Aug 2009 Financial News

Karen’s ready for tough times

Aug 20, 2009

WITH traditional revenue earners like oil and natural gas currently fighting to get off the economic ropes, Finance Minister Karen Nunez-Tesheira has revealed Government will be relying even more heavily upon infrastructure in the 2010 Budget to boost the economy and stimulate growth during the lean times created by the world financial crisis.

On September 22, 2008, Nunez-Tesheira made history as the first woman finance minister to present the national budget in the House of Representatives.

As she prepares to deliver her second budget in September, Nunez-Tesheira does so against a background which sees the country staring tough economic times squarely in the eye. The budget will also be delivered as debate continues as to whether or not TT is in a recession.

In an interview with Business Day at her office at the Eric Williams Financial Complex in Port-of-Spain, Nunez-Tesheira said Government was not daunted by the grim economic times which lay ahead.

“There is a challenge but given that challenges somehow circumscribe or dictate and to a large extent delimit what you can or cannot do, in that context while it may be a challenge in one sense, in another sense there is a certain level of certainty or clarity about your choices as opposed to when there is plenty,” she said.

In relation to the 2010 Budget, Nunez-Tesheira said: “I think that in this case, there is more clarity of the limits and the envelope on which you are going to be basing your budget. To a large extent, we know what is happening and we know what the global economic situation is so obviously whatever you do and say in the context of this new budget, we will be informed by these realities.”

What will be the Government’s main focus in the budget?

“There is no question that we are in a period of contraction, no question that we experienced two quarters of negative growth. It is important in that context that we do the things that are necessary to ensure that the economy does not slide into recession.

“We make sure that the economy gets the necessary boost that is required to keep us in a sense avoiding those kinds of pitfalls.”

How will this be done?

“Essentially by doing the things that we know are necessary to do employment levels, to maintain growth, to maintain economic activity in the context of what have been seeing around the world. We have been seeing the green shoots but the growth is going to be slow,” the minister replied.

Nunez-Tesheira indicated that national security, education, health, social development, housing and agriculture will all receive top priority in the budget once more. However infrastructure will have a more prominent role in this year’s budget compared to previous ones.

“You will need to do things that will obviously boost the economy in areas which can encourage employment and certainly some of the areas which you want to see that perhaps is in the construction industry because of its multiplier effect. It’s a big winner,” she declared. “We have a lot of infrastructural projects which will last for two to three years.”

The minister said improvements to the transportation network, including the upgrade of existing highways, construction of new highways and the rapid rail project, will not be completed in one fiscal year. Similarly, she said Government’s plans to construct facilities which will boost the supply of water for domestic and industrial use “is going to be for several years.”

“They are going to provide the opportunities for growth. They are going to provide the opportunities for employment and they are going to provide the opportunities for boosting the economy,” the minister explained.

“You have to ensure that various sectors in the economy do not experience a contraction where it reaches a point where you really start to say there is a recession. You will see that all of the infrastructure programmes are targeted to the priority areas that the Government has identified. So you will see a very targeted approach.”

Trade Minister Mariano Browne and Energy Minister Conrad Enill have said mega projects, such as the construction of the Alutrint aluminium complex, will continue but they will be prioritised.

Nunez-Tesheira said when Prime Minister Patrick Manning called upon citizens to loosen their belts, he was saying, “if you want to stimulate the economy, you have got to spend the money.” “When an economy finds itself in a difficult period, in a challenging period, Government plays a more critical role as opposed to times of plenty,” she stated.

Nunez-Tesheira said Manning was underscoring the Government’s commitment to play its part and is seeking the help of the public and private sectors. She added that Government will also look to the financial services sector as another engine to boost the economy.

There may be fiscal incentives in the budget but Nunez-Tesheira said this alone may not stimulate economic growth.

“There is no question there is a slew of incentives for those who want to go into agriculture. The manufacturing sector has been the recipient of several incentive packages up to last year. I don’t know necessarily if in the context of what we are facing, the answer resides only in an incentive package. There are several different incentive packages for several different sectors in the economy.”

She added that in recent discussions with the Manufacturing Association, Browne has suggested that manufacturers focus on new markets or take advantages of opportunities in existing multilateral and bilateral trade agreements. As consumers last week breathed a sigh of relief as distributors lowered the prices of powdered milk, Nunez-Tesheira said Government will continue its efforts to curb inflation and strengthen agriculture.

While there is the risk of unemployment reaching six or seven percent, the minister observed the Central Bank’s summary of indicators in June reported that “while you saw a drop in the employment levels in several sectors, one sector where the employment rate increased substantially by 31 percent is in agriculture.” The social sector continues to be a priority for the Government.

Article by: Clint Chan Tack
Source: Trinidad Newsday
http://www.newsday.co.tt/businessday/0,105846.html
Date Published: Thursday, August 20 2009