(An extract from Foreign Direct Investment 2019)
The
nation, the state, the citizenry, the people must be taught and constantly
reminded to appreciate that their very well-being, their basic standard of
living, and any expansion in their nation’s economy depends on sound fiscal
policy. The means by which spending adjustments to
Resource Preservation, Human Development, Infrastructure Management, Economic
Drivers, Fiscal Policy and Governance are made bringing expenditure into line
with expected revenues to influence economic growth,
controlled by the elected branch of Government, the executive cabinet, under
the direction of a Minister of Finance. Fiscal policy, functioning on a
budgetary allocation; 30.15%
of the nation’s total expenditure, as reported by the office of the Auditor
General 2017 and 32.48 in the 2018 revised estimates,
while estimating 30.19%
for 2019 down by 4.91%, as published by
the Ministry of Finance. This category, comprises the Ministry of Finance, Charges
on Account of the Public Debt and Pensions
and Gratuities, must focus efforts on increasing productivity and revenue
collection while, reducing the nation's debt and debt servicing expense.
The
Ministry of Finance (MoF), with 35.43% for 2019 of the Fiscal Policy
funding, most of which services and repays debt; Crystallized
Guarantees/Letters of Comfort the original borrowing entity could not repay,
the associated interest and Interest on the overdraft held at the Central Bank,
hopes to reduce this burden and stop the issuance of any new Guarantees/Letters
of Comfort. The ministry continues to work closely with the Central Bank, the
protectors of the local currency and architects of Monetary Policy. The MoF is
primarily in charge of the national budget and the state of the economy;
forecasting revenue and collections, approving and disbursing funds previously
allocated to budgeted expenditure, negotiating borrowing terms and conditions
within the authorized debt ceilings, retiring debt, and dealing with unforeseen
expenditures, all to bring about a fair distribution of wealth or of sacrifice.
Noting
that, fiscal policy is
akin to and heavily dependent on monetary policy, through which the Central Bank influences the money
supply.
The Central Bank, in independent control of monetary policy, primary purpose is the
promotion of monetary, credit and exchange conditions most favorable to the
development of the economy. Whereas, the MoF General Administration, has
responsibility for ensuring that Government’s fiscal policies are implemented
by the respective Divisions and provides the support services required to
facilitate the efficient functioning of all other Divisions. These other
Divisions are Budget, Customs and Excise, Inland Revenue, Treasury, Investments,
Central Tenders Board, Valuation, National Insurance Appeal Board Tribunal,
Financial Intelligence Unit and Office of the Supervisor of Insolvency.
It
is public information that, the MoF pays annual contributions to Regional,
Commonwealth and International bodies and into Special Purpose Funds, other
transfers go towards numerous revolving accounts to support statutory,
regulatory and other operating expenses; Betting Levy Board, Infrastructure
Development Fund, Government Assistance for Tuition Expenses Fund, CARICOM
Petroleum Fund, Heritage and Stabilisation Fund-Operating Expenses, etc. The
MOF is also expected to subsidized and pay bills on behalf of commercial
entities; Agricultural Development Bank, Mortgage Finance Company Limited,
Sugar Manufacturing Company Ltd., Caroni (1975) Limited, East Port of Spain
Development Co. Ltd., BWIA, PETROTRIN, International Financial Centre,
Allutrint - Operating Expenses, to name a few. The MoF directly services debt
resulting from the Crystallization of Guarantees/Letters of Comfort, which the
borrowing quasi-government entities can no longer honor, with Interest Charges
and Principal Repayments, and also pays the Interest on its Central Bank Overdraft.
And the MoF estimates needing funds to upgrade administration systems, renovate
public buildings and training drug detection dogs for the customs and excise
division.
Charges on Public
Debts,
with 44.77% for 2019 of the Fiscal Policy
funding, is the direct responsibility of the MoF’s borrowings to fund past and
present estimates of expenditure, as the management of outstanding debts and
debt servicing, have serious implications for the nation’s international credit
rating and further on the abilities to further borrow. These Charges refers to
the debt repayment– the repayment of principal amounts in full or in
installment and debt servicing – the interest charges and other fees associated
with the debt. The nation issues three types of debt instruments; Treasury
Bills – short term less than 365 days discount bills to finance Central Bank
operations, Treasury Notes – medium term 1-5 years discount notes to finance
Central Bank functions, and Government Bonds – long term durations for specific
and defined purposes. Such financial instruments can be privately held by
commercial lenders or publicly traded with clear transactional terms.
Pensions and
Gratuities, estimated at 19.80% for 2019 of the Fiscal Policy funding, provide for Public
Officers, who have given service to the nation and are entitled to Pensions and
Gratuities upon retirement. Such pensions, totally or partially contributed,
and if partially, deducted from the officer’s salary would have been invested,
while gratuity is seen as a gift or reward for services rendered. This is obligated
to be paid on a timely basis, and therefore, must undergo some reform to
improve accuracy and efficiencies. Noting that, some retirees’ benefits are
passed on to their Dependents.
Rationale
T.A.J
& Associates Company Limited
uses this occasion to comment on topics that have been covered, both academically
and by the mainstream media, to add its opinion and point out investment
opportunity, not to invoke any social action.
