per cent) was spent on in­ter­est pay­ments;

• And of the $57.50 bil­lion ex­pend­ed in 2024, $30.43 bil­lion (52.92 per cent) is es­ti­mat­ed to have been used in trans­fers and sub­si­dies.

Ac­cord­ing to the 2024 Re­view of the Econ­o­my, cur­rent trans­fers, were es­ti­mat­ed to ac­count for the ma­jor­i­ty of trans­fers and sub­si­dies (77.8 per cent) in the last fis­cal year, amount­ing to $23.69 bil­lion.

Trans­fers to house­holds are the largest com­po­nent of cur­rent trans­fers and were es­ti­mat­ed to have to­talled $10.25 bi­il­lion, which the Re­view of the Econ­o­my doc­u­ment es­ti­mat­ed was a 10.7 per cent de­cline from the pre­vi­ous fis­cal pe­ri­od.

“This cat­e­go­ry of trans­fers in­cludes pay­ments for pen­sions and gra­tu­ities, se­nior cit­i­zens grant, so­cial as­sis­tance, dis­abil­i­ty grant and the food price sup­port pro­gramme. This an­tic­i­pat­ed de­crease can be main­ly at­trib­uted to low­er spend­ing to meet the short­fall in sub­si­dies re­lat­ing to the sale of pe­tro­le­um prod­ucts, amount­ing to $470 mil­lion.

“Ex­pen­di­ture on so­cial as­sis­tance and dis­abil­i­ty grants al­so de­creased by $29.0 mil­lion and $10.5 mil­lion, re­spec­tive­ly, over the re­view pe­ri­od.”

Ac­cord­ing to the doc­u­ment, the short­fall in the fu­el sub­sidy to­talled over $1.5 bil­lion in fis­cal 2023 and $470 mil­lion was es­ti­mat­ed to have been spent in 2024.

Lib­er­al­is­ing the T&T fu­el mar­ket, by to­tal­ly re­mov­ing the sub­sidy on fu­el is one pol­i­cy op­tion that the new ad­min­is­tra­tion would need to ad­dress.

It is es­ti­mat­ed that a to­tal of $4.5 bil­lion a year is spent on the se­nior cit­i­zens’ grant, which is prob­a­bly one of the ar­eas that the in­com­ing ad­min­is­tra­tion would not want to touch.

Run­ning a fis­cal deficit in 16 of the last 17 years means T&T has a peren­ni­al prob­lem of liv­ing with­in its means.

In T&T’s case, fis­cal deficits are ad­dressed in three ways:

1) Bor­row­ing from do­mes­tic and in­ter­na­tion­al lenders, main­ly through pri­vate place­ments;

2) Tap­ping the Her­itage and Sta­bil­i­sa­tion Fund; and

3) The sale of state as­sets

With T&T’s ad­just­ed gen­er­al gov­ern­ment debt to­talling $143.8 bil­lion, which was 73.7 per cent of the coun­try’s GDP as at June 2024, the fis­cal space for ad­di­tion­al bor­row­ing is lim­it­ed. And fu­ture prospects may be even more grim if the gen­tle­man in the White House ter­mi­nates the Drag­on li­cence.

Will the new ad­min­is­tra­tion be forced to sell more state as­sets to soft­en the land­ing for T&T?