Episode Transcript
[00:00:00] Speaker A: You're tuned into the all New Freedom
[00:00:03] Speaker B: 106.5, 106.5 economists and former Finance Minister Mariano Brown is with me this morning as we continue to look at the media budget review. The economy is our economy in good hands? And that is a very, very serious question. One person told me to ask Mariano this morning, how does a government solve poverty?
Mariano, good morning to you and welcome back to the Morning Rumble. It's always a pleasure to chat with you. How are you going?
[00:00:32] Speaker A: Good morning.
That was a difficult question your caller wants to address.
[00:00:37] Speaker B: Well, we, we, we, we, we are here this morning. I do apologize for the tardiness, but that's all right.
[00:00:42] Speaker C: Not a problem.
[00:00:43] Speaker B: We had some commitments that I needed to address and then somebody mentioned something to me that I just, I just had to respond to. So now as we look as the stakeholders, I Minister Devinjanath Tanku as he delivers his media budget review in Parliament later on today. I think it's about 10:30 this thereabouts the same question I chatted with Umlala earlier on. I'm going to talk with you on we have been operating in a deficit budget for quite some time.
What goodies if any at all or what good things that happened in the last six months of this media budget and what expectancy we have stakeholders such as the nurses, the cwu, of course, fueling and policing concerns. The chamber pushes a growth agenda with teachers awaiting their back pay. Not to mention jobs are at the center of this all.
So as we have our discussions this morning quickly and of course you have your meeting coming up at 9. Let's get to the first question of the morning. How are we faring economically at this time?
[00:01:38] Speaker A: Well, from has been in the depression since 2014 and that depression was relieved only by the increase in energy prices in 2022 and 2023, largely as a result of the war in Ukraine.
So methanol prices, for example, went from $450 a ton at one stage to about $1,750 a ton. China managed to average, I think $1,120 a ton. And as a result of the sanctions on Russia, we became the largest exporter, not the largest producer, the largest exporter of ammonia.
So that worked well for us for that period of time. And since then, the economy has, if you, I wouldn't say tanked. But you remove that stimulus, you remove that buoyancy, well, not even buoyancy, that increase in public revenue, public expenditure and the economy has declined. Now the deficit financing that we've been running deficits is 26 years.
This is 26 years into this century.
And we've run deficits for approximately 23 out of the 26 years. The net result, of course, is your national debt goes up, your borrowing goes up, and as a result your ratings go down.
So your capacity to borrow more declines the higher your debt goes.
So that's a positive.
That's the reality. And part of the reason for that is that government has been attempting to address the poverty situation, address the social balance situation, by using government expenditure to fill what one would call any holes in economy.
Now, government's capacity to continue to do that is fraught with danger, as you see that in continuous IMF reports which talk about the need for fiscal consolidation and a fiscal debt ratio. In other words, some sort of fiscal debt rules that would stop us from doing that on an ongoing basis. And the reason why it's hard to do politically is because the private sector isn't growing to compensate. There's only one element in the private sector that basically can drive the economy at this time, which is the energy sector.
And even though the non oil energy sector or the non energy sector has been improving, has not been sufficient to be able to drive growth.
So as a result of the decline in the energy sector, for example, immediately after 2023, growth started to decline and we are, this year, the rate of growth is expected to be 0.7.8%, in other words, less than 1%. And it was the same thing in 2025.
So literally we're running on the fumes of the expansion money that took place in 2022 and 2023 now.
So government is in a particularly difficult sticky wicket. A sticky wicket also because the new government has come in in that night, 2014 to 2022, 2025 period, government did not address public sector wage negotiations.
The new government, of course, made that a platform for its campaign and addressed the situation.
They settled everything that the PNM did not settle, and in particular the psa, which is the largest bloc of public sector unions. And they agreed a 10% increase, which was twice the amount that was being offered by the PNM before.
The difficulty is, having settled the negotiations is to find the money to pay it. That's the real problem.
And quite frankly, this media budget review doesn't address it.
[00:05:28] Speaker C: Why?
[00:05:29] Speaker A: Well, there's a reason why the PNM was only offering 4 and 5%, because even that was hard to pay.
10% makes it worse.
