T&T GOV’T OUTLINE PLANS TO ACHIEVE BALANCED BUDGET BY 2020
The Trinidad and Tobago government says it will embark on a fiscal plan that aims to achieve overall budget balance by 2020, with a limit in public sector debt of no more than 65 per cent of gross domestic product (GDP).
Finance Minister Colm Imbert, delivering the TT$53.7 billion (One TT dollar=US$0.16 cents) budget to Parliament on Friday, said that in pursuit of macro-economic stability, the plan involves a series of fiscal reforms and institutional changes aimed at reducing dependence on energy revenues and containing government expenditures through eliminating waste and corruption and redirecting expenditure away from subsidies and discretionary transfers and towards spending on essential economic infrastructure.
He said the medium-term framework is predicated on the resumption of economic growth starting at one per cent in 2017, and increasing to two per cent per year in 2018-20.
“The recovery in growth is based largely on the rebound of the energy sector as commodity prices are expected to recover moderately and new discoveries of oil and gas come on stream, as well as an expected turnaround in other major sectors, in particular, construction and manufacturing,” Imbert said.
He told legislators “our fiscal plan assumes that oil prices would be in the vicinity of US$50 per barrel in 2017, rising to US$60 per barrel by 2018 and beyond, and further, that we will be able to stabilise and significantly increase oil and gas production.
“Similarly, our projections are based on a long term gas price of $3 per mmbtu. With this structure of prices, we expect revenues from petroleum to recover from the present two billion dollars to TT$14 billion by 2020,” he said, adding “this compares favourably with the revenues from petroleum in 2014 of TT$19 billion.
Imbert said that the Keith Rowley government also aims to grow recurrent non-energy revenues by eight billion dollars by 2020.
“Attaining this growth in revenues is critical since we need to reduce reliance on one-time revenue sources such as extraordinary dividends and privatisation proceeds. Current revenue is thus targeted to increase from $37 billion in 2016 to $57 billion in 2020.
“We also see the need for a shift in the composition of expenditure in favour of infrastructural spending for the most part, through reducing expenditure on transfers and subsidies and containing the public sector wage bill.”
Imbert said that steps have already been taken to begin to reduce expenditure on tertiary education and on CEPEP and URP Unemployment Relief Programme), as from 2017.
He said other transfers and subsidies to be examined include the elimination of fuel subsidies and reduction in transfers to public utilities.
“This fiscal strategy is aimed at re-establishing internal and external balance and sustainability in our economy. These conditions are necessary for restoring more rapid and broad-based economic growth and a steady improvement in living standards.
“The macro-economic policies are however, to be supported by a number of sectorial strategies,” he told legislators.
Debate on the budget will begin on October 6 when Opposition Leader Kamla Persad Bissessar will respond to the fiscal package.