What is the PNM's plan for the economy?

[Redman]

Lofty ideas...

But Water Taxi already sells advertising, govt still subsidizing +85% of the ticket http://www.trinidadexpress.com/news/Wat ... 59171.html
Point Fortin and Waterloo are good ideas on paper but it would include further expense of dredging, building port facilities and still they would require subsidized bus transport because both ports would not be walking distance from the commercial centers esp. in the case of Chaguanas.
http://www.trinidadexpress.com/news/No- ... 69441.html

.

Well given NIDCOS management of the Highway abortion ...I would say their opinion isnt worth a pint of piss.
much less a UNC NIDCO opinion on a PNM project that the UNC bad mouthed from the beginning...Jack was downplaying the WT concept from day one.
You quoting an assassination attempt.
With a vested interest in 7.5B TTD of expenditure...a WT is a direct threat.
The results speak volumes.

But your article says it cost 100ttd per trip per person.

Off of Austal 's site using the Fuel usage as 240 gallons per hr(rounded up to 3usd per gallon for 4 engines ) and 8 crew at 100USD per hr I come up to1600 USD per hr running cost.
There is about 75 cents USD per gallon of fuel,plus 80USD per hr inside for the support staff.
NIDCO has 12 trips in either direction.
so 1600x12=$19200 per day in running cost. or 134,400 TTD.

Rounding up to 150k Carlson Charles is saying that they transport 1500 user s(one way) per day at $100 ttd per trip

Austal says that the boats have a capacity of 405
1500 trips out of a total capacity of 4860 or 30%

So for the same running cost we can double the usership with little expense...
at 60% usership, the cost will fall to 51 TTD per person per trip.

(at 75% it falls to 41 TTD per person per trip.)



That 51 TTD per person per day compares to the fuel subsidy how?
Cost of traffic etc etc etc

Would people driving pay more per day to park and ride?
Whats the reasons for it running at 30% all these years....??

The City of Sando yesterday added another 250 parking spaces in close proximity to the WT...
They must know something.
Maybe a run from Point will add usership.????

Maybe this thing could be tweaked and improved.

And I call bullsheeit on the dredging statement for Point.

Trinmar base is a good example.

[Dizzy28]

Lofty ideas...

But Water Taxi already sells advertising, govt still subsidizing +85% of the ticket http://www.trinidadexpress.com/news/Wat ... 59171.html
Point Fortin and Waterloo are good ideas on paper but it would include further expense of dredging, building port facilities and still they would require subsidized bus transport because both ports would not be walking distance from the commercial centers esp. in the case of Chaguanas.
http://www.trinidadexpress.com/news/No- ... 69441.html

.

But your article says it cost 100ttd per trip per person.

Off of Austal 's site using the Fuel usage as 240 gallons per hr(rounded up to 3usd per gallon for 4 engines ) and 8 crew at 100USD per hr I come up to1600 USD per hr running cost.
There is about 75 cents USD per gallon of fuel,plus 80USD per hr inside for the support staff.
NIDCO has 12 trips in either direction.
so 1600x12=$19200 per day in running cost. or 134,400 TTD.

Rounding up to 150k Carlson Charles is saying that they transport 1500 user s(one way) per day at $100 ttd per trip

Austal says that the boats have a capacity of 405
1500 trips out of a total capacity of 4860 or 30%

So for the same running cost we can double the usership with little expense...
at 60% usership, the cost will fall to 51 TTD per person per trip.

(at 75% it falls to 41 TTD per person per trip.)

Boats need to be insured, drydocked for overhaul and repairs etc. Those aren't cheap activities at all.


That 51 TTD per person per day compares to the fuel subsidy how?
Cost of traffic etc etc etc

Would people driving pay more per day to park and ride?
Whats the reasons for it running at 30% all these years....??

The City of Sando yesterday added another 250 parking spaces in close proximity to the WT...
They must know something.
Maybe a run from Point will add usership.????

Maybe this thing could be tweaked and improved.

And I call bullsheeit on the dredging statement for Point.

Trinmar base is a good example.

[Habit7]

You quoting an assassination attempt.

Perhaps the non-politician would convince you. http://www.trinidadexpress.com/news/Tax ... 91601.html

And I call bullsheeit on the dredging statement for Point.
Trinmar base is a good example.

