Panday expects TT recession, predicts poverty will grow

Opposition Leader Basdeo Panday expects the number of people living in poverty to grow to half a million because of worsening economic conditions in Trinidad and Tobago. And he says a 2005 survey putting the poverty level at 16.5 per cent is grossly inaccurate today because it was based on a monthly income of $665 a month.

"More than that, since 2005, inflation has increased greatly, the cost of all goods and services has risen considerably and the purchasing power of people's incomes has eroded substantially. Therefore an even greater number of people would have fallen into poverty since the survey," the former prime minister said in a media release.

Panday said despite assurances from government and the Central Bank all the conditions that immediately precede a recession present in Trinidad and Tobago today. These include:

• high inflation
• collapse of international financial institutions
• low production – particularly in agriculture; reduced competitiveness of domestic manufactured goods as a result of increased input costs including security, transport and labour
• high level of unproductive employment
• high commodity prices
• falling energy prices
• falling purchasing power of incomes
• high cost of borrowing
• falling business confidence in the economy.

"We are sitting on the edge of a recession which will most likely hit in 2009," Panday said, adding that the world's strongest and most diverse economies including those of the US, Japan, China and the countries of the European Union are all experiencing recessionary conditions at the moment with projections that things will get much worse.

"Already tens of thousands of jobs have been cut in those countries and the same thing is likely to happen in Trinidad and Tobago," The Couva North MP said.

He said Trinidad and Tobago is facing the same conditions that caused the economic collapse in the 1980's following the energy boom of the 1970's.

"The PNM government of that day squandered and looted the treasury, and the inevitable result was an economic crash. Twenty-five years later the PNM has squandered off another boom and mismanaged the economy," he charged.

"In the 1980's, the structural adjustment measures included borrowing from the IMF, cutting Cost Of Living Allowance (COLA), freezing wages and overall reduction in social programmes. Those were the belt-tightening measures of the 80's and it is the poorest who felt it first and who felt it the hardest, and the same thing will happen again", Panday predicted.

"There are over 250,000 people whose belts were already on too tight for the past several years – even during the boom. More people have fallen into that category and even more will experience worsening hardship as the economy continues to slow down and enters recession.

"Businesses will cut production and surplus spending. Wages will be frozen. Breadwinners will be retrenched and families will be displaced. Government's social programmes can be a temporary buffer but eventually – as happened in the 80's – these programmes will be cut back in the longer term and the government must put measures in place to prepare citizens and to prepare the economic system for when that time comes", he said.

"How will people cope with high prices when inflation is at 14 and 15 per cent and they either do not have a job or the value of their income is constantly shrinking?" he wondered.

He blamed the manning government's "stubborn wild spending and institutionalized corruption" for moving the country to the brink of disaster at a time when the country and its citizens should be better off having experienced a boom.

Panday said, "The government has a serious obligation to find proper solutions to the problems it has brought upon our citizens or give way to those who have the ability and will to save our country."