Special to the AmNews
While the majority of the 15 nations in the Caribbean trade bloc are making the most of drastically reduced prices for oil, the region’s usually most robust economy is dealing with the opposite.
Trinidad, the bloc’s largest producer of oil and recently a major supplier of gas for Eastern Seaboard states in the U.S., is being forced to significantly cut back on spending as international prices plunge, leaving the oil- and gas-dependent nation in the financial lurch. Prime Minister Kamla Persad-Bissessar, who faces a general election in September, this week assured the business community that the country would not go bankrupt and that social spending would not fall victim to austerity measures now being put in place.
“It is not a systemic risk to the economy. It is a cash flow problem. I tell you we are not going bankrupt at this point in time,” she said as anxiety levels rise in the country of 1.3 million people.
Oil and gas production is the linchpin of the island’s economy. Successive governments and administrations have been criticized for not doing enough to reduce dependence on oil, given previous economic shocks in the 1970s, 1980s and 1990s, when prices dipped significantly and triggered severe economic problems in Trinidad. Persad-Bissessar argued that this should not be the time “to promote fear and panic among citizens,” as this would only worsen problems in the country, which recorded more than 400 murders last year.
She made it plain that cutbacks would be made to several mega-infrastructural projects, allocations to some government ministries as well as non-critical goods and services, but she was adamant that spending on social services, pensions, disability grants and public assistance programs would remain as is.
Many of the island’s neighboring states have been able to cash in on reduced expenditure on gas imports, passing on reductions to vehicle owners as utility subscribers. Trinidad’s biggest headache is how to cope with a budget that now has to be pegged at oil trading no lower than $45 per barrel—nearly 50 percent less when the budget was drawn up.
She said the biggest headache for authorities is to determine exactly what should be put on the chopping block and what should not.
“The question arises as follows: Should we remove the disability grant? That is a subsidy. It accounts for helping 24,100 disabled people. Should we remove or decrease the public assistance grant? That is for 24,797 people in need of public assistance. Food cards account for 49,930 households. We have to see the impact on the ordinary and most vulnerable citizens in our country,” she told the business community.
The silver lining in all this, she argued, comes in the form of a drastically reduced bill for fuel subsidies for motorists and other sectors. She noted that if oil drops to $30 a barrel, the government would have $500 million more, so all is not lost.