Prime Minister of Trinidad and Tobago, Kamla Persad-Bissessar. When Trinidadians elected a new government on May 24, the rest of the Caribbean, including Barbados, will have to pay close attention to the policies of the new government, especially as they relate to fixing some imbalances in the economy there.
Business Monday - Trade in Focus: Changes in T&T; will have significant implications for Barbados and others
6/21/2010
By Jewel Brathwaite
IT has very often been the case that whatever happens in Trinidad and Tobago, tends to impact on Barbados and the rest of the Caribbean.
Therefore, when Trinidadians elected a new government on May 24, the rest of the Caribbean, including Barbados, the twin-island Republic’s closest trading partner, will have to pay close attention to the policies of the new government, especially as they relate to fixing some imbalances in the economy there.
This coming Thursday will mark exactly one month since the Peoples National Movement of former Prime Minister, Patrick Manning, was voted out of office by the People’s Coalition led by Mrs Kamla Persad-Bissessar. The Coalition secured 29 of the 41 parliamentary seats.
The new Prime Minister has acknowledged that it won’t be easy, given that she has to honour several campaign promises in the face of some worrying economic issues confronting Trinidad and Tobago.
Like other Caribbean states, Trinidad has experienced economic slowdown, although not to the extent of the others.
It therefore leaves one to speculate whether Mrs Persad-Bissessar will have much time for CARICOM affairs, vis-ŕ-vis the domestic agenda which she said called for urgent attention.
During the election campaign, the Coalition, based on reports in the Trinidad press, promised improved services like health care, water, housing, drainage, and the removal of property taxation, once it won the election. Other promises like laptops to first form students, higher old age pensions and a review of the minimum wages, have been made.
From a CARICOM perspective there are a number of pressing matters that require attention. These include Trinidad signing onto the Caribbean Court of Justice, finalising a fishing agreement with Barbados, as well as initiating the natural gas pipeline project between the twin-island Republic and some Eastern Caribbean islands, more financial support and investment for the region as promised by Manning, and the acquisition of LIAT (also a Manning initiative). Will these have to take a back seat, given the enormous resources that are required for most of them?
Mrs Persad-Bissessar is the newest of the new generation of Caribbean leaders coming to office in the last three years. What is also instructive is that their elevation into office has coincided with what is being repeated continuously as the worst economic crisis since the 1930s.
It has been particularly severe on small countries. All of them have reported slower economic growth (in some instances no growth at all), rising unemployment, slowdown in capital inflows and an increase in budget deficits on account of higher government spending. Some of them have sought financial assistance from the International Monetary Fund.
The collapse of the CL Financial Group has had some negative impact on Trinidad and Barbados and some other regional countries. Resources had to be found to shore up some of the businesses while job losses have taken place.
Information emerging from Trinidad and Tobago last week indicated that the economic picture there is not rosy at all. There was talk of a $7 billion deficit which has to be tackled and some commentators are calling for austere and belt tightening measures. When these are positioned next to the promises the Coalition made, then this does not provide much elbow room for the new administration to manoeuvre.
“Obviously, there will be some challenges to meet those promises,” Finance Minister, Winston Dookeran said in an interview with Newsday, a Trinidadian daily.
Since the onset of the recession, regional leaders have tended to pay more attention to stabilising their country’s economies, rather than focusing too much on CARICOM. It will be no surprise if this is the case of the new Trinidad Government.
Trinidadians have invested billions of dollars in Barbados and across a wide range of economic sectors: tourism, finance, manufacturing, wholesale and retail and other services.
Trinidad is Barbados’ main trading partner in the region in that it accounts for about $80 million in exports from this country, which in turn absorbs more than $700 million in goods and services to Barbados.
Barbados exports food and beverage, chemicals, paper products, wooden products, and some clothing to Trinidad and Tobago, which also processes crude drilled by the Barbados National Oil Company Limited (BNOCL).
Trinidad is also a major market for visitors to Barbados as well as investments here. Last year Barbados concluded a loan on the Trinidad market.
Like the rest of the world, trade among CARICOM states has declined both in 2008 and again last year. It is estimated that the overall declines are into double digits. Earlier this year, the then Trinidad Trade Minister, Mariano Browne, said that country’s exports to CARICOM were down 42 percent.
In the event therefore that the government there institutes belt tightening measures, then they would hold significant implications for Barbados, particularly its goods and services exports. Cautious economic policies tend to signal to consumers that they need to be prudent and should this be the case, then there is likely to be falling demand for imports and for vacations abroad.
History has shown that the tight economic conditions which faced Trinidad back in the 1980s had repercussions in Barbados, as exporters here encountered setbacks in doing business with Port of Spain. A devaluation of the Trinidad dollar in the late 1980s did not help the situation in Barbados either.
But trade is very vital to economic growth and any additional fall off would be detrimental to everyone, not just Trinidad but Barbados and the others.
