Investment, Employment and Social Benefits
are the opportunities essential for nation building. However, the nation's
capability to earn from its present or projected revenue streams, increasing
productivity, currently carries much less influence, when compared to the
nation's power or ability to borrow and, of course, service and repay the debt.
In other words, it is presently easier to borrow than to diversify. Fiscal
policy, functioning on a budgetary allocation; 32.48% of the nation’s total expenditure, as
reported by the office of the Auditor General 2018 and 33.74% in the 2019 revised estimates, while estimating 31.46% for 2020 down by 0.01%, as published by
the Ministry of Finance.
This is the responsibility of the nation's
elected executive; to design, adopt, fine-tune, implement and revise policies,
which would encourage and reward risk-takers' investment while, maintaining a
measured standard of living through employment and the uplifting of the
vulnerable in society. Hence, if revenues remain stagnant or falls, below
recurrent expenditure, resulting in mounting deficits, forcing new borrowings
to balance the nation’s annual budget, harsh pending cuts, will then trigger an
inability to borrow or repay placing the economy into a debt trap. This
budgetary category comprises the Ministry of Finance, Charges on Account of
the Public Debt and Pensions and Gratuities, which focuses efforts
on increasing productivity and revenue collection while, reducing the nation's
debt and debt servicing expense.
News from the previous period
The Ministry of Finance (MoF) revised its annual budget mid-term in an effort to reduce and align expenditure with projected falling revenues and minimize borrowings. The Ministry announced the establishment of a Trinidad & Tobago Revenue Authority (TTRA), combining the Inland Revenue and the Customs and Excise Divisions during a transition process. As the process unfolds, members of staff will see that this move to the TTRA is in their interest as professionals - committed to serving their country - as much as it is in the interest of the country as a whole.
Also noting, The Financial Intelligence Unit
of Trinidad & Tobago (FIUTT) gathers information from various sources and
produces financial intelligence which is submitted in the form of an
intelligence report to law enforcement for investigation. Intelligence reports
are submitted to the Financial Investigation Branch of the Trinidad and Tobago
Police Service, Board of Inland Revenue, Customs and Excise and the Immigration
Division. After the investigations, consultations are held with the Director of
Public Prosecutions (DPP).
Charges on Account of the Public Debt 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.
Pension and Gratuities, responsible for the administration of Public Service Pension Schemes in accordance with numerous pension laws, regulations and policies, refers to the nation’s obligation to its public officers having served and retired with promises of a calculated income for the rest of their, and in some cases their spouse’s, natural lives.
Within this current period
The Ministry of Finance (MoF), with 34.83% for 2020 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 ministry again, intent to borrow and is capable of doing so with the security of the nation’s Heritage and Stabilization Fund. The question is will the new debt be used for recurrent expenditure – deficits funding or to fund export intended development – attract investment and create employment.
Charges on Account of the Public Debt, with 47.13% for 2020 of the Fiscal Policy funding, are estimated to increase and growing if revenue remains flat. An independent Office of Budgets, with similar non-political standing and respect as the Centre Statistical Office (CSO), forecast additional deficit two to three years before traditional revenue sources recover and adds; with expenditure held flat and diversification efforts starting now, new sources of revenue, to repay debt and debt servicing, is 4 years in the future.
Pension and Gratuities, estimated at 18.04% for 2020 of the Fiscal Policy funding, obligated to be paid on a timely basis, are undergoing some reform to improve accuracy and efficiencies.
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.
