A Firstline Securities blog by Mike
In the second of a three-part series on the Mid-Year Review we continue our look at the main contents of that presentation and the implications of the review for the citizens of Trinidad and Tobago.
The Heritage And Stabilisation Fund
At the end of April 2018, the net asset value of the Heritage and Stabilisation Fund (HSF) was US$5.87 billion. This is over US$200 million higher than the US$5.65 billion held in the HSF at the end of September 2015, despite withdrawals amounting to US$637 million between 2016 and 2017. Income received on the fund since the current administration took office amounted to US$850 million.
Spending On Infrastructure
GORTT’s priorities include a desire to continue to focus on improving the quality of infrastructure.
This includes improving the highway network and the modernisation of the airport terminal at ANR Robinson International Airport in Tobago at a cost of TT$500 million (excluding the cost of land acquisition). The Development Bank of Latin America (CAF) is supporting the airport modernisation project with a private-public partnership utilising a “Build-Own-Lease-Transfer” mechanism structured to deliver a new terminal in 2020.
Modernisation of the beach facilities at Maracas will shortly be completed, and the modernisation of Manzanilla and Las Cuevas should also complete in 2018.
In order to promote health tourism GORTT is upgrading and improving hospital facilities in the country.
In collaboration with the Government of Canada, the Couva Medical and Multi-Training Facility is to be rebranded as a “First-World Hospital” and will be operated by Interhealth Canada and jointly owned by GORTT and the University of the West Indies (UWI).
The Hospital at Point Fortin is expected to be completed in 2019 with 100 beds available to service 100,000 citizens. The Arima Hospital is also expected to complete in 2019 with 150 beds able to service 150,000 citizens. The Port of Spain Central Block will begin construction in 2018 and on completion will provide 540 beds to service 500,000 citizens.
Banking On The National Investment Fund
The fiscal outturn for FY2018 depends heavily on the National Investment Fund expected to be launched in June 2018.
As a first step, approximately TT$4 billion of the debt owed by Colonial Life Insurance Company (Trinidad) Limited (CLICO) to GORTT will be settled by an initial public offering (IPO) of 49.9% of a newly incorporated holding company, the National Investment Fund Holding Company.
Selected assets of CLICO and CLICO Investment Bank (CIB) (see next section for details) together with an undefined shareholding in Trinidad Generation Unlimited (TGU) will be transferred to the new holding company.
The value of shares issued to underwrite the fund is estimated to be between TT$8 billion and TT$10 billion
Recovering The Assets Of CLICO
As part of the first distribution of assets from CLICO Investment Bank a total of 42,475,362 shares in Republic Bank representing 26% of that entity are to be transferred to GORTT. These shares have an estimated value of TT$4.3 billion.
In addition, 23% of One Caribbean Media valued at TT$200 million, 29% of Angostura valued at TT$1.07 billion, 5.4% of WITCO valued at TT$402 million, and 19.5 million shares in Home Construction valued at TT$476 million are also to be transferred to GORTT.
GORTT has recovered TT$3.8 billion in cash from CLICO since September 2015 together with lands in Tobago (earmarked for the Sandals project) valued at TT$186 million, and is actively pursuing the sale of shares in Methanol Holdings valued at over TT$2 billion, and the recovery of bonds worth TT$500 million.
Not all identified assets have been recovered. Steps will be taken to recover an additional 40% of Angostura held by CL Financial and others.
In respect of other projects being undertaken by GORTT the Minister specifically mentioned the following:
- The industrial estates and business parks of eTeck are being modernised and expanded with the aim of assisting and promoting the diversification of the economy away from oil and gas.
- The sale of the rice mill owned by National Flour Mills to a preferred investor is at an advanced stage of completion.
- The securing of an investor to partner GORTT in the management of The Vehicle Management Corporation of Trinidad and Tobago Limited is advancing to the request for proposals stage.
The Property Tax
The implementation of the Property Tax is getting closer to reality, but the implementation will not be retrospectively applied. The waiver for the payment of property tax will be extended to December 2017 to allow all required administrative work to allow for an effective implementation of the tax to be put in place.
The Property Tax (Amendment) Bill and the Valuation of Land (Amendment) Bill were introduced to the House of Representatives in February 2018 to correct anomalies in current legislation.
The Trinidad And Tobago Revenue Authority
According to the Minister the establishment of the Trinidad and Tobago Revenue Authority is essential to stopping the billion-dollar leakage of tax revenue and tax avoidance that is prevalent in Trinidad and Tobago.
The required legislation to create the Trinidad and Tobago Revenue Authority will require a special majority, and so the bill to establish the authority will be introduced to a Joint Select Committee of Parliament shortly.
The Gambling Industry
A Joint Select Committee of Parliament is reviewing the Gambling (Gaming and Betting) Control Bill with legislation expected to be finalised before the end of 2018.
The Business Climate Of Trinidad And Tobago
In order to improve the business climate of Trinidad and Tobago the US$100 million Eximbank Foreign Exchange Facility is operational. Eligible small and medium sized businesses are now able to access the facility to finance material inputs for their export operations.
To further assist the business climate in Trinidad and Tobago, the TT$50 million business development incentive programme is at an advanced stage of implementation. It is intended that this facility would finance, through the provision of grants, the working and seed capital requirements of small and medium sized businesses.