So you'll find yourself example that we know that the back pay element to just two or three union blocks come up to somewhere just under $7 billion.
And quite frankly, this current administration doesn't have the revenue to pay it.
So even when and if there is an energy price boom or energy price increases as a result of the Middle east conflict, right. Those revenues, when they come in, are simply going to pay off and not even in full. Perhaps the, the revenue positions from before,
[00:06:17] Speaker B: which is, which is loans, loans and so forth. Right.
[00:06:20] Speaker A: They're not on the loans, not even getting loans yet. That's paying off. The salary increases that the people are asking for.
They just, they just, they just adjusted. The revenue isn't there to do it.
[00:06:31] Speaker B: What realistic expectations can one look to?
[00:06:34] Speaker A: Hold on one second.
[00:06:35] Speaker B: Okay.
We continue our discussions here on Freedom. We are chatting with economists. Of course, he wears many hats and he has worn many hats in the past. Mariano Brown is here with me. It's always a pleasure to chat with him.
Another good friend of ours as well, Mrs. Carolyn Sipasad Beachan. Always a pleasure to chat with these learned individuals. What realistic expectations can one look to with this media budget review? As you know, with the information that we have in the public's domain at
[00:07:02] Speaker A: this time, not much actually, but what government will do is attempt to manage as best as it can. Right.
The budget deficit was understated at this stage. Even with the media supplementation, it is still understated because it hasn't dealt with the back pay issue.
The $2.3 billion really should take care of additional expenses assisting from meeting back pay requirements.
So you're postponing that next year. So even if the revenue increases next year, but it's already spent because you have a commitment on the table to pay people and to pay people increments and back pay. That's why the teachers are making noise, that's why the nurses are making noise. And I don't know how soon the PSA will start making noise too. But that has to be on the table.
So there are some real issues here in terms of government's ability to pay. Now Mr. Inwood was in the same problem. You know, that's one of the reasons why he probably was the most disliked man in the government because he was always in a situation. Well, I don't really want to increase taxes because it's politically unacceptable, but I can't really pay anybody either. And quite frankly, this government is in exactly the same situation.
And the evidence of that is one, VAT refunds are not being paid effectively as a borrowing from the private sector.
2 CDAP, which is part of your. If you're on anti poverty initiative to help those who are aged and in difficulty.
The drugstores haven't been paid for 11 months. No, that means I am buying the drugs, I'm giving all the drugs and I'm not getting any cash.
Right. So how do I replace this stock? Well, I have to borrow money or reinvest whatever profit I had. So it means my cash flow is.
Now, that's the situation across the board right now in the country.
So this is not an easy time. It's difficult and quite frankly the bet is. And the same way Mr. Inbut was betting, Mr. Inbet was betting a boom in the energy sector was going to come. Well, that's what everybody's looking forward to, another increase in prices. The real problem here is that the increase in prices won't help us too much. Why?
Because 50% of the plants in the energy sector, in the petrochemical sector are closed. Why did it close?
They don't have enough gas to go around. Simple as that. They don't have enough gas. So the critical issue, that's why Dragon was so important. That's why the PNM were paying so much attention to Dragon. That's why this administration will have to do the same thing.
[00:09:42] Speaker C: Right?
[00:09:42] Speaker A: So the only horse in the race so far in the energy sector that is likely to come on stream and make a difference is humanity.
And when that comes on stream, well, and they get some extra revenue out of it. You have to remember, when Manatee comes on stream, well, I spent about US$2 billion putting this in position.
So I have to get cost recovery first.
[00:10:08] Speaker B: Before anything else.
[00:10:09] Speaker A: Before anything else.
[00:10:11] Speaker B: All right.
[00:10:11] Speaker A: So that's a limitation on whatever additional revenues will come. So this is difficult.
[00:10:16] Speaker C: Good morning.
[00:10:16] Speaker B: Good morning.
[00:10:17] Speaker C: What are you doing, sir?
[00:10:20] Speaker B: Yeah, yeah.
[00:10:22] Speaker C: But there's one thing that we know PNM is quite clear at working at is the race game.
[00:10:28] Speaker B: No. Are we dealing with the economy right now and the media budget Review your thoughts on that or a question for our guest, Mr. Mariana Brown.
