Old document ; but a good read on T&T dependency on oil and gas.
http://www.iadb.org/res/publications/pu ... SI-116.pdfA good read for information on economic recessions
http://www.eccb-centralbank.org/PDF/SAML13.pdfSome clippings from the above document
Furthermore, some of the extended recessions in the later sub-periods were very long. The Guyana economy was in recession from 1982-1985; the Jamaican economy from 1973-1980, the Trinidad and Tobago economy from 1985-1989
Trade, specifically world petroleum prices, caused a massive deterioration in the terms of trade of oil importers in the mid-1970s, modified in part only by a brief rise in world prices for sugar. World prices for crude petroleum (West Texas Intermediate) rose from $4 per barrel in August 1973 to $10 in January 1974 and increased even more steeply to peak at $38 per barrel in January 1981. This unprecedented rise in petroleum prices set in train cost-push inflation which undermined export competitiveness and in some countries also led to foreign exchange rationing which reduced production capacity.
In 1982, world petroleum prices began to decrease, falling by mid-1986 to $8 per barrel i.e. to a level less than one quarter of the previous peak. For Trinidad and Tobago, this was calamitous. The economy was stuck with import price inflation derived from manufactured goods imports and a much weaker domestic goods (non-tradables) sector in the face of a sharp fall in its commodity terms of trade and of exports in current prices. The result was an economic recession of major proportions, both in terms of magnitude and duration.
NAR
https://en.m.wikipedia.org/wiki/Nationa ... nstructionOpen main menu
The National Alliance for Reconstruction (NAR) was the governing party in Trinidad and Tobagobetween 1986 and 1991.
HistoryEdit
The party was established in 1986, aiming to be a multi-racial party.[1] It was formed by former People's National Movement members and opposition parties,[1] including the Organisation for National Reconstruction (a party established in by PNM dissident Karl Hudson-Phillips in 1980), the United Labour Front, the Democratic Action Congress and the Tapia House Movement – the latter three having previously been part of an electoral pact known as the National Alliance.
The new party won the 1986 elections, taking around 66% of the national vote (the first time the PNM had failed to win over 50% since 1956)[2] and winning 33 of the 36 seats in the Trinidad and Tobago. A. N. R. Robinson, previously leader of the DAC, became Prime Minister.
The NAR entered government with broad national support and goodwill, but support declined as fiscal austerity and neo-liberal economic policies imposed by the International Monetary Fund's Structural Adjustment Program resulted in increased unemployment and a 10% cut in salaries in the public service. Infighting over government posts and economic policies split the party and some ministers defected after a single year in power.[1] In 1988 former ULF leader Basdeo Panday was expelled, taking with him five other former ULF members to form the Indian-dominated United National Congress.[3] Subsequently a further five MPs defected to become independents.
In 1990 the Jamaat al Muslimeenattempted to capitalise on the dissatisfaction with an attempted coup. Despite surviving the attempted coup the NAR was defeated in the 1991 general elections, winning only two seats, both in Tobago.
Involvement with IMF
http://www.thedominican.net/articles/stabilization.pdfLargely as a consequence of the stabilization measures undertaken by the government of Trinidad and Tobago, the public sector deficit was reduced to 4.8 percent of GDP in 1989 compared to 6.4 percent in 1988. The balance of payments strengthened in 1989 largely on account of an increase in petroleum export earnings and increased capital inflows. However, economic activity still declined during that year, and unemployment rose slightly to above 22.4 percent.
In 1990 and 1991 the country returned to positive economic growth of 1.5 and 2.6 percent respectively. The oil shocks of 1992 however seriously undermined growth prospects and negative real GDP was recorded in that year and also in 1993. From 1994 onwards, the economy stabilized and real growth rates of well over 3 percent was realized from that point on.
In 1986 the government of Trinidad and Tobago reduced the public sector wage bill by suspending cost of living allowances and merit pay increases and by reducing nominal public sector wages by 10 percent. A voluntary severance program was also introduced aimed at reducing the size of the public sector. The government also reduced its holdings in several energy companies and liquidated many state enterprises. An attempt was also made at tax reform through the abolishing of several taxes and the introduction of a 15 percent value added tax (VAT) covering all goods and services except for exports and some basic commodities.
Selective credit controls, reserve requirements, and limited open market operations were used by the central bank in an attempt to control the availability of credit. For a certain period, banks wishing to lend to certain state enterprises and statutory authorities would have to consult with the central bank before reaching a decision, and the discount rate was increased as a means of reducing borrowings by commercial banks.
In 1988 faced with a renewed decline in international petroleum prices and a significant bunching of external debt service payments, the government adopted a more comprehensive adjustment program. The program included a 15 percent devaluation resulting in a cumulative depreciation in real effective terms of over 40 percent since the beginning of 1985, sizeable reductions in government expenditure, and increases in the central bank lending rate.