A MAJOR goal of the politician is to be re-elected. That challenge encourages unscientific approaches that many times may not be anchored in pragmatism.

The economist cannot take an approach that resembles that of the politician. When the two interact, as they must, the politician must make decisions that try to satisfy the population while maintaining sound economic policies. That is a very difficult task that only the best minds can manoeuvre.

Over the last month, many commentators have been making suggestions to deal with the distribution of foreign exchange in Trinidad and Tobago, without applying common sense to the equation. Perhaps it may be important to look at the reality.

Trinidad and Tobago earns much of its foreign exchange from the energy sector. Over the last decade, oil and gas production has decreased due to dwindling supplies, and the price of energy products has been low. The result is that there is less foreign money to distribute. While there are problems in the distribution, where some banks have preferential customers who get more foreign funds than others, the major issue remains the dwindling supply.

Government’s challenge in the short term is to manage the limited supply available through reserves and the Heritage and Stabilisation Fund, but it must be focused on the long-term goal of earning additional foreign exchange.

The present Government seems to be hoping that in a few years, there will be an increase in gas supply, and this will allow for increases in income and hopefully deal with the foreign income deficit that exists.

What is required, however, is a more innovative approach. The car dealer who imports a car for ‘x’ dollars and sells it for ‘x’ plus ‘y’, with a gain of profit ‘a’, will not be satisfied with policies that say that the State can no longer afford to give him the ‘x’ dollars anymore as the funds are not available. The challenge is to encourage that dealer to become a foreign exchange earner. That challenge requires a lot more than simply hoping for more gas and oil to be discovered.

The Government must look at what are possible foreign exchange earners and invest in those initiatives. There must also be an understanding that many of the possible initiatives will not come in any way close to the quantity of income that one had grown accustomed to in the energy sector. The areas for immediate attention are tourism, in partnership with international investors, agriculture, ship bunkering and repairs, manufacturing and health services.

The widespread use of artificial intelligence, electric vehicles, the ever-changing advancements in harvesting solar energy, and the negative effects of oil and gas regarding climate change may lead to continued decreases in the demand for traditional energy sources, and can very well see a major decline in the demand for oil and gas. Now is the time for innovation and intelligent responses to the foreign exchange challenge.

Steve Alvarez