[00:10:35] Speaker C: Sorry, sorry.
All right, I'll call that.
[00:10:38] Speaker B: All right. 625-2257. If you have concerns. I did get a message coming in to me. Hello. Good morning.
[00:10:45] Speaker C: Good morning. Davy again, good morning. Good morning to Mr. Mariana Brown. Man Morality. Mr. Mariana Brown. I met something some form here that for me years ago by regular color program and contribution to our national issue. All right, Mr. Mar, answer the custom. I appreciate what you do at the present state put in any place of the Finance Minister, the present economy. Have you taken the country? Iago, give us a.
What you would, you would or would not have done as a senior Fear they hear a response.
[00:11:17] Speaker B: That's a very good question.
Putting him in that space that he existed in the past. Anyway, thank you very much, Mr. Mariana Brown, for your timely and informative series on the economics of the FIFA and the World Cup. This texter is saying they love it.
So, Mariano, you're coming in for some praises there.
[00:11:34] Speaker C: All right?
[00:11:35] Speaker B: So had you been in the seat of the honorable Devindranath Tanku today or when he took office a year ago, a little over a year ago, as Minister of Finance, what would you have done differently given the realistic economic challenges that we are facing in this country? That's what they call the first order
[00:11:55] Speaker A: condition, is that you have to address the. You have to address the fiscal shortfall. And the key way to address the fiscal shortfall is increased access as reality.
[00:12:07] Speaker B: Taxes or penalties and fines.
[00:12:09] Speaker A: No, no, no, no. Not penalties and fines. Those are nuisances, right? You. If what. What you want to do. If, if you want to get the economy. If you say these countries in discipline, what you need is enforcement, not higher fines, right? You need to enforce the rules, right? You have to put your rules in place and follow through the rules. So get that in order. If the rules aren't being followed and, and you, you need to watch your college. You need to basically get people's attention. You burn them a bit, then you increase the fine. Not before. What's the way we have now is the increasing defines increasing fines, bottom line enforcement. Those are, those are things that will keep things going, but. But irrelevant. Generating more revenue. You have to address the situation.
[00:12:53] Speaker B: All right?
[00:12:53] Speaker A: How do you get revenue? The only way our government gets revenue is taxation.
[00:12:59] Speaker B: But this government has. Has lobbied against it under the past administration stating that you can't tax a nation into prosperity.
[00:13:07] Speaker A: So I never said that you want to tax a nation into prosperity. What you want to do is close holes.
So, for example, this is a. For example, right?
TN Tech gets money from government, all right? They put it in, not any form of subventions. They have a creative measure to basically do it. But at the same time, when you look at TNT income statement, it's losing $1.5 billion a year.
It's getting gas under cost. It can't be NGC because it isn't collecting enough money on electricity distribution. Well, as a recipe for failure. The only way you can address that is address the rates. Full stop Wasa and by the way, and you're borrowing every time, every time Tiantech borrows more. So when Tiantech makes a $1.5 billion loss, $1.1 billion is interest.
So you keep you getting somebody's bank, bank account fat at the same time because you are not collecting what you should be collecting for your rates to keep your rate structure in position.
How are you going to get any kind of transformation if you send the wrong economic signals? And price is one of those mechanisms. We go to Wasa.
Wasa has a. Whatever loss it is, the subvention is $1.8 billion a year.
So between those two institutions you're talking about, you're spending about just under 5% of your national budget.
The state isn't. You can't provide electricity for free and water for free even if you just want to meet the marginal cost. Right? So that's about three or four billion dollars there. That in a sense the government should be spending, the public supposed to be spending. It's not the news that the public wants to hear, but that's the reality of the situation.
If you want to get conservation, the only way you can get chief conservation either with electricity usage or with water usage or for that matter with regard to gas. It's not just the price and people will find different ways to do it. Of course it's going to cause hardship, but there's additional difficulty if the government has to spend money on all of those things and it can't pay public service. What you're going to get with the public service, inefficiency, lack of a will to work and every other thing that goes with that. You can't expect the private sector to be efficient. If my public sector is inefficient, the things are related.
