Key Points From the Spotlight on the Economy Presentation :
- Minister of Finance Colm Imbert stated that the fiscal credibility earned over the last 7 years allowed the government to access substantial financing during the COVID-19 crisis to protect and support the population.
- The Finance Minister indicated that T&T is well positioned to reap the benefits of the current favourable price dynamics with regards to petrochemicals, especially Ammonia, which has more than tripled in price over the last 2 years.
- Minister of Finance Colm Imbert : “Several countries are close to economic collapse further to the pandemic and the invasion of Ukraine. Some others are struggling under IMF programs. This is not the case of T&T.”
- Minister Imbert : “Our foreign reserves have now stabilized, in fact there is significant inflow of foreign exchange coming in now which have allowed us a lot of flexibility.”
- Minister Imbert : “In 2015 we were advised to immediately devalue the dollar to 10 to 1 and that if we did not do so, our foreign reserves would evaporate in 1-2 years. 7 years later our foreign reserves are still close to 7 billion US dollars with 8 months of import cover.”
- Minister of Finance stated that the market consensus is that inflation in T&T should be somewhere in the vicinity of 8%, but our inflation is just below 5% and one of the main reasons for this is that we have not interfered with our exchange rate and refused to devalue our dollar.
- Minister Imbert shared some major areas of expenditure :
- – Social grants – Over $5 Billion per year
- – Subsidising WASA – Over $2 Billion per year
- – Fuel Subsidy – Over $2 Billion in 2022
- – Subsidising Electricity – $700 Million per year
- The Minister of Finance addressed public sector wage negotiations and stated that the current offer of 4% over the period of 2014-2019 for the mainstream public service will cost 2.43 billion in arrears calculated up to June 2023 the additional annual cost will be $490 million.
- The Minister said that if the PSA’s request for a 19% increase for the period 2014-2016 is accepted, it would cost $15.8 billion in arrears up to June 2023 with an additional annual recurrent cost of 1.8 billion.
- Minister Imbert concluded that if this proposal was extended to the wider state sector this would cost $30.3 billion in backpay up to June 2023, the additional recurrent cost will be $3.4 billion and that this level of expenditure is NOT possible.
- Economist Dr. Dave Seerattan stated that global growth is now expected to slow to 3.2% in 2022 from 6.1% in previous years and that that there are situations where growth can fall to 2.6% in 2022 and further to 2% in 2023 if certain risks materialize.
- Dr. Seerattan also indicated that the cumulative impact of global economic shocks have led to a number of macro economic problems in T&T, such as : Weak Economic Growth, Rising Unemployment, Rising Inflation, Higher Sovereign Debt & Decline in International Reserves.
- Dr Seerattan stated that the domestic financial system has weathered the shocks relatively well because of unprecedented interventions by regulators, governments, international financial institutions and private market participants.
- Deputy Governor of the Central Bank of T&T Dr. Noel announced that over the next 12 months global markets & economic conditions will likely remain volatile punctuated by periods of drawdowns and upturns. Major Central Bank monetary policy rates will have to move higher to maintain inflation at acceptable levels.
- The Deputy Governor also stated that export prices are likely to remain high in the near months and gradually adjust downwards as geo-political tensions and supply chain disruption fades.
- Permanent Secretary at the Ministry of Finance Dr. Taylor-Lee Chee : “We are confident that revenue this year will be around 51.5 billion dollars. This is around 8 billion more than budgeted.”
- Dr. Taylor-Lee Chee also stated that this increased revenue is expected to come almost exclusively from taxes on income & profit, with an additional 4.2 billion from oil companies & 3.8 billion from other companies.
- The Permanent Secretary announced that next year, the Ministry hopes to go live with an Information Management System throughout the Public Service as part of their Public Financial Management Modernization Project.
- Dr. Taylor-Lee Chee added that through this system and the wider PFM Project, it is the Ministry’s hope to automate the entire budget process, from request for releases to revenue management and audit.