Rosemarie Sant
In just under seven days Finance Minister Colm Imbert will present the country’s fiscal package in an economic climate which the Central Bank has said is challenged by lower global energy prices, reduction in local gas and oil production and Government spending cuts.
It is very likely that the value of the fiscal package could be in the region of $57 billion.
Imbert is expected to address outstanding debts owed to public officers and contractors.
Partial payment of both debts have been made but a huge sum remains outstanding. In the case of the contractors, over $2 billion is still owed and contractors are hoping that there would be some effort to pay off the debt and give new hope to the industry, even in the face of fiscal prudence which would have to be adopted by the Government.
In April this year, during a mid-year review, Imbert revised the $63 billion fiscal package announced last October to $59 billion. He has already indicated that he wants to “bring the Government finances into approximate balance by fiscal year 2018.”
Imbert told the country a year ago that he was aiming to reduce the deficit from $7 billion or 4.2 per cent of Gross Domestic Product (GDP) to $2.8 billion or an estimated 1.7 per cent of GDP.
In the past year State enterprises, statutory bodies, all ministries and the Tobago House of Assembly were directed to review their operations and make identifiable adjustments of a seven per cent reduction in proposed operating expenses.
Government also withdrew US$375 million or TT$10 billion from the Heritage and Stabilisation Fund in May of this year.
But the Central Bank’s quarterly report released in early September reports that for the period October 2015 to June 2016 Central Government registered a deficit of $6.2 billion or 4.6 per cent of GDP.”
The deterioration, according to the Central Bank, was due primarily to “a sharp fall-off in energy revenues which was partially offset by a reduction in Central Government spending.”
Energy revenues declined to $4.8 billion. Non-tax revenue from the non-energy sector grew to $6.6 billion.
Taxes from income, as well as receipts from goods and services remained relatively flat. VAT collections totalled $4,711.5 million.
Transfers and subsidies fell by $1.6 billion to $20.9 billion as a result of a fall-off in the petroleum subsidy to $466.3 million in the nine-month period.
The Central Bank report said Government collected roughly “$30.3 billion in the nine month period to June this year.
Respected business publication, Bloomberg, also paints a gloomy picture, noting the numbers from the Central Bank report which noted GDP contracted 5.2 per cent in the first quarter, the largest contraction since 2009.
Headline inflation increased to 3.4 per cent in June from 2.4 per cent at start of year.
Natural gas production dropped 11.2 per cent in first half of the year;
Crude oil production was down by 10.4 per cent.
It is in this scenario that the minister will present the fiscal measures next Friday.
Where will major allocations be?
Given the crime situation there is expectation that National Security will again get the biggest slice of the pie, followed by Education, Health, and Works and Infrastructure. Local Government will also be given a larger slice of the pie. The Local Government election is due early next year and the ministry also now has responsibility for the CEPEP programme.
Over the next seven days the T&T Guardian will be delving deeper into the measures announced in the 2015-2016 fiscal package and examining how the money was spent.
We will look at some key ministries and the allocations, what they achieved and where they failed.
In tomorrow’s Sunday Guardian we examine the allocations to National Security and Health.