So you have to put some level of organization and you have to make some hard decisions and the country has to understand the hard decisions. The same but used to keep telling us, right that we have. You do have cash for this, you do have cash for that. But you got things that are moving well.
The two things are dissonant. They just don't work together.
[00:15:47] Speaker B: Seems to be an option.
[00:15:48] Speaker A: Mr. Bank who is in the same position, he comes in, he creates a budget, but he leaves out back pay. He leaves all the increase in this. He talks about jobs for this and jobs for that. And the net effect is a supplemental budget where he has to pay additional salaries but he not paying the back pay. It can't work that way. You have to adjust your revenue.
[00:16:10] Speaker B: Let's Take a call quickly. Good morning.
[00:16:13] Speaker C: Morning Davy again. Morning Mr. Brown. Mr. Brown, did you. Do you think that in relation to the government's approach to stop the Revenue Authority, stop the property tax, the geopolitical aspect with Venezuela that put them out of the whole proper negotiation with the Dragonfly, all these factors distorting of one doing these things, do you think that those more or less things that they put on hold or cancel, do you think it put them in even a worse buying? I listen,
[00:16:44] Speaker A: putting those things on hold hasn't helped your situation.
All right, so six to eight weeks ago the Prime Minister said she's putting together to send a delegation to Venezuela. No word out of it. You haven't appointed an ambassador to Venezuela. You can't get a full negotiating team or get a little window into the back door. Right. And the Americans are clearly doing business with dlc, right. So they've removed the strictures on Del C DLC is going to India, Delcy is going to Barbados, Del, she's going to Greenader. She sent a message to Trinidad that they're going to take you on.
Right. So you can't kick her up on one side and then come and play nice and want a friend not going to work. Right. So you have to rejig your approach to getting that done. At the same token every Minister of Finance including UNC Ministers of Finance try to reintroduce the Revenue Authority in different ways. So we scrap the Revenue Authority. So basically you've basically played up to the PSC was which was against the Revenue Authority but we're going to improve these measures which is really trying to improve the entire revenue collection process. We're trying to do the same thing, right? To get the same result but using it under different name. All right, what is the result?
[00:18:00] Speaker B: Well we have.
[00:18:01] Speaker A: Let's see what has happened.
[00:18:02] Speaker B: Well that's what we have to see and that's what this media budget in the next couple hours will tell us. Hello, good morning.
[00:18:08] Speaker C: Good morning Mr. Mariano. Bro mind they call you a PNM this morning.
[00:18:12] Speaker A: You know you can call me anything you want, right? But because objective is the real word that you should use.
[00:18:18] Speaker C: Ah, because we were asking for a written piece for tntec, explain the debt for TNTEC and they said to the population no all what is going to be done.
And now that they get into office realize same thing with Wasa. Wasa took a loan, sent home how many thousand of them they came back into office employee the same thing. So what Dr. Eric Williams use a word and it's simp and this administration is the words that points out the lack of vision and to me fool the population could win. The population based on promises as you outlined. You get 10%, nobody can't get it back pay. The same man who read the budget didn't put none of these things in the budget. And when we said that to him, they say we were mad.
So come on, enjoy your morning. The whole everybody guardian and all this pnm, you know, enjoy the morning.
[00:19:16] Speaker A: I think he was being sarcastic.
[00:19:17] Speaker B: I would imagine. Hello, Good morning.
[00:19:20] Speaker C: Morning. Mr. Arm. Mr. Brown, could you please tell us like nobody knows what is the national debt or Trinidad tobago? Is it 150 billion or 200 billion? Could you clarify that for me please?
[00:19:36] Speaker A: I don't understand the question. What's the question with clarifying?
[00:19:38] Speaker B: What would you want to know? What is our national debt? If it's 1 point something billion or
[00:19:44] Speaker A: 200 billion, 1.7 billion. Well, GDP is approximately 200 billion. Right, right. And the national debt is about 83% of that. So that's 160 billion, not 1.2 billion.
[00:19:56] Speaker B: Well, I mean, no, he did say 160. My, my, my correction is 150. He said 150. One hundred and fifty billion or 200 billion. So it's 160. It's going up, it's climbing. All right. Good morning.
