Interview: Prime Minister Kamla Persad-Bissessar
Which structural adjustments to the economy are priorities in light of low oil and gas prices?
KAMLA PERSAD-BISSESSAR: The economic outlook for Trinidad and Tobago is positive, even in the face of volatility in the global energy sector. This is largely because of the reforms adopted and the discipline with which we have carried through with these reforms to reverse economic decline, bring stability, restore confidence and foster economic growth. The focus has been to re-build and, in some cases, build the critical infrastructure needed to ensure sustainable development.
Capital expenditure has been reformulated to decentralise projects across both islands, as opposed to the previous concentration of projects in the capital city. This reformulation is supporting the creation of new small businesses that have been participating in the infrastructure phase – with opportunities in transport, education, agriculture and industry. They are gaining the experience necessary to take hold of opportunities in the development phases that will follow. We also restructured our approach to education and training. Rather than increasing space in the available programmes, we introduced new ones in line with our economic diversification goals. The intention of this is to ensure that as we are building new sectors, we are also creating the necessary human resources who would drive those sectors forward. These approaches have now afforded a higher level of resilience to external shocks.
As was noted in my January 8, 2015 address to the nation regarding the state of the economy, our macroeconomic fundamentals remain strong. In December 2014 Standard & Poor’s reaffirmed T&T’s “triple A” credit rating, with a stable outlook for the economy. As a matter of fact, at the end of December 2014 our foreign reserves stood at $11.3bn, an increase of almost 30% from 2010 and the highest in our country’s history, with import cover climbing from 10.4 months in 2012 to approximately 12.7 months in 2014. The Heritage and Stabilisation Fund has also increased by over $2bn since 2010 to $5.5bn – an increase of over 65%.
Similarly, our balance of payments is robust and our dollar continues to be strong and stable. We project new investment in the energy sector will be well over $2bn in 2015. Inflation remains in the single digits, down from double digits in 2010, while our debt remains comparatively low, with public sector debt to GDP at approximately 40.6%. The unemployment level is at its historic low at 3.6%. It is not simply me saying so, as there is evidence to point to the great strides we have made through these economic reforms to shift our priorities and maintain stability. Nevertheless, some adjustments will be made to moderate spending. We are currently reviewing our Public Sector Investment Programme and recurrent expenditure. We aim to identify savings of approximately TT$4.5bn ($694m).
What can be done to further incentivise the private sector’s participation in developing the economy?
PERSAD-BISSESSAR: I have actively engaged the local business community on the direction taken by government to further expand the economy. We want to ensure that the private sector becomes the main driver of economic development, as an economy exposed to high government spending creates risks for sustainable development. By achieving a balance that moderates government investment with private sector input, we created a competitive business environment that has delivered the right opportunities for business expansion and greater corporate leadership in the economy.
With that in mind, now is not the time for sudden changes in economic development policies. We are in a period of lower energy prices and while we do make adjustments, we have avoided taking an austere approach. A period of buoyant prices gave us the revenues we needed to invest in economic transformation, and now a period of lower prices means that we can still drive spending and, investment to ensure we maintain economic expansion and confidence. The consensus among businesspeople supports our efforts toward the diversification of the economy and increased ownership of national assets on the part of individuals and private sector players. In this regard, the intention is to expand initial public offerings on the exchange, a programme that brought about 8000 new investors to the market. Additionally, we will aggressively pursue public-private partnerships to expand the private sector’s stake in our country’s economy.
How will reform of the government’s “make work” programmes improve labour market efficiency?
PERSAD-BISSESSAR: My government is committed to building the resources and skill sets required to increase productivity throughout the labour market. Our subsidised, short-term employment programmes, which target disadvantaged communities, are one mechanism used to upgrade the skills base of citizens who may not have had the opportunity to access formal vocational or life skills training through traditional channels.
Moving forward, we are fully cognisant of the fact that global competitiveness, sustained economic development and the continued prosperity of our nation require increased efficiency, innovation and productivity within our workforce. Over time, guided by market intelligence, we have sought to ensure that these short-term programmes build competencies and capabilities that enable participants to transition to more long-term, sustainable employment, in order to address gaps in the labour market. Participants of these programmes now acquire training and skills in areas such as environmental awareness and upkeep, wetland and marine conservation, coastal improvement, disaster and emergency response, construction and child care.
How would you characterise the existing economic relationship between T&T and Cuba?
PERSAD-BISSESSAR: In 2007, the then Ministry of Trade and Industry established a trade facilitation office in Havana. The main functions of the office are to address the unique market entry requirements, promote trade and investment opportunities, and support local manufacturers and exporters that are seeking to enter the Cuban market. Currently T&T enjoys a very strong, positive trade balance with Cuba. With respect to service provision, trade and cooperation, T&T engages Cuba in financial, recreational, sporting, cultural, and medical services. Additionally, we have proposed improved reciprocity with Cuba in agriculture, culture, energy, higher education, trade, health and labour.
Building on long-established diplomatic, political and trade relations, our country is seeking to strengthen relations with Cuba in several areas: training for Cuban energy professionals; assistance from Cuba on environmental matters, particularly regarding disaster prevention and assessment; tourism and cultural exchanges; the export of food and beverages; security in the area of narco-trafficking, firearms and related crimes; Spanish-language education; and economic partnerships. Having said that, I would characterise our relations as particularly strong. Looking forward, I believe that both nations will benefit tremendously from what is now a turning point in Cuba’s economic development path.
How is T&T capitalising on its oil and gas sector experience to support the PetroCaribe agreement?
PERSAD-BISSESSAR: In re-affirming T&T’s commitment to work with the US and other Caribbean nations to foster a cleaner, more sustainable energy future in the region, the government of T&T proposed the creation of the Caribbean Energy Thematic Fund for Caribbean Community member states. The fund was proposed after collaboration between the government of T&T and the Inter-American Development Bank to develop an initiative that was both feasible and conceived in the Caribbean. T&T recognises the transformation of the Caribbean’s energy matrix may not be possible for countries with high debt and minimal fiscal space, so cooperation is necessary. By working with donors, strategically invested nations and the private sector, the Caribbean can get the financing and technical support needed to transform its energy sector.
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