Letter from... the Caribbean

Rory Rostant reports

Awash in oil and gas money, Trinidad & Tobago is bulging at its seams, but try telling that to those who have been living with no running water for years, who burn tyres to protest about bad roads, or even farmers who perennially suffer millions in losses due to flooding.

It is not a pretty picture for a country whose balance sheet is dripping with energy profits.

Economic growth continues to be driven by the energy sector, which recorded a rate of expansion at 11.4% in 2003 and, according to the Central Bank, for the first four months of 2004, the Government recorded an overall surplus of TT$740m.

Net international reserves increased from about US$2.3bn in March 2004 to reach nearly US$3.1bn—about eight months of import cover. US$1 is TT$6.30.

Government revenues for that same period amounted to about TT$6bn, 11% higher than expected.

To top it off, the 2004 budget was based on an oil price of US$22-US$25 per barrel. Now hovering between US$55-US$60 a barrel, the Government is swimming in cash. It also intends getting a greater share of energy profits by changing the tax structure under which foreign companies like BP, BG and BHP Billiton, now operate.

Energy Minister, Eric Williams, admits that the bugbear has been the persistent inability to ensure that the wealth is shared by everyone.

When a UN agency concluded earlier this year that 50% of the country’s 1.3m population was living on TT$12 a day or less, the Government saw red and launched its own survey.

“While per capita income approximates US$9,000, approximately 12.4% live on US$1 per day and a further 39% live on less than US$2 per day,” said a UNDP document.

“We recognise there is still a lot to do,” said Minister in the Ministry of Finance, Christine Sahadeo, noting that in the fight against poverty, the minimum wage had increased from TT$8 to TT$9.

Christian Mouttet, President of the Trinidad & Tobago Chamber of Commerce and Industry, while buoyant over increasing energy revenues, insists that this must be channelled into social programmes, education and health.

But nobody wants a repeat of what happened during the last oil boom in the 1970s. Dependent on revenues from high oil prices, the economy bottomed out when oil prices fell, sending the economy into a downward spiral; the real estate boom fizzled out, the country turned to the IMF for a bailout and the Government raided foreign exchange reserves to keep the economy afloat.

Economist, Kelvin Sarjeant, says Trinidad & Tobago needs to find policies designed to redistribute wealth, noting that this was the only way to ensure a trickle-down effect.

He says the UNDP report confirmed what he always believed: while there has been growth in various sectors, the trickle-down effect has not been guaranteed.

Dr Ronald Ramkissoon, an economist at Republic Bank, said that given this country’s resources, it should be ranked among the top 10 countries of the world. Trinidad & Tobago, he noted, has been at the bottom of the human development index, stressing that a country with resources like Trinidad & Tobago should be higher up in the world’s scheme of things.

It’s not: the island suffers from 10% unemployment, a figure some analysts say is too high given the island’s wealth. Crime is soaring, with murders and kidnappings on the rise. The feeling is that unequal wealth distribution is fuelling crime.

Letters to the daily newspapers scream out for the Government, led by Prime Minister Patrick Manning, to ensure that the oil and gas money is not frittered away. A Revenue Stabilisation Fund has been set up by the Government to provide a buffer against any fall in the price of oil and gas; it now stands at about TT$3bn but the reins of the Fund are in the Government’s hands.

Another fly in the ointment is the perception of corruption in Government circles, something that overshadows oil rich countries. From cost overruns on Government-awarded contracts and unbudgeted multi-million projects, to the creation of new state enterprises designed to fast- track Government projects, it’s all being seen as oil money to grease the hands of those in power.

According to a corruption index of Transparency International, the international watchdog group, the country recorded a low 4.2 rating, a steady decline from its first rating of 5.3 in 2001.

Yes, oil money can either make you or break you.

Rory Rostant is a business editor at Newsday in Trinidad.