Trinimar base is a well dredged harbour with a dredged channel with a solid quay wall. It can't be used for passenger transport because that is a security risk. If PF have to get a WT installation it would cost millions and we not sure how well it used if the hway is finished.

[Redman]

Convince me of what?

48 M over 365 is 131k per day.
6 day weeks run 153k per day.
I said 150k


4000 cars vs 4860 seats per day.

sound familiar?
So if they were to run at 60 % capacity AND charge 50 round trip they would generate 26.5M in ticket rev.
On 48M in running cost.
50 per day is 1000 per month.
Thats what 1 was paying in fuel to POS when I was working there. thats 2007.
So fuel is more now.

The whole subsidy issue is based on closing the gap between what we pay and what it cost the state.
The WT has never been properly implemented and managed.

And based on an operator in Trinmar base-they dredge every 3-4 years.
LNG dredges regularly for their heavy vessels.

[De Dragon]

So? What does this have to do with us? Is Suriname in the exact economic position that we are in?

Yes.

In fact in CARICOM there isnt an economy more similar to ours than Suriname. Suriname is heavily dependant on commodity prices like us. After us, they are the largest producer of oil. Their reaction, like Azerbaijan, is indicative of how other govts like us dealt with the economic shocks from the oil price drop.

So, in other words, the Government and the citizens are in no way prepared for the measures being forced upon us? Your Norway comparison is null and void, if they have been saving all their petro-dollars for decades.

[EmilioA]

[
Because norway did it right. Pnm and UNC was spending like monkeys in a all u can eat banana buffet. Not saving, not investing in diversification. When times good save for when times are bad. The lack of wisdom in resource management is evident.

Fixed that for you.

[shake d livin wake d dead]

Quick question....seeing that the price of gas has risen in the US...can we expect to see a rise in our gas prices as well?

[Habit7]

So? What does this have to do with us? Is Suriname in the exact economic position that we are in?

Yes.

In fact in CARICOM there isnt an economy more similar to ours than Suriname. Suriname is heavily dependant on commodity prices like us. After us, they are the largest producer of oil. Their reaction, like Azerbaijan, is indicative of how other govts like us dealt with the economic shocks from the oil price drop.

So, in other words, the Government and the citizens are in no way prepared for the measures being forced upon us? Your Norway comparison is null and void, if they have been saving all their petro-dollars for decades.

How could the govt not be prepared when they are the ones implementing the measures?

It goes to show that oil producing countries with rigid tax regimes or who implemented more rigid tax regimes, are doing much better than countries that didn't do enough like Azerbaijan and Suriname or even Venezuela.

So when the UNC party you support spends the largest budget ever in light of falling oil prices, change the oil tax regime so that at low prices expenditures can be written off against investments, thus major oil companies would not be paying tax this year. Couple with the none collection of Land and Building Tax the removal of VAT inexpensive imported food, all show that the UNC did not know what they were doing. Added to the fact that the last time the put money into the HSF was 2013 even with previous times was with borrowed money, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

[EmilioA]

, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

i will disagree with this for one reason. Imbert is applying the standard formula, but TT is not a standard economy. Unless something is done to cut all the drug money flowing in via bribes and money laundering we about to get hit with stagflation instead of a recession.

[Habit7]

, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

i will disagree with this for one reason. Imbert is applying the standard formula, but TT is not a standard economy. Unless something is done to cut all the drug money flowing in via bribes and money laundering we about to get hit with stagflation instead of a recession.

Well that is in the hands of the AG with SSA bill with extra fiscal monitoring and the ability to seize assets. But it has more to do with issues of a criminal enforcement nature outside of Imbert.

But seriously we are in uncharted waters and even though Imbert is the face of ministry of finance he has a lot of technocrats running simulations behind closed doors. This is what the country voted for, we rejected what was past and we trust in what we have now and in 5 years if he is unsuccessful, I will join in the chorus to remove him and the PNM. But I do like the none populist measures because I think efforts to be populist by both parties, hurt us in the past.

[drchaos]

, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

i will disagree with this for one reason. Imbert is applying the standard formula, but TT is not a standard economy. Unless something is done to cut all the drug money flowing in via bribes and money laundering we about to get hit with stagflation instead of a recession.

