The government’s decision to avoid extravagant cash transfers reflects its ability to be a responsible steward of our country’s oil money, says economist Richard Rambarran.
During an appearance on the Starting Point Podcast, Rambarran shared this perspective, underscoring the importance of the government staying the course in managing the nation’s wealth. He said the administration’s approach is commendable, especially given the mounting populist calls to ramp up cash grants from $100,000 to $500,000 or $1 million.
Rambarran stressed that Venezuela, Trinidad and Tobago, and even oil-rich developing countries in Africa are prime examples of what happens when governments fall prey to this spending trap. This, he said, leads to economic instability over time, since it offers temporary satisfaction while couched in the dangers of unsustainability.
“If I’m to give the entire country an increase in cash grants from $100,000 to maybe $500,000, it temporarily stimulates demand. People will go buy. But what is the shopkeeper going to eventually do? What is the commercial space eventually going to do? They’ll jack up the prices,” said Rambarran.
The economist urged citizens to ponder what happens to the economy when that transfer cannot be sustained in the future. He said countries go through painful periods when they have to walk back such measures, noting that the labour and productive sectors feel the squeeze the most. With this in mind, he said the fiscally responsible thing to do is to ensure the budget is programmed to address social needs while setting the stage for lasting wealth creation. The economist said this was achieved with the measures of the 2026 budget.