[00:20:09] Speaker C: Good morning, Mr. Brown. Clearly the Minister of finance has some payment problems and the issue that they talk about in relation to the revenue Authority rather than the cacophony of taxes introducing all over the place, that is something that really and truly has to be a heavy on him.
But the question that remains to my mind right now is that the promises that have been made prior to the election, the 10%, the pay, all of this, all of that, how long does the minister believe he can delay that? And would the minister take some kind of step that is going to allow us in this country to open our mouths?
I really and truly like my dollar the way it is, you know, but I hope every everything remains the way it is because I know that the minister doesn't have an easy task. Thank you.
[00:20:59] Speaker B: All right, one texter is saying. What are your thoughts before you respond to that text? On the government's revitalization plan which was revealed a few months ago and we haven't heard anything on it since.
[00:21:11] Speaker A: Well, it can't revitalize if you have no money to do it.
[00:21:14] Speaker B: Well, I.
[00:21:15] Speaker A: And the revitalization plan as predicated by the Minister of Planning and Development is built on the private sector. So the Idea was, and Ms. Julian John went off on a trip to raise money to the Gulf States. Now, you want to remind me when I've been in the Gulf States again over the last couple of months, they have a massive problem. They have to rebuild infrastructure. War is very destructive.
Now.
Do I have money to invest in Trinidad? Do I have to spend money in terms of fixing the damages which were done?
There's a substantial amount of damages done. You know, we're not clear about the full impact in terms of what took place in the world. It's kept that under wraps. But it's going to take more than a year to fix that. Right. So definitely no money coming in for that from the Middle East. So what are the alternatives? So I don't figure that the revitalization blueprint has much to go on at the moment.
[00:22:12] Speaker B: All right, so as we get closer to the end of this interview, please bear in mind, as we thank Marianne Brown, we'll take. I have a couple calls that I messages coming in that wanted to say some, to send some words. Let me see this one here.
Let me hear you.
[00:22:29] Speaker C: Morning, D.B.
[00:22:30] Speaker A: firstly, Rowley Jr. Should change his name.
[00:22:33] Speaker B: All right, so we'll get back to that. Hello, Good morning. Quickly, please.
Hello, Good morning. Quickly.
[00:22:38] Speaker C: Good morning. Morning, Princess Tong. Morning, Dr. Brown. I like Mr. Brown. You see, Karam share with us. We're talking about a lot of subsidies and transfers and so on, TN the, etc. But what about productivity and efficiency? I mean, if we had to sustain our state enterprises and public utilities, the cost that they incur, is it justified? Are we getting value for money? Thank you, Princess Tong.
[00:23:05] Speaker A: And he's right. We talked about. But the point is that the minister hasn't had time to deal with productivity. He can't even deal with his expenditure profile. Far less to talk about getting productivity. And how are you going to get productivity out of your particularly the public sector if you're not paying them? I mean, you have to remember that it is.
How many negotiating periods is 12 years and they can't even pay back pay for six? We haven't started to deal with the other six years. You know, we're only dealing with the period 2014 to 2019.
The period 2020 to 2025 hasn't been put on the table yet. You think that's going to be any less than the figures? And if you can't pay for the period 2014 to 2019, how are you going to manage the 29th? The 2020 to 20, 25, period now everybody, nobody has been paying attention to that. But those are the biggest issues.
Those are big issues.
So to talk about a boom coming or we can get extra revenue because we get extra gas, the money has already been spent.
That's the difficulty.
So the only, every minister of finance for the last 10 years have been facing this issue. And subsidies and transfers amount to more than 50% of the budget. So that can't carry us forward. It can't.
[00:24:21] Speaker B: But given the economic challenges and realistic, the realities facing our finances in this country, was it prudent of the government to remove at least a dollar of the subsidy of, of gas prices? I mean, I am grateful. I feel the effects on the pumps. I'm being honest. You know, could we, could the government have afforded that at the point in time?
[00:24:43] Speaker A: Well, here's the problem with that.
At the time they made because prices were reasonably stable and decided to play the game. So we will basically appeal to everybody in what we consider to be the low income segment by adjusting the price of, of fuel.
Right now in North America, as around the world, the prices of fuel have gone up by something in the order of 50%.