Well that is in the hands of the AG with SSA bill with extra fiscal monitoring and the ability to seize assets. But it has more to do with issues of a criminal enforcement nature outside of Imbert.

But seriously we are in uncharted waters and even though Imbert is the face of ministry of finance he has a lot of technocrats running simulations behind closed doors. This is what the country voted for, we rejected what was past and we trust in what we have now and in 5 years if he is unsuccessful, I will join in the chorus to remove him and the PNM. But I do like the none populist measures because I think efforts to be populist by both parties, hurt us in the past.

This country does not follow your concept of "This is what the country voted for". They see an extremely corrupt system, they get angry and vote them out due to lack of viable options. This has been a rinse and repeat cycle for a little while now. This "new" PNM is just a re-branded version of the same PNM under Manning minus the Manning, just like the PP was a reboot v.2.0 of the old UNC.

In just over 4 year the sheeple will return to the polls to vote out yet another corrupt government.

[De Dragon]

So? What does this have to do with us? Is Suriname in the exact economic position that we are in?

Yes.

In fact in CARICOM there isnt an economy more similar to ours than Suriname. Suriname is heavily dependant on commodity prices like us. After us, they are the largest producer of oil. Their reaction, like Azerbaijan, is indicative of how other govts like us dealt with the economic shocks from the oil price drop.

So, in other words, the Government and the citizens are in no way prepared for the measures being forced upon us? Your Norway comparison is null and void, if they have been saving all their petro-dollars for decades.

How could the govt not be prepared when they are the ones implementing the measures?

It goes to show that oil producing countries with rigid tax regimes or who implemented more rigid tax regimes, are doing much better than countries that didn't do enough like Azerbaijan and Suriname or even Venezuela.

So when the UNC party you support spends the largest budget ever in light of falling oil prices, change the oil tax regime so that at low prices expenditures can be written off against investments, thus major oil companies would not be paying tax this year. Couple with the none collection of Land and Building Tax the removal of VAT inexpensive imported food, all show that the UNC did not know what they were doing. Added to the fact that the last time the put money into the HSF was 2013 even with previous times was with borrowed money, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

I meant that your comparison to Norway is meaningless because they have already had the savings regime in place for decades. You also conveniently do not mention that the suddenly frugal PNM Governments Budget came in at 63 billion dollars which was on par for the last PP Budget. Also the VAT removal has had quite the opposite effect in case you didn't notice, as almost all of our food is imported. Also don't assume that because I criticize the PNM makes me an automatic PP/UNC supporter. You, like the MoF seem deluded into thinking that these $2.00 measures will make a difference while maintaining ridiculous expenditure numbers. You reduce expenditure concomitant with taxes, not simply apply taxes while still talking about Tarouba stadium, 5 storey Eric Williams shrine etc.

[Habit7]

So? What does this have to do with us? Is Suriname in the exact economic position that we are in?

Yes.

In fact in CARICOM there isnt an economy more similar to ours than Suriname. Suriname is heavily dependant on commodity prices like us. After us, they are the largest producer of oil. Their reaction, like Azerbaijan, is indicative of how other govts like us dealt with the economic shocks from the oil price drop.

So, in other words, the Government and the citizens are in no way prepared for the measures being forced upon us? Your Norway comparison is null and void, if they have been saving all their petro-dollars for decades.

How could the govt not be prepared when they are the ones implementing the measures?

It goes to show that oil producing countries with rigid tax regimes or who implemented more rigid tax regimes, are doing much better than countries that didn't do enough like Azerbaijan and Suriname or even Venezuela.

So when the UNC party you support spends the largest budget ever in light of falling oil prices, change the oil tax regime so that at low prices expenditures can be written off against investments, thus major oil companies would not be paying tax this year. Couple with the none collection of Land and Building Tax the removal of VAT inexpensive imported food, all show that the UNC did not know what they were doing. Added to the fact that the last time the put money into the HSF was 2013 even with previous times was with borrowed money, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

I meant that your comparison to Norway is meaningless because they have already had the savings regime in place for decades. You also conveniently do not mention that the suddenly frugal PNM Governments Budget came in at 63 billion dollars which was on par for the last PP Budget. Also the VAT removal has had quite the opposite effect in case you didn't notice, as almost all of our food is imported. Also don't assume that because I criticize the PNM makes me an automatic PP/UNC supporter. You, like the MoF seem deluded into thinking that these $2.00 measures will make a difference while maintaining ridiculous expenditure numbers. You reduce expenditure concomitant with taxes, not simply apply taxes while still talking about Tarouba stadium, 5 storey Eric Williams shrine etc.

