Aug 2009 Financial News

Mariano sees signs of recovery

Aug 20, 2009

TRADE Minister, Mariano Browne, has said there were anecdotal signs that the country’s economy was recovering, although there was a lag in official data to show this. At last Thursday’s post-Cabinet news conference, he replied to Central Bank Governor Ewart Williams recent remarks saying the country is not in a recession but faces tough times requiring caution.

On Williams’ claim that the economy was not yet in recovery, Browne said: “We have a lag in data, and the data that is being evaluated will not show any recovery at this point in time. The issue of recovery...there are signs of investment expenditures which people have made, and so on, — anecdotal evidence — but no econometric evidence at this point.”

Asked if the TT economy had to move further than the US economy in order to recover?

Browne replied, “We have not spent the type of money that the American government has.”

As a result, the TT Government has not incurred the big deficit incurred by the US government through its bailout of the US economy. “It is clear that the speed of (US) recovery has been and is due to a large element of a stimulus package. It is a very significant stimulus package and the fact is that significant stimulus packages have been used in many places in the world.

“We haven’t done that, by definition, and it is in that context perhaps that we need to understand the Prime Minister’s statement that there is a reason to loosen our belts. We could not be too tight in our expenditure. We will need to consider some level of deficit financing.” He said there are a number of arguments about whether or not TT is in a recession.

Browne said, “The numbers are trending downwards. The numbers are actively showing forms of stagnation.” He said it is very important what the Government does now, in managing the economy.

“Our position has been relatively favourable when we compare ourselves with our neighbours.”

He said judicious management of the economy is needed.

Browne said the Government had always said this would be a tough economic year. He said if one spends more than one earns, one must then use deficit financing, as already declared by Prime Minister Patrick Manning. “What he said at that date, holds through to today”, added Browne, vowing the deficit financing would be conservative.

Browne said, “Capital projects have a life of their own. Once they are started, if you abandon them, you leave fairly large monuments to failure, big holes in the ground, neither of which is acceptable.”

“What this means in terms of our ability to finance projects, is that we allocate certain types of priority and to order those priorities. There are many things that still have to be done, and may not be done immediately but have to be done on a phased basis over time. So there would be some greater phasing of the expenditure. I think that’s what we can look forward to.”

Asked about the contents of the upcoming budget, he replied it is coming in September when all the details would be available.

He said the latest data must be considered in writing the budget.

“We are in the planning stages. Planning requires us to evaluate what our current position is, and where we are.” Reporters asked about a current low price of natural-gas, he foresaw Trinidad and Tobago facing competition from several new gas-suppliers whom would make the market a little more difficult.

“In the short-run we will see volatility. We know we are in the volatile zone.”


Article by: SEAN DOUGLAS
Source: Trinidad Newsday
http://www.newsday.co.tt/businessday/0,105848.html
Date Published: Thursday, August 20 2009