PORT OF SPAIN, Trinidad – The Trinidad and Tobago government, anticipating a windfall of approximately five billion dollars (One TT dollar=US$0.16 cents) from increased global prices for oil and gas, Monday sought parliamentary approval for a TT$3.81 billion supplementary budget that it said would be used to finance outstanding payments across various sectors.
Finance Minister Colm Imbert, piloting the motion to adopt the Report of the Standing Finance Committee, told legislators that based on the projection that the price of oil would be in the vicinity of US$95 a barrel, “even though oil is US$113 today, and using an average gas price of five US dollars even though gas is seven dollars today, we expect that we will generate additional revenue in this fiscal year of somewhere between TT$4.5 and five billion dollars”.
Finance Minister Colm Imbert is piloting a supplemental appropriation bill (CMC Photo)
He said the government would be using “three billion dollars today to deal with all of the issues contained in the supplementation of appropriation, including subsidizing the price of liquefied petroleum gas (LPG) for households.
“I want to stress that the government will deal with this situation because the additional money will be focused on paying the backlog of bills that has grown over the last several years because of simply inability to generate the revenue.”
He said the funds would also be used to target the poor and vulnerable in the society and improve the standard of living of those at the lower end of the spectrum, dealing with infrastructure, collective agreements for public servants, subsidizing fuel, and driving the productive sector.
He said the government also intends to reduce the budget deficit and improve the country’s standing in the international community. With the credit rating agencies, “which has a tremendous benefit because f your credit ratings improve then the cost of borrowing is reduced (and) you can borrow at a lower rate, and therefore debt service goes down.”
Imbert told legislators that among those government agencies and departments to benefit from the supplementary budget would be the Tobago House of Assembly (THA), the judiciary, the Office of the Prime Minister, and the Ministry of Education and the Election and Boundaries Commission (EBC).
He told Parliament that because of the profound adverse effect of the coronavirus (COVID-19) pandemic on Trinidad and Tobago, the country had to borrow “considerable sums of money” to meet expenditures, including vaccines, salaries for public servants, and provide relief to the most vulnerable, while also implementing a stimulus package.
“This caused the total public debt to climb from TT$104.7 billion at the end of 2019 to TT$130.6 billion at the end of 2021. However, because of the cash flow that has resulted from the stimulus of the economy and increased prices of oil and gas as a result of a worldwide economic recovery., where you had demanded in the developed countries pushing up the prices of oil and gas and then came the war in Europe…the positive cash flow that has resulted…has allowed us to stabilize our debt and to reduce borrowing.
“As a result, I am happy to announce that the government has not borrowed any money, locally or externally, to finance government expenditure since December 2021…and our public debt, believe it or not, is comi8ng down and ass of today stands at a TT$129.8 billion, TT$800 million less than it was in December 2021”.
Imbert, who announced that the government would be allocating TT$1.6 billion to repay money owed to businesses under the Value Added Tax (VAT) system, said that on the project pattern of expenditure for fiscal 2022, the fiscal deficit at the end of April this year would have been TT$5.5 billion.
There would have been a mismatch between expenditure and income at the end of April 2022 of TT$5.7 billion. Instead of a deficit of TT$5.7, we have achieved a fiscal surplus of TT$1.98 billion. Therefore we are on target to reach more deficit in 2022 than initially expected.
He also said that the overdraft level at the Central had also declined significantly, recalling that when the Keith Rowley administration came to office in 2015, it was informed by the then Central Bank governor that the government only had three days of funding to administer the affairs of the country.
“The overdraft limit was almost 100 percent…and since then, because of the collapse of oil prices in 2016….we have always been perilously close to the overdraft limit,” Imbert said, adding that for months and years, the overdraft hovered around the average 90 percent.
“So it has always been highly to manage cash flow, and for those who don’t know and pretend not to know, we can’t cross over the overdraft limit…or the government cheques will bounce.
“However, I am very pleased to inform you that with the improved cash flows for the last several months, our overdraft level has been coming down progressively, and as of today, the 16th of May, believe it or not, our overdraft limit is down to 50 percent,” he said, correcting that figure to 49. 8 percent.
Imbert told Parliament that the island’s gross domestic product (GDP) had also improved significantly, with a total debt to GDP of TT$130 billion at the end of 2021 being 77 percent and not the high 80 percent as had been initially calculated.
“The nominal GDP in 2022 has continued to improve because of the increased cash flows. It is now estimated that our GDP is now TT%180 billion, which gives our current debt to GDP ratio, as of today, May 16, at 72 percent, making our debt to GDP ratio 15 percent less than estimated in the budget documents.
“This debt to GDP ratio of 72 percent is extremely manageable. This is one of the best GDP ratios in the world at this point,” he told legislators.
The debate on the supplementary budget is continuing.
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