By Kevin Ramnarine
The budget is October 2nd, 2017. Brace for Impact. The Minister of Planning has already signaled that this will be a hard budget. How much more can the population take? Well at least they haven’t rioted as yet. The private sector is buckling under the weight of crime, increased green fund levy, business levy and corporation tax. Every business will tell you revenue is down. In POS restaurants that are usually filled by 12 noon are now two thirds filled. We cannot tax our way out of this problem.
The population isn’t unreasonable. They get that revenue has fallen and therefore expenditure will fall. What they don’t get is what is the plan to get us out of the hole. That is why there is a sense of hopelessness in the country. On that note, the Government gets an F for communication. Just look at how they handled the communication around property tax and GATE. Up to two weeks before the start of the academic year, students did not know what was happening with GATE.
It is my view that the Government deliberately slowed down the economy in 2015 to preserve the foreign reserves of the country. That has not worked. It’s now US$ 8.7 billion in June 2017 down from US$10.7 billion in June 2015. The Prime Minister’s address to the nation on December 30, 2015 said exactly that. He said that we had to “restrain expenditure overall and also to change the mix of expenditure so that the demand for foreign exchange is reduced whilst local dollars are put to maximum use.”
The consumption of foreign exchange has been reduced but it is not because the demand has been reduced. It is because people can’t get US dollars at the banks. The Minister of Finance will have to tell us what the foreign exchange strategy is when he reads the budget in 2 weeks. Its tough times ahead as money dries up in the economy. What is the plan and can it be implemented ? The worst poverty is a poverty of ideas.