Saturday, 20 July 2019 02:28 GMT

Letter: Credit rating downgrade the result of PNM incompetence

(MENAFN - Caribbean News Now) Dear Sir: 

The downgrading of Trinidad and Tobago's credit rating by the respected international agency Standard & Poors (S & P) is the result of the gross mismanagement of the economy by the failed Rowley regime.

The highly-regarded S & P has confirmed what the United National Congress (UNC) has been telling the Government and the country for the almost four-year tenure of the inept People's National Movement (PNM) administration.

S & P lowered the long-term foreign and local currency credit rating from BBB+ to BBB on the basis of lower-than-expected production and economic growth.

With the reduced revenue base, the institution expressed concerns about the government's ability to balance the 2020 budget, which is due within the next three months.

The PNM government is obviously reaping the whirlwind of the absence of incentives and other industry strategies to stimulate oil and gas production.

Indeed, oil production has fallen by about 20,000 barrels a day during the life of the administration.

In its last year in office, the government is finally seeking to venture into drilling operations.

Prime minister Dr Keith Rowley has not reported to Trinidad and Tobago on his highly-touted recent cross-Atlantic trip to various energy corporations.

The government has also badly mishandled the restructuring of the State petrochemical sector.

S & P also lowered the transfer and convertibility risk assessment to BBB+ from A.

This pertains to the possibility that government-imposed capital and exchange controls would prevent or impede the ability to convert TT dollars into foreign currency.

In other words, S & P has fears that the government would effectively block the release of currency for the payment of international debts. The decline in credit rating has taken place in the midst of extensive spending and unprecedented domestic and international borrowings.

The government has so far exhausted $229 billion, and its report card shows a loss of 55,000 jobs, closure of both State and private sector companies, no Direct Foreign Investments (DRI) and higher inflation.

The Debt-to Gross Domestic Product (GDP) ratio has climbed from 43 percent, during to the tenure of the People's Partnership (PP) administration, to a current 62 percent.

The incompetent government has not utilised the Infrastructure Development Fund (IDF) to stir economic activity, resulting in the loss of about 20,000 construction jobs and virtual collapse of several contracting firms.

A total of 62 unfinished schools have not been completed, and there has been no construction of homes, police and fire stations and other essential public facilities.

The international agency criticised the longer-than-expected delays in implementing institutional reforms to strengthen revenue collection and improve timely economic data.

This is a reference to the revenue authority and statistical institute, both of which were promised in the PNM's 2015 general election manifesto but have still not yet been put into operation.

The government has spent large sums on both stalled institutions, including payments to international consultants. But the projects remain incomplete as a result of typical PNM red tape and ineptitude.

The current economic dilemma persists despite unparalleled borrowings by the Rowley regime.

The government has so far accessed $26 billion on the domestic and international markets, including $4 billion through the issuance of fixed income bonds by the National Investment Fund (NIF).

The ruling regime has also raided the Heritage & Stabilisation Fund (HSF) on two occasions, drawing down US $700 million that was accumulated through prudent management by the PP administration.

The Kamla Persad-Bissessar government had overseen the increase in H & SF savings from US $3.5 billion to US $5.6 billion.

The Rowley administration has utilised more than US $ 4 billion (TT $ 28 b) in foreign reserves.

The two long-term Petrotrin bonds have so far cost taxpayers about $10 billion and would continue to be a drain on the national coffers, because of the onerous 9.5 per cent interest rate.

The disturbing truth is that around $8 billion of the next national budget would have to be assigned to debt servicing, resulting in even less revenues being available to ease the suffering of hard-pressed citizens.

Through its economic bungling and poor policy decisions, the government has robbed Trinidad and Tobago of the resilience that was provided by the Persad-Bissessar administration against external economic shocks.

The downgrade by S & P adds to the decision of Moody's, another respected ratings institution, to reduce Trinidad and Tobago to junk bond status.

Among other things, the lowering of the credit ratings would lead to an increased cost of borrowing for Trinidad and Tobago's already struggling economy.

The catastrophic economic realities stem from the hopelessness of the Rowley regime and its steadfast refusal to accept quality advice from experts.

The government ignored the recommendations of the Economic Development Advisory Board, leading to the disbandment of the team of economic specialists.

Trinidad and Tobago's current economic hellhole is similar to that of the mid-1980s, created by the thoughtless slash-and-burn policies of the Chambers administration. It took the country two decades to emerge from that financial mess.

The failed policy prescriptions of prime minister Rowley and clueless finance minister Colm Imbert have taken Trinidad and Tobago to an economic abyss, with long-term pain for every national.

In contrast, virtually every other CARICOM country is currently producing economic growth, with Jamaica being an international model of what could be achieved through sensible governance and effective policy solutions.

Trinidad and Tobago is paying the price of electing the worst government in its history.

Dr Tim Gopeesingh
Member of Parliament for Caroni East


Letter: Credit rating downgrade the result of PNM incompetence

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