Short-term goal: lower inflation

Published: Wednesday October 1, 2008

Finance Minister Karen Nunez-Tesheira delivered her historic National Budget for fiscal 2008-2009. And as was to be expected, the fiscal package came under heavy fire from the Opposition and was largely criticised in business circles. Criticism was mainly focused on the Government's decision to maintain high levels of expenditure and the lack of clear strategies to deal with rising inflation.

On the issue of Government spending, one business leader argued that the approximately 16 per cent increase over what was spent last year is a matter of deep concern. In fact he went on to state that the Government's present rate of spending is not sustainable.

But in one of her many public appearances at traditional post-budget discussions with the private sector, Minister Nunez-Tesheira said Government expenditure must be viewed not simply as a spending exercise but rather as an investment in the future of the country.

In her view, "it's a matter of how we see things. What you may see as expenditure we see as investment and developing productive capacity in a sustainable investment for the people of Trinidad and Tobago."

Central Bank Governor Ewart Williams has been expressing concern over the increase in Government expenditure. He cautioned that the faster the increase in expenditure the more is the reliance on monetary policy to reduce inflation and tightening monetary policy has implications for interest rates and that has other implications for the rest of the country.

The bottom line, therefore, is that Government must place greater emphasis on efforts to bring down inflation in the shortest time possible from the current high level of over 13 per cent. Single digit inflation must be the short-term objective of all stakeholders, Government, monetary policy leaders and the private sector alike.


Source: Trinidad Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161382175