We are still at the lower price that we were. So if you look at any index at the moment, Trinidad is like a sore thumb. We're below the market price for every country in the region. Everyone. And it's not because we produce in oil or that we have a refinery which is producing. If you have fuel, we're buying fuel at the same prices they're buying it at. So obviously that's a subsidy.
So where is that subsidy accounted for in the budget in full?
Right now, on average, the entire Caribbean, which has also subsidized energy prices, the market price has gone up by about 15 to 16%. But in Trinidad, we have the reverse position. We drop ours, the government's budget is bound to be in a mess.
You're bound to be in a deficit. And unless you address some of those situations. And again, Mr. Tanku is in the same position as Mr. Inbut talking about how things are going to improve and everything is going to go well. And at the same token, meeting daily expenses is a problem. One political scientist says they only have a little cash flow problem.
Well, the fundamental issue that affects any country is finances. And if you don't get that right, that's when you run into problems. And that's exactly where we are now. Trinidad bagel looks good on the surface, but it's a knife edge. A knife edge and wrong end of the knife edge at this stage of the game, somewhere along the line, the government of Trinidad and Tobago, PNM or UNC has to get realistic. And if they don't get realistic, we end up in the same position with Jamaica and or Barbados and have to borrow and go capping hands to the imf. And other things are going to happen. That's the reality.
[00:26:56] Speaker B: One Texas says, Good morning, Davy. Your guest said the government, the PNM government didn't have the money to do what they had to do, but they were able to raise their salaries and I mean, when I speak on that issue, Mariano, I deal with it on a level that it's 40, 55 politicians at best. I want to say that, all right, maybe, maybe 60, including the independents and what have you, as opposed to thousands of public servants having to spend this amount of money on a recurring basis because once you raise it, you pay the one off back pay. Remember, this is a recurring expenditure somewhere in the sense of two point something billion on the public's purse yearly, I think, going forward.
But I want to thank you very much.
The realities are grim, but you.
[00:27:44] Speaker A: They're difficult. Difficult, you're right. I mean, it's not only the politician, but also senior public servants, so the Permanent Secretaries and so on. A number of other people are caught into that. So say 200 people, right?
[00:27:57] Speaker B: As opposed to 3,000, 5,000.
[00:28:01] Speaker A: No, no, no, no, no, no. You know, the public service is 100,000 people.
[00:28:05] Speaker C: Whoa.
[00:28:06] Speaker B: Well, you see, I was only being modest. So 100,000 persons over, over that.
[00:28:11] Speaker A: So even if you make a distinction between the civil service and the rest of the public service, because you have to remember the agencies of state will include the police, fire services, the nurses and everybody else. We're talking about 100,000 people here, as
[00:28:28] Speaker B: opposed to
[00:28:31] Speaker A: a good 20% of the work workforce. Now, the difficulty there is the cop is the cognitive signal. You are asking me to make a sacrifice. You haven't given me any increments for four negotiating periods in addition to my normal increments, and you give yourself a salary increase. Now, the interesting thing about it is that the new government comes into position, promises to pay everybody else, but they're paying. They didn't, they didn't take any haircut.
So it's always going to say, it's always going to rub a union the wrong way, right? And that's when you get, when you're in a leadership position, you can't say, this is what you want to do. I want you to do this. But I'm not going to do it right at the end of the day all of us have to do it that's the reality all right and the quicker we understand that and we accept that at a political level the better.
[00:29:18] Speaker B: That's what doc not doctor that's what A and R Robinson did back in the 80s he instructed his government every minister we had to take a pay cut time's hard it was a very
[00:29:28] Speaker A: important and when he did that guess what the private sector did the same thing.
[00:29:33] Speaker B: Thank you very much Marion thank you very much Mr. Brown for chatting with us this morning. It's always a pleasure. We learn a lot and no doubt after this media budget review is presented in Parliament you and I will have conversations again maybe by next week and we'll review what is being said and look at it again. Thank you again and do have a very safe and productive day. I know you have a next meeting ahead. All the best.
[00:29:53] Speaker A: Thank you very much. Take care.
You're tuned into the all new freedom 106.51 6.5.