Allow me to correct your errors.

My comparison to Norway was because of taxes, not savings.

The PNM’s Budget is smaller than the PP’s last 2015 Budget of $68 billion.
http://www.guardian.co.tt/news/2015-10- ... raft-limit

2014-2015 was the largest budget ever. PNM's budget was initially $63B they dialed it back to $59B and I wont be surprised if final count would be lower than that.

Yes when VAT was removed under PP merchants benefited and the govt lost http://www.guardian.co.tt/news/2013-06- ... food-flops Therefore it is best we just get the tax and allow merchants to be competitive with their pricing.

Tarouba Stadium tendering hasn't even gone out yet, and PNM bldg is with donated funds, not state funds.

[De Dragon]

So? What does this have to do with us? Is Suriname in the exact economic position that we are in?

Yes.

In fact in CARICOM there isnt an economy more similar to ours than Suriname. Suriname is heavily dependant on commodity prices like us. After us, they are the largest producer of oil. Their reaction, like Azerbaijan, is indicative of how other govts like us dealt with the economic shocks from the oil price drop.

So, in other words, the Government and the citizens are in no way prepared for the measures being forced upon us? Your Norway comparison is null and void, if they have been saving all their petro-dollars for decades.

How could the govt not be prepared when they are the ones implementing the measures?

It goes to show that oil producing countries with rigid tax regimes or who implemented more rigid tax regimes, are doing much better than countries that didn't do enough like Azerbaijan and Suriname or even Venezuela.

So when the UNC party you support spends the largest budget ever in light of falling oil prices, change the oil tax regime so that at low prices expenditures can be written off against investments, thus major oil companies would not be paying tax this year. Couple with the none collection of Land and Building Tax the removal of VAT inexpensive imported food, all show that the UNC did not know what they were doing. Added to the fact that the last time the put money into the HSF was 2013 even with previous times was with borrowed money, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

I meant that your comparison to Norway is meaningless because they have already had the savings regime in place for decades. You also conveniently do not mention that the suddenly frugal PNM Governments Budget came in at 63 billion dollars which was on par for the last PP Budget. Also the VAT removal has had quite the opposite effect in case you didn't notice, as almost all of our food is imported. Also don't assume that because I criticize the PNM makes me an automatic PP/UNC supporter. You, like the MoF seem deluded into thinking that these $2.00 measures will make a difference while maintaining ridiculous expenditure numbers. You reduce expenditure concomitant with taxes, not simply apply taxes while still talking about Tarouba stadium, 5 storey Eric Williams shrine etc.

Allow me to correct your errors.

My comparison to Norway was because of taxes, not savings.

The PNM’s Budget is smaller than the PP’s last 2015 Budget of $68 billion.
http://www.guardian.co.tt/news/2015-10- ... raft-limit

2014-2015 was the largest budget ever. PNM's budget was initially $63B they dialed it back to $59B and I wont be surprised if final count would be lower than that.

Yes when VAT was removed under PP merchants benefited and the govt lost http://www.guardian.co.tt/news/2013-06- ... food-flops Therefore it is best we just get the tax and allow merchants to be competitive with their pricing.

Tarouba Stadium tendering hasn't even gone out yet, and PNM bldg is with donated funds, not state funds.

The Government's Budget for this fiscal year still far exceeds the projected revenue. The "competitiveness" that you claim will be fostered by VAT removal is that prices have on average increased since that measure was implemented. How also is it that Noel Garcia is promising to have the stadium "completed" by years end if tenders have no gone out? Lastly, if you believe that that monolith is going to be built solely with donated funds, I have some swampland that might interest you

[Habit7]

In case you were sleeping for the last 6 years govt's budget "far exceeds the projected revenue" even when revenues were high for 4 of those years.

I think you are confusing yourself, PP removed all VAT and that flopped (food priced raised) PNM replaced VAT (food prices raised along with tax revenue), companies like Nestle and SM Jameel absorbed VAT increases to be more competitive. Welcome to capitalism.

