Last week Trinidad & Tobago Prime Minister Kamla Persad-Bissessar addressed her country on the possible consequences for the Twin Island Republic of the rapid decline in oil and gas prices on the international market. With the prices of oil declining over the last few weeks from US$80 per barrel toUS$45, the government anticipates a major revenue shortfall in terms of budgetary expenditure, the amount projected being TT$7.4 billion. And in similar vein, with the scaling down of natural gas prices, the Prime Minister predicted a decline in revenue available from that source in terms of its contribution to the government’s projected budget.
For the government, and similarly for the citizens of the country, the significance of the decline in projected revenue is that Trinidad & Tobago is coming to the end of its present electoral cycle, a period in which government’s resources would naturally be directed to projects and other expenditures favourable to the government’s re-election in May 2015 at the latest. And Prime Minister Persad-Bissessar’s statement to the nation therefore directly indicated a process of what she referred to as “redirectional saving” – in other words cuts in the originally projected budget – which would affect, in her words, “infrastructural projects for which funding has not yet been confirmed, lower expenditure on non-critical goods and services; and cuts in allocation in selective ministries by about 15 per cent.”
In addition, the Prime Minister emphasized that in remedying the situation, there would be attempts to sell shares in companies owned by the government, for example the Phoenix Park Gas company, thus using the opportunity to respond to recent indications from the Trinidad & Tobago private sector that it too wished to share in the largesse from the then persistent rise in oil and gas prices. Normally the financial results were accruing directly to government through its ownership of gas production companies.
To be expected in the run-up to general elections, the Prime Minister indicated that a major effort would be made to ensure two things, the first being the maintenance of particular infrastructural projects already scheduled, for example in the area of road construction; and the second being placing priority on “the provision of protection to the vulnerable and disadvantaged, ensuring that the pace of business activity continues.” In addition expenditure in social areas like health and education would be maintained.
And finally, Prime Minister Persad-Bissessar sought to assure the population that just as her government had steered the country from the threat of economic decline when it assumed government in the midst of the global recession of 2009 and following, it was quite competent to hold the economic fort in the face of this new present threat to expected government revenue.
The response of the People’s National Movement (PNM) opposition has been largely predictable, suggesting that the Prime Minister’s presentation has been insufficiently precise in terms of the implications of the decline in prices for public expenditure, particularly as the government had consciously projected expanded expenditure in the context of the coming general elections. But the public will certainly be reminded that the present situation is not unlike that of the economic recession period 2009-2010, when in anticipation of coming difficulties, then PNM Prime Minister Patrick Manning suddenly called a general election which, however, his party lost. And as the present leadership of the PNM seeks to finalise its reorganization under new leader Dr Keith Rowley, the odds are that Mrs Persad-Bissessar will push public expenditure to the limits that she can define, in order to keep some amount of economic momentum going, and look for the earliest possible opportunity to pre-empt the PNM’s consolidation, by calling general elections while there is still sufficient revenue available to government. For as opposition spokesman, Mariano Browne, Minister in the last PNM government has observed, “We do not know how long this fall in prices will last. No one does.”
In fact, the political situation in Trinidad & Tobago at this time would appear to be neither particularly favourable nor unfavourable to either government or opposition, this accounting for Mrs Persad-Bissessar’s effort to salvage the maximum revenue for public expenditure. In one sense, the PNM leader is still attempting to consolidate his position in a party in which Patrick Manning still appears to have a certain leverage in spite of his illness, and what now appears to be a recognition on his part that he cannot return to the political and electoral struggle. But on the other hand, Mrs Persad-Bissessar has really been unable to keep together the coalition of parties that brought her People’s Partnership (PP) government into office.
A central part of that coalition was the Congress of the People (COP), essentially a creation of, and led at the time, by Dr Winston Dookeran, whose prestige and following has, by all accounts, fallen drastically, leaving a rather unstable COP core, often, in the public eye, disparaged by officials of the United National Congress (UNC) core of the PP. With the departure from the PP of Jack Warner, acknowledged as a central strategiser in the PP’s 2010 victory, but still under persistent attacks from international football circles, the current popular impression of the coalition government would appear to be that it has reverted to its UNC core, dominated by individuals loyal to Ms Persad-Bissessar.
The oil and gas prices crisis therefore finds Ms Persad-Bisssessar and her UNC faction of the PP facing the challenges presented largely on its own. A concern of the PNM, of course, is that the government will have no hesitation, in spite of a perceived coming cash crisis, in stretching the available resources to permit a fine-tuning of its spending, and then electoral, strategy to the limits, in the little less than six months left before general elections. And the PNM’s response to Ms Persad-Bissessar’s announced strategy of financial expenditure during her period of government left, is to focus on identifying where expenditure is done by a degree of a subterfuge that hides the real state of the country’s finances from the electorate.
A critical element in the present political scenario, deemed from the PP’s perspective to be an advantage, has been recruitment some time ago, of a private sector banker of some prestige, Larry Howai, as Minister of Finance. Clearly Prime Minister Persad-Bissessar believes that his credibility in private sector circles can serve the purpose of providing support for her economic programme from the private sector, in spite of concerns that the sector may have about the general solidity and financial strategy of the government.
The political setting becoming visible, therefore, is an intense struggle between the parties, and a possible prospect that this could shatter the PP coalition, with the UNC reverting to its own electoral identity. Yet, it is also possibly the case that certain personalities within the COP, conscious of the weakness of their own grouping, will revert to membership of the singular UNC under Ms Persad-Bissessar, leaving the election to be fought as a straight battle, once again between the traditionalists, the PNM, and a PP in which the UNC remains the dominating element. For the immediate future, politics will be trumping economics.
