Caribbean & Central America - April 2014 (ISSN 1741-4458)

Trinidad & Tobago’s ruling People’s Partnership (PP) coalition, under Prime Minister Kamla Persad-Bissessar, is in its penultimate year of power before it has to face the electorate in 2015. Two ministerial resignations during the past month have been unhelpful to restoring government stability after a turbulent 2013. The economy, however, is performing relatively well.

The coalition’s main constituent component, the United National Congress (UNC), lost four electoral contests during 2013. In January 2013, the PP had failed to win a single seat in the Tobago House of Assembly election; July saw the corruption-tainted former UNC chairman and security minister Jack Warner’s victory in Chaguanas West; in October, the opposition People’s National Movement (PNM) came out on top in the local elections; and then in November, the UNC lost the St Joseph by-election.

Between the Chaguamas West defeat and the local elections defeat in October, the prime minister had attempted to regain the political initiative with her third major cabinet reshuffle, but that seemed to have as little impact on the electorate as it did on opposition leader Keith Rowley, who jeered that the prime minister was in her fourth year of “chaotic government”. He said: “It is clear that we are in the throes of the most severe political and governance crisis that our country has ever seen. The country has lost all confidence in this government and this prime minister.”

Now the prime minister has lost two ministers within a week of each other. On 25 March, she fired Glenn Ramadharsingh from his position as Minister of the People and Social Development following an incident in which the minister was accused of behaving inappropriately towards a flight attendant on a Caribbean Airlines flight from Tobago. Then on 1 April Minister of Tourism Chandresh Sharma was forced to his resign because of a police investigation into an alleged assault on his girlfriend.

Seeking to make a virtue out of a necessity, the prime minister said: “Each member of my administration must be mindful that we are held to different, higher standards than ever before, even by those who are our most bitter critics. There is no privileged escape, no allowance for arrogance, no forgiveness for indiscretion. Those days are gone, such compromise has expired. The responsible leadership which we promised to usher in a new dawn era is the new political currency.”

The better news for Kamla is on the economy, with the International Monetary Fund (IMF) delivering a generally positive verdict following its 18 March-1 April Article IV consultation. The IMF’s headline verdict was that Trinidad & Tobago “is experiencing more robust growth after several years of sub-par performance”. Growth for 2014 is projected to reach 2.5% after 1.5% in 2013.

However, the IMF did issue a mild warning note on the fiscal deficit. It said: “The mission projects a fiscal deficit of about 1.5% of GDP in 1013/14, closer to balance than envisaged in the budget statement. However, this is due in part to one-off developments, without which the deficit would be closer to 3.5% of GDP.”

It is the longer term that is concerning the IMF – in particular, the moment when Trinidad’s energy reserves run out. It says: “Fiscal policy should be set in a long-term context that ensures the country’s non-renewable energy reserves are used as a steppingstone to lasting prosperity. This requires increasing savings from the substantial resources extracted from this sector, which should be accomplished by moving the fiscal position into surplus within a few years.”

The IMF’s main source of concern is fuel subsidies, which it describes as “extremely costly and inequitable, starving the government of resources that could be better targeted towards poverty reduction.”

The really bright spot for the government is unemployment, which in the first quarter of 2013 fell to 3.7%, the lowest rate in the country’s history and a significant improvement on the previous year’s 5.4%. But this good news only provided the IMF with another reason for calling for more economic responsibility, arguing that the time had come to tighten monetary policy. It said: “The time for withdrawing the accommodative monetary stance of the past few years may be coming nearer as the unemployment rate has fallen meaningfully.”