Noel Garcia http://www.looptt.com/content/completio ... gin-august

Well there is a new invention called a mortgage, 10% downpayment and income generated from office rental space pays back the bank. Years of buying and raffling off 3 BMWs must be building up to something.

Please inform yourself before talk.

[Redman]

were AT RECORD high for 4 of those years.

The period of 2010 -2015 had the highest revenue period for any five year period....and certainly for any Political cycle.

And they CHOSE to run deficits, and STILL left unpaid work ala NAMALCO.

musbe sweet to be able to carry 100 s of millions in unpaid work....musbe an iron clad contract.

[De Dragon]

In case you were sleeping for the last 6 years govt's budget "far exceeds the projected revenue" even when revenues were high for 4 of those years.

I think you are confusing yourself, PP removed all VAT and that flopped (food priced raised) PNM replaced VAT (food prices raised along with tax revenue), companies like Nestle and SM Jameel absorbed VAT increases to be more competitive. Welcome to capitalism.

Noel Garcia http://www.looptt.com/content/completio ... gin-august

Well there is a new invention called a mortgage, 10% downpayment and income generated from office rental space pays back the bank. Years of buying and raffling off 3 BMWs must be building up to something.

Please inform yourself before talk.

Oh like One Alexandra and OWP? Hilarity is you advising me about a mortgage when I paid off my mortgage years ago, while you probably still squatting on some piece of State land somewhere

[Habit7]

In case you were sleeping for the last 6 years govt's budget "far exceeds the projected revenue" even when revenues were high for 4 of those years.

I think you are confusing yourself, PP removed all VAT and that flopped (food priced raised) PNM replaced VAT (food prices raised along with tax revenue), companies like Nestle and SM Jameel absorbed VAT increases to be more competitive. Welcome to capitalism.

Noel Garcia http://www.looptt.com/content/completio ... gin-august

Well there is a new invention called a mortgage, 10% downpayment and income generated from office rental space pays back the bank. Years of buying and raffling off 3 BMWs must be building up to something.

Please inform yourself before talk.

Oh like One Alexandra and OWP? Hilarity is you advising me about a mortgage when I paid off my mortgage years ago, while you probably still squatting on some piece of State land somewhere

*after being made out to be an erroneous blather mouth, De Dragon gets personal and boasts over anonymous ppl on the internet*

[De Dragon]

So? What does this have to do with us? Is Suriname in the exact economic position that we are in?

Yes.

In fact in CARICOM there isnt an economy more similar to ours than Suriname. Suriname is heavily dependant on commodity prices like us. After us, they are the largest producer of oil. Their reaction, like Azerbaijan, is indicative of how other govts like us dealt with the economic shocks from the oil price drop.

So, in other words, the Government and the citizens are in no way prepared for the measures being forced upon us? Your Norway comparison is null and void, if they have been saving all their petro-dollars for decades.

How could the govt not be prepared when they are the ones implementing the measures?

It goes to show that oil producing countries with rigid tax regimes or who implemented more rigid tax regimes, are doing much better than countries that didn't do enough like Azerbaijan and Suriname or even Venezuela.

So when the UNC party you support spends the largest budget ever in light of falling oil prices, change the oil tax regime so that at low prices expenditures can be written off against investments, thus major oil companies would not be paying tax this year. Couple with the none collection of Land and Building Tax the removal of VAT inexpensive imported food, all show that the UNC did not know what they were doing. Added to the fact that the last time the put money into the HSF was 2013 even with previous times was with borrowed money, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

Yet a few posts after

, you would be pleased to know that the country is in safe fiscal hands of Colm Imbert

i will disagree with this for one reason. Imbert is applying the standard formula, but TT is not a standard economy. Unless something is done to cut all the drug money flowing in via bribes and money laundering we about to get hit with stagflation instead of a recession.

Well that is in the hands of the AG with SSA bill with extra fiscal monitoring and the ability to seize assets. But it has more to do with issues of a criminal enforcement nature outside of Imbert.

But seriously we are in uncharted waters and even though Imbert is the face of ministry of finance he has a lot of technocrats running simulations behind closed doors. This is what the country voted for, we rejected what was past and we trust in what we have now and in 5 years if he is unsuccessful, I will join in the chorus to remove him and the PNM. But I do like the none populist measures because I think efforts to be populist by both parties, hurt us in the past.

