From T&T NewsDay

University of the West Indies (UWI), St Augustine Principal Prof Clement Sankat yesterday urged the country’s leaders to develop a strategic vision and a medium- to longterm action plan and stick to it for the good of the nation.

Speaking at the opening of a Symposium on the state of the economy titled “Return of the Downturn in the Caribbean : Sustaining Hope and Economic Return” at UWI, Sankat stressed that legislation was necessary so that changes in government would not derail these plans.

“This is a moment for us to really put our shoulders to the wheel with a level of determination and say, the next crisis, when it comes, that we are in a better position,” he said.

“What we do not want to have in this country anymore, is stop and start, and stop and start again because the fiveyear electoral cycle is not helping this country,” he continued.

Sankat stated that years ago, with the advent of shale oil in the US, analysts predicted that the day of low oil prices would come and questioned if anyone listened as nothing was put in place. Similarly, he said, very little had been done to “deepen the gains” or “widened the base” of the manufacturing industry, or to develop the country’s agriculture and tourism industries.

Marla Dukharan, Group Economist at RBC Financial (Caribbean) Ltd, agreed that the “start/stop” was keeping back progress, and that this could be remedied by the implementation of fiscal rules.

She noted that the countries in the region that impose fiscal rules have better governance, the least debt, lowest poverty and crime rates, best infrastructure, and the highest level of stability.

Her suggestions included imposing a minimum floor on social spending, that fiscal deficit to GDP should not exceed the growth rate, and that the government should not run a primary fiscal deficit, that is, borrowing to pay interest on current debt.

Dukharan noted that Latin America and Caribbean in general had low growth. However, the International Monetary Fund (IMF) forecasted that Trinidad and Tobago would be the only Caribbean country with negative growth, with Dominica and Suriname not far behind at zero and 0.5 respectively.

She noted that Gross Domestic Product (GDP) was calculated as Consumption + Investment + Government Expenditure + (Exports – Imports), but the only things driving the economy in the Caribbean at the moment was investments and exports.

“We think, the governments think, policy- makers think and many of us think that when the government spends, we can spend our way to growth, spend our way out of our problems. But if you have low fiscal multipliers it means that is actually not working,” she said.

She made several suggestions to government including the implementation of reforms to ensure the development of private sector-led growth as it relates to ease of doing business.

She also noted that the issues which has the country almost last in the Caribbean on the Global Competitive Index were all issues the government needed to address. These include division of public funds.

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IMAGE: sta.uwi.edu Prof. Clement Sankat