was used to finance an expansion of the state’s role in the
energy sector. The establishment of an ‘export-oriented
industrial park and commercial port’ in Point Lisas (the Point
Lisas Industrial Port Developmental Company) was one
achievement; the formation of the National Gas Company of
Trinidad and Tobago was another development in furtherance
of the Government’s strategy. In 1970, the government
purchased 51% of Caroni Ltd and acquired the remaining
49% in 1978; Forres Park was then acquired in full by the
government and placed under the care of Caroni 1975 Ltd.
The state then had a monopoly in the sugar industry. The
standard of living of the population improved as a result of
the increased government expenditure but little attention
was paid to the fact that the higher expenditure was being
financed by an exogenous increase in oil prices and which
was therefore unpredictable and not sustainable.
Turning attention back to Trinidad and Tobago, the period
1983 to 1994 the country experienced an economic bust
resulting in a decline in output of 4.84% per annum.
Between 1990 and 1991 there was some recovery with the
growth rate averaging 2.08% per annum. However, the
economy went through another slump with output falling to
1.56% in both 1992 and 1993. The Government of Trinidad
and Tobago had implemented sectoral plans focused on the
energy sector (as opposed to an overall development plan)
in the preceding period. Consequently, there was no plan to
address what should be done in the face of negative growth.
Some of the macroeconomic characteristics of the economy
during the period were high unemployment, high inflation,
and severe economic contraction, devaluation of the exchange
rate, low crude petroleum prices and currency account deficit
on the rise from 2% of GDP in 1985 to 14% in 1986.
By contrast, that same period in Jamaica, one decade after
independence, saw a Government trying to meet election
promises and provide social services to the poor and other
The Government of the day embarked on a Structural
Adjustment Program (SAP) to, inter alia, reduce the external
current account deficit, reduce the public sector deficit and
In the end, the Government decided to borrow from the Bank of
Jamaica and from abroad, to finance the growing fiscal deficit and not
surprisingly, a balance of payments crisis resulted.
weak sections of the population – all of which exerted
pressure on the import bill. The rise in food and oil prices
in the early 1970s (the latter led to a windfall in Trinidad)
led to a major foreign exchange crisis in Jamaica as the
windfall receipts from sugar exports and bauxite were wiped
out. The Government of Jamaica responded by imposing a
new levy on bauxite companies and channeled this revenue
to a large capital development program aimed primarily at
unemployment reduction. The bauxite companies responded
to this perceived “attack” and reduced bauxite production
as bauxite prices headed south. The conundrum facing the
Jamaican government was then a large cut in revenue, a
high oil-import bill and a politically charged unemployment
relief program (with an election around the corner). The
government of the day imposed restrictions on imports of
luxuries and other “non-basic” goods by way of prohibitive
tariffs, quotas, import licensing, and foreign exchange
licensing and other controls. In the end, the Government
decided to borrow from the Bank of Jamaica and from abroad,
to finance the growing fiscal deficit and not surprisingly, a
balance of payments crisis resulted.
to improve the incentives for both domestic and foreign
investment in the tradable goods sector. Some of the
policy measures adopted by the government to achieve the
aforementioned aims of the program included the suspension
of cost of living allowances for public sector employees,
reduction of transfers to the state enterprise sector and
liberalization and rationalization of the trade system. The
unintended consequence of these actions were however,
cuts in wages and salaries, which led to the exodus of many
experienced workers in the public sector such as teachers and
nurses and reduction in the expenditure on capital projects,
this led to the deterioration in roads and public buildings.
The most significant social impact of the Government
facilitated SAP was the sharp increase in the rate of poverty.
The 1992 Survey of Living Conditions noted that the poverty
rate increased from 18.5% in 1988 to 35% in 1992 including in
the “working poor” – those workers who fell below the poverty
line as their real incomes fell brought about by a fall in nominal
incomes and significant increases in the price level.
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