[eliteauto]

Habit 7 the Min of Finance is not listening to a lot of advice the technocrats are giving, even the advice of international advisors is in line with local ones (who have all worked in the same international agencies at some point) yet it seems economic advice is trumped by political/social status quo. After 7 economists took a look at the economy and suggested measures it seems that paper ended up as a coaster for the scotch and coconut water in some financier's backyard

[zoom rader]

^^^in a case where Imbert is not listening, then expect more taxes coming

[eliteauto]

^^^in a case where Imbert is not listening, then expect more taxes coming

tax restructuring was always going to happen, what seems to be the case is the taxes will affect the working class and poor more than the "elite". The difference between the proposed Luxury Tax and what Imbert said in Parliament is a lot. Even when he was corrected at a Chamber of Commerce meeting 2 Tuesdays ago he still said the same rubbish in Parliament the Friday after. It has convinced a lot of ppl that he isn't stupid he's being influenced by certain ppl

[zoom rader]

^^^in a case where Imbert is not listening, then expect more taxes coming

tax restructuring was always going to happen, what seems to be the case is the taxes will affect the working class and poor more than the "elite". The difference between the proposed Luxury Tax and what Imbert said in Parliament is a lot. Even when he was corrected at a Chamber of Commerce meeting 2 Tuesdays ago he still said the same rubbish in Parliament the Friday after. It has convinced a lot of ppl that he isn't stupid he's being influenced by certain ppl

Seems that these ppl want to remain the elite class and can't bare the fact that some classes are catching and moving up.

[Habit7]

Treat adjustment as permanent

Published: Thursday, April 28, 2016

The mission chief of the International Monetary Fund (IMF) to T&T, Elie Canetti, says the biggest problem with the government’s decision to use mainly higher taxes and lower spending to reduce aggregate demand in the economy is that it is “less growth friendly” than depending on an exchange rate depreciation.

Canetti was speaking to the Business Guardian in an interview in Washington DC during the spring meetings of the IMF and the World Bank earlier this month.

Asked what were the downsides of attempting to deal with a terms of trade shock by mainly fiscal means, Canetti said: “The biggest problem is that it is less growth friendly. If you do a fiscal adjustment it is all about contracting demand domestically. But, if you do a depreciation, it is really about reducing demand for foreign goods.”

The IMF staffer said engineering a successful depreciation requires that inflation be held in check, so the positive benefits of the measure are not eroded.

“But the contraction in demand, as a result of a depreciation, falls on foreign goods and foreign services and so, in that sense, it is not as damaging to domestic growth.”

Canetti referred to the statement in the IMF’s press release following its March Article IV visit that T&T had undersaved and underinvested, which means that the country does not have the savings necessary to adjust by drawing on those.

He said it is hard to estimate the extent to which the fiscal measures announced by Finance Minister Colm Imbert on April 8 will impact on the country’s growth—called the fiscal multiplier—because the data is “just so weak.”

Asked to outline the IMF’s thinking about the use of exchange rates in countries that suffered dramatic terms of trade shocks—meaning a collapse in the prices of their main export and foreign exchange earners—Canetti said T&T has experienced what is being treated by the Central Bank as a more or less permanent wealth shock.

Given the global energy picture, and the fact that oil prices began to collapse almost two years ago, Canetti said that it was “pretty unlikely” that the global price of oil would return to US$80 a barrel any time soon.

The IMF staffer said there are three main adjustments that countries have used when they experience sharp terms of trade shocks: fiscal, monetary and exchange rate depreciation.

“In terms of countries that are significant energy exporters, and have some parallel to T&T’s situation, essentially there are several thing that have been done.

“The worry is that you have much less US dollar inflows coming in and, to balance that, countries either need to generate more export revenues to substitute for the loss of US dollars from the previous revenue earner or to contain demand for US dollars.

“Generating more exports is a long-term process that requires a great deal of investment and this is something that T&T has had as a goal, although there has not been much success.

“The challenge is how to address the problem of the dramatic decline in export earnings in the short term and that probably come down to finding ways to curb the demand for foreign exchange.

“The first policy lever, and the one that most countries have pursued, is that they have to do fiscal adjustment.

