The recent online discussion hosted by UWI’s Trade and Economics Department has added no clarity to the alarming comment by Economist Marla Dukharan that 25 billion U.S. dollars is missing or unaccounted for. I feel more confused by the fact that Dr. Terrence Farrell ended his participation in the conversation by acknowledging that Marla has identified an important issue regarding data collection and the accuracy of balance of payments reporting in Trinidad and Tobago. He commended her for bringing attention to this critical matter, as accurate and timely data is essential for effective policymaking. He then “pelted a big stone” by saying that her conclusions were somewhat sensational and led to unnecessary speculation. This is despite his earlier article stating “Marla was wrong,” a point he reiterated several times during his presentation.
What popped into my mind is a statement by former US President Harry Truman who said: “Give me a one-handed Economist. All my economists say ‘on ONE hand…’, then ‘but on the other…’”
So, Dr. Farrell is saying Marla’s analysis of the numbers is wrong, but she is right to bring this issue to our attention. Who is the one-handed economist who will explain to Trinidad and Tobago that the “loss” of over $2 billion U.S. dollars per year on average, which makes us rank the highest in the world per capita for this item, is nothing to worry about? Who is the one-handed economist who will explain how and why this issue has persisted since 2011?
Anyone employed by the government who defends it against criticism may not be perceived as fully independent. Dr. Farrell, despite being a former Central Bank Deputy Governor and former government policy advisor, (Chairman, The Economic Development Advisory Board) pointed out that there are issues with how the energy sector reports its data and expressed uncertainty about whether the Ministry of Energy has accurate numbers. This situation reflects potential challenges in policy and governance, particularly in managing the energy sector, which has been operating for over a century. If, after more than 100 years of exporting oil and gas, we still can’t get the numbers right, it raises serious questions about governance and where the responsibility lies.
The issue of large unexplained foreign exchange losses appears to have emerged around 2011, possibly linked to changes in the Balance of Payments methodology. If the adoption of a new Balance of Payments methodology in 2011 was the trigger for the massive unexplained hole of over USD 2 billion a year, a comparison of the methodologies used before and after 2011 might help clarify the discrepancies and explain the “errors and omissions” item in the data.
Will the Minister of Finance explain the foreign exchange gap so that the “person in the Maxi” will understand, or will he be speaking to the 15% of the population who actually have credit cards? Will Dr. Roger Hosein explain that this is not just a statistical irregularity but a significant economic problem that requires immediate and serious attention from the authorities? Or will Dr. Farrell return to the Central Bank and help them raise awareness of the problem and find ways to address it? He said that solving the problem would require cooperation from the business community and may involve leveraging data from commercial banks.
What am I, a person who failed economics, supposed to understand when he said that the USD25 billion in question is not actually missing but has already been spent and consumed when I can only get US$100 from the bank to leave this country? Spent on what and consumed by whom?
My takeaways from this 2-hour online conversation are that our country needs to strengthen the economic data infrastructure, promote transparency, and enhance collaboration between government institutions and the private sector. The “persons in the maxi” must be targeted to understand the state of our economy so that we can feel included in the issues that impact our daily lives.
Dennise Demming 