Finance Minister admits T&T in economic peril

*Trinidad and Tobago Guardian – T&T, we have a problem. We are not making nearly enough money to pay our bills.

In fact, we made almost $2 billion less than we expected to make by the end of January.
And if the trend continues, we may lose up to $5 billion in revenue for fiscal 2021. This figure does not include the expected $5 billion shortfall already predicted for fiscal 2021.*

This was the sobering information revealed by Finance Minister Colm Imbert yesterday during a virtual press conference to update the country on the “Actual Fiscal Outturn for Trinidad And Tobago for the first four months of Fiscal 2021.”

Imbert said the official budget estimate of revenue for the period October 1, 2020 to January 31, 2021, which represents the first four months of the fiscal year, was $13.823 billion.
“However, primarily as a result of the adverse effects of the pandemic, the actual revenue collection for this four-month period was $12.020 billion, a negative variance of $1.803 billion, or 13 per cent less than the estimates,” he stated.

Imbert said the shortfall in revenue occurred in several areas including taxes on Income and Profits which was down by $436 million compared with estimates.

A significant portion of that shortfall was as a result of the decrease in tax revenue received from oil and gas companies which was a direct result, he said, of depressed prices for oil and gas and lower than expected production volumes.

In addition to this, non-tax revenue dropped by $1.430 billion or 35 per cent of what was expected, Imbert said.
“The effect of all this is that the Government has been seriously challenged in the first four months of the financial year to find the money necessary to keep the country running and to meet mandatory commitments and has had to resort to loan financing and withdrawals from the Heritage and Stabilisation Fund, to make up the deficit between income and expenditure,” Imbert said.

“We have so far borrowed $3 billion for direct budgetary support and withdrawn the equivalent of a further $2 billion from the Heritage and Stabilization Fund, simply to pay salaries and wages and pensions and keep our health sector functioning in the face of the demands of COVID-19,” he said.
Despite the financial constraints, Imbert said the payment of salaries and wages for the approximately 90,000 workers in the public sector has been the “top priority”.
Imbert said the “mandatory payments” cost the country a “staggering $3.5 billion per month, each and every month.”

The Finance Minister described the current financial situation is “unsustainable”, and going forward, there must be a change in the country’s approach.

In the last three years, the support to the Water and Sewerage Authority (WASA) has been $7.28 billion.
While the Trinidad and Tobago Electricity Commission (T&TEC) requires the support of over $800 million a year to pay for the gas used to produce electricity and to service a series of loans.
Imbert lamented that subsidies and transfers that make up almost 50 per cent of the annual budget.
To deal with the difficulties Imbert said additional unbudgeted borrowing and further withdrawals from the HSF for this year may be necessary.

“With a persistent budget deficit and uncertainty as to when the global and local economy will fully recover from the destructive effects of COVID-19, we simply can’t afford significant wage increases at this time,” Imbert said.
“Simply put, if excessive wage increases are granted in the state sector, then employment levels may have to be reduced, because the additional money simply isn’t there,” he said.