“There are times when countries can get by without much fiscal adjustment, but given the scale of the shock and given T&T’s starting position, I don’t think that is an option for the Government. If the country had been running a fiscal surplus of three to four per cent before the shock, then it would have built up enough fiscal space or fiscal cushions to let the shock be absorbed by running s small deficit. But the country came in with a small deficit and is now faced with a very large deficit.

“Fiscal adjustment is the first line of defence. But the problem with fiscal adjustment is that it is very pro-cyclical. It is difficult to take demand out of the economy by increasing taxes and cutting expenditure if the country is slowing down.

“The second tool is to attempt to contract demand through monetary policy by increasing interest rates. That was done proactively by the T&T authorities as the Central Bank tightened monetary policy substantially in late 2014 and throughout 2015. The motive was not so much to adjust to the balance of payment shock, but to get ahead of the US Federal Reserve and to address concerns about the flow of capital out of the country.

“I am not even sure you would call it capital flight, because that connotes people escaping their countries out of fear that their capital could be confiscated. That certainly is not the case with T&T. The vast majority of the capital outflows have been motivated by some combination of better return and more investment opportunities outside the country.

“Monetary policy can work to contract demand but there is so much excess liquidity in T&T’s banking system that I don’t think raising interest rates has had much effect on how monetary policy is transmitted to the economy. So some monetary policy action was taken and the IMF mission team thought it was appropriate to pause in January because the Central Bank had done a great deal of tightening in a short space of time and it was appropriate, in the context of a slowing economy, to pause to establish the impact of the higher interest rates.

The third channel of adjustment is the exchange rate. Many countries, in T&T’s situation, have depreciated their currencies quite substantially. Energy-producing countries like Russia, Mexico, Norway, Colombia and Angola have all used exchange rate depreciation as a tool of adjustment.

“People in T&T told me that the country has really used the exchange rate and it is a significant depreciation.

But for a country that has had a defacto fixed exchange rate for a long time against the US dollar, it is within one or two per cent of $6.40, which may seem like a large move, but relative to other energy exporters, it’s been a relatively small move.

“The main way exchange rate depreciation work is on the import-contraction side, which might sound like it is not a great thing but the country has much less wealth and fewer US dollars to spend, so it really needs to find a way to contract its imports. Raising the price of imports across the board—which is what a depreciating exchange rate does—is probably a quite effective way to do that. It tends to work.

“And then, over time, the nice thing about an exchange rate depreciation is that it makes Trinidadian products cheaper for the rest of the world, so it does help stimulate exports and, ultimately, stimulate non-energy jobs.

“Some economists have been guilty of being over-optimistic about the impact of an exchange rate depreciation on exports, but there are many other factors that go into increasing exports, such as making it easier to start a business and clearing customs. There are some big reforms that are coming, such as the reform to the procurement legislation and we have said many times that the labour market is distorted and not as effective as it could be. That’s an area that businesspeople see constraints.

“There are many things that have to happen to allow the country to diversify its export base, but a depreciating exchange rate would help that.”

He added that apart from constraining demand for foreign exchange, a depreciating currency also helps in the fiscal situation “because any revenues received in US dollars get converted into TT dollars at a higher rate, so it actually helps the fiscal adjustment itself by bringing in more revenue, but it also reduces the burden on fiscal measures in terms of carrying the weight of the overall adjustment.”

Canetti noted out that the current administration has opted to do “more action on the fiscal side” by raising taxes and cutting subsidies, compared to other countries that have used exchange rate adjustments “as a significant element in the strategy.”

Responding to the arguments made by some local economists that because T&T is a small, open and import-dependent economy, exchange rate depreciation increases the cost of imported manufacturing inputs, Canetti said the argument was a correct one.

“But I think the question is how far it goes. Over time what you would like to happen is that you generate local businesses so you get some import substitution. Other things being equal, a more open economy has less of a positive growth impact from a depreciation.

But, the other way to argue it is, a more open economy means that a depreciation should also reduce total imports. It all depends on whether the imports are consumption goods or inputs into production. If it’s the latter, it is going to help your competitiveness less than if the production inputs were produced domestically.

“Part of the answer is that a depreciation in the exchange rate helps provide more incentives for inputs to be produced domestically, within certain limits.”

Canetti argued that the food production sector could be stimulated if more of the value-added is produced domestically.

