Aug 2005 Financial News

$2B Windfall

Aug 19, 2005

Roxanne Stapleton, Trinidad Express

Increased oil prices have contributed to the government collecting additional revenues totalling $2 billion for the current fiscal year.

The current budget is based on two oil prices-expenditure and revenue which are US$25 and US$35 per barrel, respectively.

The additional $2 billion in revenues is based on tabulations from US$25 per barrel of oil.

Oil fetched a price of US$63.27 per barrel on the world market yesterday. Also playing a part in accumulated revenues were individual and corporation taxes, Minister in the Ministry of Finance, Conrad Enill said at yesterday's post-Cabinet press conference at Whitehall in Port of Spain.

He also said that although oil prices have skyrocketed globally, the population here has been protected from domestic price increases through Government subsidies.

"The price at the pump for citizens has not changed.

In fact, one of the criticisms of the $3 billion appropriation was that we were spending too much but with that appropriation was an amount due to Petrotrin by NP based on the subsidy.

"The Government is basically supporting the cost of keeping gasoline prices to citizens at the current rate to the tune of $1.2 billion," Enill said. He added that he had informed Cabinet about this country's recent economic upgrades by ratings agencies Standard and Poor's and Moody's Investment Services, who came here on July 21 and August 9, respectively.

But while Moody's upgraded T&T's Foreign Currency Bonds status from BAAA3 to BAA2 and Foreign Currency Bank Deposits from BA1 to BAA+, the agency is concerned about Government's implementation of capital programmes and an increase in Government contingent liabilities.

"They expect that we would receive further upgrades once we can ensure a prudent management of the increased energy revenues, we maintain our external competitiveness and generate momentum in reform of the country's large public sector," Enill said.

Standard and Poor's upgraded Trinidad and Tobago's Long Term Foreign Currency Issues from BBB+ to A- and our Long Term Local Currency Issues went from A- to A+.

Clarifying what he termed "issues" with regard to the country's economic outlook, Enill said: "The stable outlook by Standard and Poor's reflect their expectation that external and fiscal trends will remain positive and that the growing Heritage and Stabilisation Fund will provide an increasingly important buffer to the open energy economy."

According to Enill, the rating agencies also were expecting Government to pick up the pace of its reforms in legislature, financial services, human resource, public administration and procurement, if it (Government) wanted continued upgrades in the future.

Asked if he felt the country was getting its monies worth for each dollar spent, Enill said the process Government has at its disposal "gives us the best opportunity at having monies spent efficiently".

"We make the best efforts to ensure that what we say will happen within the law is done and how we intend it to be done," he said.

He indicated that reforms of Government management were also underway, geared to look at value for money, rather than just allocation. Enill also hinted that in the upcoming budget, Government intends to highlight its expenditure in the area of training, given the recent scrutiny of its programmes CEPEP, URP and HYPE, to name a few, in light of information that it was looking to source 900 skilled workers from Caricom territories.