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Reform of Petrotrin will define Govt—Hosein
If a reform of state-owned oil company Petrotrin is actually achieved it will define this Government, economist Dr Roger Hosein has said.
Hosein made the statement yesterday as he analysed the latest Article IV Mission done by the International Monetary Fund on this country.
"On the basis of the IMF forecasted numbers, the level of real economic activity in T&T in 2020 would be five per cent smaller than in 2015. Additionally, one may add that in 2020 the level of economic activity in T&T would be at the 2007 level of real GDP although in that time period, interval (2007-2020) the economy produced approximately 3.6bn barrels of oil and gas equivalent," Hosein said.
"These numbers to me portray an economy in need of much heavier structural reform."
A reform of Petrotrin would be a "major structural change" and would help to send a signal of a new, improved level of governance and a notion of an intolerance for substandard state-owned enterprise performance, Hosein said.
Hosein said the figures in the IMF report shows that this country still remains dependent on the energy sector.
"The IMF Staff Concluding Statement of the 2018 Article 4 Mission also indicated that the energy sector which stood at 22.2 per cent of GDP in 2015 would increase to 30.8 per cent of total GDP in 2018, and for the period 2018-2020 would average 30.5 per cent."
'Economy more dependent on the energy sector'
When compared to 2015, he said, "the economy has yet again become more dependent on the energy sector. This is the same formula that the State has used since 1956 and which has repeatedly failed the overall development process and one wonders what will make it work this time around."
He said that crime in this country continues to be a bugbear.
"The Concluding Statement did briefly mention the need to reduce crime. However, more will need to be said on this as the murder level in T&T in particular escalated in the last few years and at the current rate of progression will likely cross 500 this year, indicating that since 2005 almost one per cent of the labour force in T&T may have been murdered.
"Altogether the State has made some good strides in terms of cutting total government expenditure and trying to rebalance the economy, the reform of Petrotrin if it is achieved will define this Government and be a major structural change. The Revenue Authority would also assist the State, if it gets going, to manage tax revenue losses and leakages from the system. However, the return to growth must not be seen as a return to manna from the State. The process of fiscal consolidation must continue. The make-work programmes have to be changed," he said.
'Data did not show end to foreign exchange shortage'
Hosein said the data presented in the report did not show an end to the foreign exchange shortage faced by businesses.
"For business people, the report does not provide data that points towards an end in the foreign exchange shortage but does indicate that although the non-energy sector would contract in 2018 and 2019, there is the prospect of real economic growth in this sector, by 2020. The enabling environment and the crime situation will both need to be addressed to help business people in T&T grow national, regional, and internationally competitive firms." he said.
"For households, the inflation rate is modest and this means that their real income would not be significantly eroded, but certainly there is scope to improve labour productivity as a means to lower unit costs in the economy," Hosein said.
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