Experts: Excessive spending by Govt will destabilise economy

Published: Wednesday October 15, 2008

SUBSTANTIAL spending by Government is only going to raise the inflation rate and create an unstable economy, say several economists.

"The fact is, the world has changed and it has changed immensely since the Budget was presented in September," according to Dr Ronald Ramkissoon, a senior economist at Republic Bank.

Speaking at an annual post-Budget discussion for Form Six business studies pupils at St Mary's College in Port of Spain yesterday, panellist Ramkissoon, Senator Mariano Browne, Minister in the Ministry of Finance; Winston Dookeran, former Central Bank governor; and Indera Sagewan-Alli, economist and consultant with Applied Learning and Solutions; gave their views on this year's Budget presentation.

Ramkissoon added that the Budget would have taken into consideration the global financial situation, but it would be in the people's best interest if Government chose to recalculate the Budget based on the new hydrocarbon prices.

Dookeran, who is also the political leader of the Congress of the People (COP) said, if the Budget was about managing risk, then the Government should acknowledge what risks are being faced today.

He said the country's sustainability was at risk because of the volatile nature of the energy sector.

"If you remove the energy sector from the revenue accounts in our country, we will not have anything to fall back on," he said.

Dookeran added that the issue of accountability also proved to be at risk when the subject of legitimate government expenditure came up.

"When you spend millions of dollars in safety and social justice and the country is still not safe, in economic terms, that is not legitimate," he said.

On the issue of the high inflation rate, Browne said it was a worldwide trend which the International Monetary Fund (IMF) claimed would only slow growth, not stop it.

He added that the economic landscape today was far different than it was back in 1990, considering the emergence of new powerhouse countries like China and India, and the country would be able to sustain itself if there were a recession.

"The poverty level can't be that high considering that we ran out of three car series within the last few months," he said.

However, when questioned about subsidies and transfers, Browne told the audience that it was spent on the people.

"Subsidies and transfers are spent on you, on schooling and education. The future of your country belongs to you. You will inherit what we have built and are building," he said.


Source: Trinidad Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business?id=161387803