The 2019 Budget Review – Part Two

On the 13^th May 2019 the Minister of Finance of Trinidad and Tobago, Colm Imbert, presented his 2019 Mid-Year Budget Review. In this second blog entry we continue to explore the main contents of that presentation and the implications of the review for the citizens of Trinidad and Tobago.

Improving the roads, airports and coastal defences

The Minister provided a number of updates on the development of infrastructure relating to the nation’s road network and the redevelopment of the international airport at Crown Point.

• After numerous delays the San Fernando to Point Fortin Highway is due to complete by December 2020.
• The extension of the Churchill Roosevelt Highway to Sangre Grande is scheduled for completion by January 2020.
• The Valencia-Toco Highway is at an advanced stage of design.
• The Moruga main road is being rehabilitated with completion scheduled for 2020.
• Preparation for construction of a new terminal building at Crown Point is at an advanced stage. Construction is scheduled to commence in December 2019 with a completion date set in early 2021.
• Coastal protection work in several areas is being undertaken.

Tobago and the Air and Sea Bridges

The Seabridge will be strengthened with the arrival of a new vessel on a one-year lease that will provide capacity for 800 passengers and 230 cars. In mid-2020 two brand new fast ferries will be added to the Seabridge.

Caribbean Airlines (CAL) continues to provide an Airbridge.

In 2018, CAL provided 1,053,910 seats to Tobago with an 86% usage rate. For the first three months of 2019, 223,991 seats were provided at an improved usage rate of 90%.

The Minister of Finance also noted that he had granted approval for the Tobago House of Assembly (THA) to raise loan financing on the local market amounting to TT$300 million for a number of development projects.

These projects include new health and sports facilities, housing, roads, bridges, and funding for coastal protection and implementation of the THA’s Intelligent Island Project.

Improvements to administration and expansion of the tax base

The Joint Select Committee stages dealing with the establishment of the new Trinidad and Tobago Revenue Authority and the Gambling and Gaming Commission have recently been completed and the amended legislation required for their constitution will shortly be reintroduced for further debate and passage into law.

Key economic elements of the budget and further statistics

As mentioned in the first of our blog entries the 2019 budget estimated revenue and expenditure at TT$47.72 and TT$51.77 billion respectively. Underpinning those targets the following is relevant:

• Public sector debt which has risen as a result of the fall in revenue from oil and gas is expected to stabilise at 62% of GDP. The Minister believes this to be well within accepted international benchmarks.
• The value of imports fell in 2018 to US$5.24 billion.
• The country continues to run a balance of payments surplus.
• Despite the government’s decision to defend the exchange rate, foreign exchange reserves still amount to 8 months of import cover. Foreign exchange reserves held by the Central Bank stand at US$7.3 billion. The Minister expects that expected expansion of the energy sector will release the pressure on foreign reserves.
• The available financial buffers remain substantial. As at the 3^rd May 2019, assets in the Heritage and Stabilisation Fund (HSF) stood at US$6.1 billion. The assets held in the HSF are separate from the foreign exchange reserves held by the Central Bank noted above.

The Mid-Year Fiscal Outturn

Revenue for the first half of 2019 was TT$706 million above that estimated in the national budget while expenditure was TT$2.55 billion below plan.

The increase in revenue of TT$706 million arose as a result of higher than expected taxes on income and profits from the non-energy sector. Receipts from oil companies and Value Added Tax were lower than expected.

Capital revenue was higher than expected due to improved performance of State Companies and higher than expected recoveries of CLICO assets.

Recurrent expenditure for the first six months of the year was lower than anticipated and amounted to TT$23.63 million, some TT$1.47 billion below budget.

The balance of the year

The 2019 budget is to be adjusted to reflect the following:

• Total expenditure has been revised upwards to TT$52.07 billion representing an increase of approximately TT$300 million over the original budget.
• Budgeted revenue is expected to be lower than expected by TT$207 million falling to TT$47.5 billion.
• The overall fiscal deficit will rise from an estimated TT$4.05 billion to TT$4.57 billion.
• The 2019 budget was originally based on an oil price of US$65 per barrel and a gas price of US$2.75 MMBtu. For the balance of the year the oil price will be adjusted down to US$60 per barrel while the gas price will be adjusted up to US$3.00 MMBtu.

Coming up in Part 3

In the final blog entry we complete our analysis of the main contents of that presentation and the implications of the review for the citizens of Trinidad and Tobago.

Your Thoughts?

What are you most hopeful about for the current and coming fiscal years? Do you see any opportunities you plan to leverage? Most importantly, are you ready to put your money to work? Madam. Sir. It is time for you to contact us. 628-1175 or info@firstlinesecurities.com.