Two economists are urging whoever forms the next Government to diversify from oil and gas in the light of falling oil prices and cutbacks in expenditure. Dr Roger Hosein and Mary King said this was the only way to keep the economy buoyant. They were also warning Christmas shoppers to spend wisely and put aside money for a rainy day. Both Hosein and King were responding to belt-tightening measures being taken by President Anthony Carmona and some state agencies due to a drop in oil prices.
A barrel of oil is being sold at US$60. Carmona has cancelled four functions for the festive season. State-owned Petrotrin has also cancelled its Christmas function, while the Sport Ministry has postponed its awards ceremony. This comes just weeks after Finance Minister Larry Howai mandated ministries to cut back on expenditure by $45 million.
Hosein: Commit to diversify from petroleum sector
Hosein said while stable gas prices would counterbalance falling oil prices, the next political party that formed the Government in 2015 would have to cut expenditure further if oil prices continued to slip.“This can work to their detriment because a lot of people in the country depend solely on social welfare programmes,” Hosein said. Hosein said while some people had been throwing caution to the wind, others were also concerned about government’s high level of transfers and subsidies.
“I think in the context of falling oil prices we would need to adjust the expense of transfers and subsidies spending. I do not think the PP Government will cut back on expenditure in an election year.”He said the decline in oil prices and the high level of transfer and subsidies was worrying to him.
Hosein said political parties contesting the upcoming election should make a commitment to the electorate to diversify from the petroleum sector. “The Government that wins the election should have the best practical plan to diversify the economy. They must have a good plan to execute.” Hosein also urged shoppers to buy wisely for Christmas.
“Look around and choose wisely. Think twice before parting with your money. Look at the best prices that would yield a return level of satisfaction. We should not engage in excessive spending.”
King: Go back to the drawing board
King, on the other hand, said while Howai urged ministries to cut back on expenditure, the Government was still throwing away money left, right and centre. She said if oil prices continued to fall in 2015, so too would gas prices, which would spell double trouble for the economy. “We need to go back to the drawing board and look at how we go forward. It is long overdue that we diversify our economy.”
King said the Government had failed to take up this challenge since they came into office in 2010 and were too dependent on the petroleum sector to generate revenue for the country. “I really think there is a lot of work to be done.” King said several ministries needed a forensic investigation to ensure accountability and transparency with taxpayers’ money. “When we start to do those things then we can start to talk about real governance.”
King pleaded with consumers to buy what they needed and not what they wanted for the holidays. She said if shoppers took as an example the PP’s leadership, many would go on a spending spree.