Former Trade Minister, Vasant Bharath has expressed shock and dismay over the Minister of Finance’s statements that the country’s long standing dependence on subsidies must be reduced.
In a social media post, Bharath said “It is ludicrous and short sighted to arrive at that conclusion at this time given the current economic circumstances that the country finds itself in.”
He said “Ordinary citizens, many of whom have lost their jobs or are on reduced hours, are already hard pressed to pay for basic necessities like food, medicine and shelter. Old age pensioners have found it difficult, even pre Covid, to sustain themselves on an inadequate pension.”
“Many businesses have had to downsize or close due to the pandemic, with significant loss of revenue.”
Bharath added “Rather than remove subsidies at this time, the Minister of Finance should focus his attention on providing incentives and encouragement to SME’s to allow them to quickly restart, retool and reestablish themselves…thereby creating economic activity, employment and tax revenues for the government.”
“Pre Covid, there were over 20,000 SME’s operating in TnT, employing over 200,000 people and contributing about 30% of GDP. In an incentivised environment, this sector can contribute significantly more.
The gap between revenue and expenditure will be closed by generating new revenues rather than reducing expenditure.”
Bharath said “We must bear in mind that the flawed economic policies of increased taxes, increased debts, taking money from the HSF and the sale of state assets have failed in spectacular fashion, resulting in 6 successive years of negative growth and a subsequent lack of confidence from the investing community.”
“The Minister stated that TnT had some of the lowest utility rates in the Caribbean but failed to balance that against the increased costs associated with the disadvantages of the Ease of Doing Business Rank at 105, meaning that there are 104 countries in the world where it is easier to do business, the fact that it takes 253 days to get a construction permit, large sums owing to businesses by government including VAT refunds, forex shortages, corruption and wastage, traffic log jams etc,” said Bharath.
The former MP noted that “Any increase in utility rates at this time, without addressing these issues, will result in a further erosion of competitiveness for TnT firms.
Ordinary citizens and businesses are already cash starved and reeling with real unemployment and underemployment in the region of 15% and growing…..how and where on earth will they find the means to pay increased taxes and utility rates?”
With regard to the statement made on the IMF, Bharath said “the Minister must be aware that TnT is eligible to access assistance from the IMF under the Rapid Financing Instrument (RFI) which is available to ALL member countries facing a balance of payments need. There is NO necessity to engage in a full fledged IMF program, requiring structural adjustment, and therefore no need according to the Minister to “go to that bad place.”
“The RFI is provided to meet a broad range of needs including commodity price shocks, natural disasters and other emergencies, for example, a health pandemic.
All that is required is cooperation with the IMF to make efforts to solve the balance of payments difficulties and to describe the general economic policies that the country proposes to follow.”
Bharath said “therein lies the real dilemma facing the Minister of Finance….access to Chinese funds at 2% with the ability to spend freely, with NO checks and balances OR cheaper funds from the IMF at 1.05% where transparency, accountability, fiscal discipline and sound economic plans and policies will be required.
The Chinese option not only perpetuates economic mismanagement, the perception of corruption and mistrust but also costs the country $65.9 million more in additional interest costs over a five year period.”