TODAY'S EXTRACT IS TAKEN FROM THE EDITORIAL ONE YEAR AGO, NOVEMBER 3, 2003.AT ONE level, Finance Minister Davies' latest decision to put the implementation of the proposed steep hike in the duty on imported cement on hold could be viewed as positive. This is so as it shows an apparent willingness to listen to opposing positions. Nonetheless, coming at this time, Dr. Davies' decision to retreat, at least temporarily, from his original position, merely reinforces the uncertainty and tentativeness existing in the broader economy.
For one thing, this latest decision of Dr. Davies is reminiscent of the uncertainty associated with the new taxes imposed in the immediate post-budget period. This uncertainty persists, as it is still not clear how the announced environmental tax will be levied...
Even more fundamentally, however, there are still question signs concerning critical fundamentals in the macroeconomy. A number of examples come to mind. First, as the realities of the fiscal imbalances hit home government recently admitted in Parliament that it had experienced a temporary liquidity crunch and was experiencing difficulty in paying road contractors. Yet, only days before this admission Dr. Davies was on record as denying reports that government departments were experiencing serious cash flow problems.
Then there were reports that the government had turned to the Trinidad market to raise funds to cushion the budget shortfall...
The Finance Ministry and the Central Bank must give clear signals that they have strategies in place to deal with the issues... that foster a climate of uncertainty. More dialogue involving the authorities and the social partners is one pragmatic strategy that would help to build confidence.
The authorities must not bury their heads in the sand or give the impression that the system is on automatic pilot. We definitely need to feel that they are in charge at this time.
