A Firstline Securities Limited Blog by: Mike
On the 1st October 2018 the Minister of Finance delivered the 2019 National Budget for the Republic of Trinidad and Tobago. This is the fourth budget presentation from the current PNM administration.
The Minister announced that after several years of economic stagnation the Trinidad and Tobago economy is projected to grow in real terms by 1.9% in 2018. Against this backdrop the theme chosen for the budget reflects the unfolding economic situation – that Trinidad and Tobago has experienced a genuine “Turnaround”.
Vision 2030 is a successor to and extension of Vision 2020 which was initiated in 2002.
Vision 2030 is supposed to represent a compelling response to the extraordinary challenges facing Trinidad and Tobago, and in accordance with that revised vision, nine active policy areas underpin the 2019 Budget.
The nine active policy areas are:
The Minister of Finance identified six game changers that should make citizens more confident in respect of the future of Trinidad and Tobago.
The six game-changers are:
Global growth is expected to reach 3.8% in 2018 and 3.9% in 2019 with rising oil prices improving the outlook of commodity producers like Trinidad and Tobago.
Oil prices are expected to remain stable at or around the current price.
The US Department of Energy expects West Texas Intermediate (WTI) to average US$67.36 in 2019, while the World Bank estimates WTI will average US$67.40.
Potential sanctions against Iraq and a further decline in Venezuela’s production capacity may increase prices above these levels.
Trinidad and Tobago’s return to growth is driven by improved macro-economic factors and developments in the energy sector.
According to the Minister of Finance there are numerous signs that the economy is improving:
The Minister trumpeted the success of the TT$4 billion asset backed National Investment Fund (NIF) Bond launched on the 9th August 2018.
The NIF bond has enabled the Government to monetise assets previously held by the CLICO group together with the Government’s total shareholding in Trinidad Generation Unlimited (TGU).
According to the Minister, 7,436 investors including 667 corporate and institutional investors are now benefiting from a stream of income with investment tenors of 5, 12, and 20 years.
For each of the 20 years of the fund, investors are paid a fixed interest rate. After the payment of interest, any excess cash earned by the NIF will be transferred to a redemption reserve fund that will accumulate and be used to redeem the bonds at maturity.
After all the bonds are redeemed, the assets of the NIF will still belong to the people of Trinidad and Tobago.
The Minister intends to offer a second National Investment Bond in 2019 similar in nature and structure to the 2018 bond.
Tomorrow we continue our narrative with the second part of our blog series on the 2019 National Budget of the Republic of Trinidad and Tobago.
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