He said it is hard for people in T&T to envisage how a depreciating exchange rate works because the country has had a fixed exchange rate for so long and been so dependent on the energy sector as the source of foreign exchange.

“People have seen agriculture dry up over the years and while it is hard to imagine the counterfactual, if you set the right price environment and incentives, clever people will seek profit in production for export. But you also need to remove the obstacles in the way of developing businesses.”

He said the government’s strategy of depending on higher taxes and reduced spending with an additional 3.5 per cent depreciation can work.

Asked where have such measures worked, Canetti said that it was too early in this chapter of an unfolding story to say where a preference to using fiscal measures rather than exchange rate has worked. He cited Latvia, Estonia and Saudi Arabia as countries that have done serious fiscal adjustments. He agreed that Barbados was an example of a country that had used fiscal adjustment to the exclusion of exchange rate adjustments.


http://m.guardian.co.tt/business-guardi ... -permanent

[brams112]

^^where the cliff notes?

[De Dragon]

In case you were sleeping for the last 6 years govt's budget "far exceeds the projected revenue" even when revenues were high for 4 of those years.

I think you are confusing yourself, PP removed all VAT and that flopped (food priced raised) PNM replaced VAT (food prices raised along with tax revenue), companies like Nestle and SM Jameel absorbed VAT increases to be more competitive. Welcome to capitalism.

Noel Garcia http://www.looptt.com/content/completio ... gin-august

Well there is a new invention called a mortgage, 10% downpayment and income generated from office rental space pays back the bank. Years of buying and raffling off 3 BMWs must be building up to something.

Please inform yourself before talk.

Oh like One Alexandra and OWP? Hilarity is you advising me about a mortgage when I paid off my mortgage years ago, while you probably still squatting on some piece of State land somewhere

*after being made out to be an erroneous blather mouth, De Dragon gets personal and boasts over anonymous ppl on the internet*

No, you pathetically tried to be comical with your stale "new invention called mortgage" sheit, and when when confronted with facts about One Alexandra and OWP you chose as you always do to try to look educated and like always, are once again exposed as a sad little apologist for this total failure of a Government.

[Habit7]

In case you were sleeping for the last 6 years govt's budget "far exceeds the projected revenue" even when revenues were high for 4 of those years.

I think you are confusing yourself, PP removed all VAT and that flopped (food priced raised) PNM replaced VAT (food prices raised along with tax revenue), companies like Nestle and SM Jameel absorbed VAT increases to be more competitive. Welcome to capitalism.

Noel Garcia http://www.looptt.com/content/completio ... gin-august

Well there is a new invention called a mortgage, 10% downpayment and income generated from office rental space pays back the bank. Years of buying and raffling off 3 BMWs must be building up to something.

Please inform yourself before talk.

Oh like One Alexandra and OWP? Hilarity is you advising me about a mortgage when I paid off my mortgage years ago, while you probably still squatting on some piece of State land somewhere

*after being made out to be an erroneous blather mouth, De Dragon gets personal and boasts over anonymous ppl on the internet*

No, you pathetically tried to be comical with your stale "new invention called mortgage" sheit, and when when confronted with facts about One Alexandra and OWP you chose as you always do to try to look educated and like always, are once again exposed as a sad little apologist for this total failure of a Government.

I admire your tenacity. After I shot down every one of your claims with citable facts, you respond with personal incredulity. Somehow One Alexandra and OWP are facts for something, something you are yet to explain. Then in a most infantile way, rather than discuss the issues, you reply with personal insult, a clear sign someone is incapable of putting forward a logical defence for their stance (ad hominem). Only to make it worst, you boast about your toys being better than my toys, another uninformed opinion backed by personal incredulity.

I'm glad ZR is back, at least he admits his illogical support for UNC and hatred of PNM and willing makes unsubstantiated political claims. You just do the same but are in Denial.

[zoom rader]

^^^ PNM can be a good party if they were not racist.

Nothing has changed as they more racist that ever.

[K74T]

^^^ I could have been a good person if I were not racist.

Nothing has changed as I am more racist than ever.

[zoom rader]

Economy now at great risk .

Very dark days ahead, SSA bill passed by two independent Senators.

We are now a police state.

Rowley gets to hire who he wants and this person reports to him at Rowleys whims and fancies.