“The Budget deficit for 2023 is astronomically higher than Colm Imbert’s projections and it seems as though the Minister of Finance is hiding the truth from the population.”
These are just some of the concerns being raised by Shadow Minister of Finance MP Davendranath Tancoo.
MP Tancoo was making these observations as Minister Imbert is preparing to present his Mid-Year Review asking the Parliament to approve expenditure of an additional sum of $3.85 billion.
In addition, the Minister proposes to transfer one hundred million dollars from the Ministry of Local Government and Rural Development, to the Ministry of Works and Transport to reflect the portfolio shift of responsibility for the Secondary Road Rehabilitation and Improvement Company Limited (SRRICL).
The intended move by the government will increase the government expenditure for 2023 to $61.637 billion, the highest ever expenditure by this PNM administration. But this also means the deficit is set to skyrocket!
Based on the Finance Minister’s expected Mid-Year proposal, the additional expenditure of $3.85 billion will push the budget further into deficit. The new deficit will be $5.46 billion dollars, or two hundred and twenty-five (225) times higher than the initial budget estimate provided by Minister Imbert to the population of Trinidad and Tobago during his last Budget presentation in September 2022.
The Minister has advised that he intends to fund this additional budget deficit from the Consolidated Fund.
Minister Imbert had said that “…our fiscal accounts in 2023 will be close to balance with a deficit of $1.510 billion.” However, that is based on a revenue of $56.175 billion.
But there is another factor which will cause the budget deficit of Trinidad and Tobago under this Government, to skyrocket even further and the Minister is curiously silent about it.
The budget deficit is based on the comparison between revenue and expenditure. Given that the government has increased their expenditure, we are now at the $5.46 billion deficit. But the revenues have also decreased.
This means that the budget deficit overall is going to be astronomically higher than what was initially estimated, and definitely higher than what was currently estimated.
It is a fact that as a result of lower energy prices, the revenue stream from the energy sector is going to be substantially less than what the revenue of the government had predicted in its 2023 Budget.
Projected revenue was based on the assumption that the price of oil would be US $92.5 per barrel, and natural gas would be US $6 per MMBtu.
Today Brent Crude oil trades at US $79.66 per barrel and Natural Gas at US $2.36 per MMBtu – a fraction of what our budget was based on.
Given that factor, it is likely that the deficit facing Trinidad and Tobago for fiscal 2023 is going to be in the magnitude of over $8 billion compared to the $1.510 billion that the Minister originally estimated.
“It is distressing and of concern that the Minister has not provided any information to the national population on the fall in revenue. Although he acknowledges that has already taken place, he has not provided any information as to the value of the loss of revenue caused by falling energy prices.”
When questioned by the Opposition about this fall in revenue, in the Parliament, the Minister provided all sorts of irrelevant responses, avoiding directly answering the questions.
Instead the Minister chose a business forum to tell the audience that “revenues are in fact being challenged.”, without providing the data to support his concerns.
Tancoo revealed that he is not only concerned about falling revenues, but also the growing fiscal deficit and the failure of the Minister to state exactly how he is going to fund the additional deficit caused by the fall in revenue.
“Perhaps the Minister plans to sell off state assets to select buyers, or dip into the Heritage and Stabilization Fund yet again, or take additional loans to compensate for his failure to present a viable economic solution. Perhaps he shares his fellow Cabinet colleague’s erroneous belief that it is not his duty to develop plans and policies to address this nation’s financial challenges.”
Recall that during the 2023 Budget debate, MP Tancoo cautioned the Minister that his estimates for oil and gas were exceptionally high, given the predictable downward trend in energy prices in what was expected as countries emerged from Covid.
According to Tancoo, “this government continues to demonstrate that they have no clue about how to stimulate the energy sector, or no policy to stimulate the business sector or no strategy on how to build this country to diversify or transform the economy of Trinidad and Tobago. Over the past eight years, they have failed to implement a framework to expand the size of the economy and successfully confront the mounting financial pressures that this country is facing.”
Tancoo is of the opinion that “there remains no attempt to deal with critical factors such as the ease of doing business or to create an enabling environment conducive to investment and economic growth. Rather, the Minister appears to conceal the true state of the economic affairs of Trinidad and Tobago. While the country spirals into economic depression and social frustration, the government of Trinidad and Tobago, prefers instead to focus on public relation gimmicks and gas lighting the population. Trinidad and Tobago deserves better.”