May 2012 Financial News

Experts favour cut in subsidies

May 23, 2012

It is not so much a question of if the Government must remove subsidies, but how, and the circumstances under which the State goes about it, two financial experts have said.

"It would require immense political will to reduce subsidies over time. There will be a knock-on effect of an inflationary impact but it is not something we can continue. It has to be managed very carefully," RBC Financial (Caribbean) Group economist Marla Dukharan said yesterday.

"It's a question of how the Government approaches the subject in order to figure out the financial impact; how the private sector and the government can ensure the environment is competitive enough to absorb the impact of dampening of economic activity," added Standard and Poor's director of sovereign ratings Olga Kalinina.

Both women were feature presenters at RBC Financial (Caribbean)'s Breakfast Seminar on "The Trinidad and Tobago Economy: Risks, Opportunities and Outlook", yesterday at the Hyatt Regency (Trinidad), Port of Spain.

Also presenting and weighing in on the subsidy issue was Judith Gold, the International Monetary Fund's Mission Chief for Trinidad and Tobago.

"You bring it to the public forum and discuss it. You look at the implications and allow it to pervade the public consciousness and you take steps to gradually remove it. You start a discussion with all the numbers: how much it costs where the resources can be directed to and how much you can save," she said, adding that the country has the capacity now to start the process.

"Once the economy is well established, the Government must increase revenue and reduce expenditure," she added.

One of the fiscal strategies the IMF discussed with the government, she said, was to contain transfers and subsidies.


Source:
By Carla Bridglal
Trinidad Express
Tuesday May 22, 2012

http://www.trinidadexpress.com/business/Experts_favour__cut_in_subsidies-152839635.html