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Thursday 15 November 2018
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2018 mid- year budget speech by Minister of Finance Colm Imbert

Finance Minister Colm Imbert
Finance Minister Colm Imbert

Madam Speaker, upon our assumption of Office in September 2015 – some
2 and ½ years ago - this Administration, led by Dr. the Honourable Keith
Rowley, committed itself to resolve two (2) serious challenges facing the
country, namely:

(1) Repairing the damage to our fiscal accounts which had
deteriorated significantly after the drastic fall in oil and gas prices in
mid-2014, from US$108 per barrel in 2014 to US$26 per barrel in
2016, coupled with declines in crude and gas production. It is worth
repeating that revenue from petroleum fell from over $20 billion in
2014 to less than $1 billion in 2016, after the Government changed,
a 90% decline. At one point in 2016, gas production dropped to
below 3 billion cubic feet per day, down from over 4 billion cubic feet
per day in 2015, a 25% drop. The process of adjustment to the
global oil shock of 2014 and production declines in oil and gas has
thus been a very challenging experience. It has not been easy
dealing with a $20 billion loss in annual Government revenue and
the adverse effects of the extravagance of the former
administration; and

(2) reversing the persistent decline in the economy which has been
with us for several years.
In the face of these two challenges, it was imperative that the economy be
reinvigorated and put on a self-sustaining basis to ensure that the welfare
and standard of living of our citizens was not unduly impaired.

Madam Speaker, I propose to present the Report of the Standing Finance
Committee and the Finance (Supplementation and Variation of
Appropriation) (Financial Year 2018) Bill 2018 in the context of these
public policy objectives and I would also provide this Honourable House with
an update on some of the public policy initiatives being implemented by this
Administration to facilitate the fiscal consolidation process and the
turnaround in the economy which is underway.

The Economy
Madam Speaker, after a long and discouraging period of economic decline,
we are now witnessing a welcome upturn. Early estimates are indicative of
a growth forecast of 2.0 percent in 2018 and 2.2 percent in 2019, rising to
2.5 percent in 2020. And contrary to the negative commentary of uniformed
spokespersons, who speak without having any facts, the turnaround is being
driven by economic expansion in both the energy and non-energy
sectors.

Within the energy sector, the full impact of the Trinidad Region Onshore
Compression (TROC) project – on-stream in April 2017 and the Juniper
Platform- on-stream in August 2017 is now materializing. Beginning in the
fourth quarter of 2018 a number of new gas fields would begin production
which would boost gas production levels over the medium-term rising from
3.37 billion cubic feet per day in 2017 to an average of:
- 3.80 billion cubic feet per day in 2018;
- 3.94 billion cubic feet per day in 2019;                                                                                          - 4.05 billion cubic feet per day in 2020; and
- 4.14 billion cubic feet per day in 2021.

These production volumes are being driven by enhanced activities among
our major oil and gas upstream producers:

Under BP Trinidad and Tobago (BPTT)
- Juniper is fully on production;
- Angelin is to come on production in 4th quarter 2019;
- Cassia gas compression project will be in operation in 2020;
- TROC project would come to an end in 2021;
- exploration drilling would be taking place in the period 2019-2021; and
- future field developments would be taking place from 2023
and beyond.

Under EOG Resources Inc (EOGR)
- exploration and Development drilling would begin in 2019

Under Shell Trinidad & Tobago Limited (SHELL)
- drilling in Starfish is in progress with expected first gas in 3rd quarter 2018;
- development drilling in Dolphin field will commence in 2nd quarter 2018; and
- Block 5c (Bounty and Endeavour) development would commence in 2022

Under BHP Billiton Ltd. (BHP)

- gas supply would be maintained to NGC at 340 mmscf/d for next two (2) years; and
- development of Block 3a is expected in 2023

Under DE NOVO
- production is expected to continue at current levels

Madam Speaker, with average gas production at significantly higher levels,
up 20% from the 2016 levels, we have revitalized the energy sector. This
boost in production is due to the hard work of a dedicated team led by the
Honorable Prime Minister and including the Minister in the Office of the
Attorney General and Office of the Prime Minister and the Minister of Energy
and Energy Industries. This team has worked unwaveringly in complex
negotiations and discussions with the oil and gas companies, and the
downstream companies, both here and abroad, to secure this country’s
future, in stark contrast to the empty posturing and grandstanding of the past.
And this effort, coupled with appropriate adjustments by the Ministry of
Finance to our oil and gas taxation regime, after detailed study and analysis,
is already bearing fruit, from a revenue outlook.
Accordingly, the energy sector is well poised to meet the demands of the
downstream sector over the near-term horizon thereby supporting our
medium-term growth recovery. Further ahead, access to additional gas from
Venezuela will generate substantial opportunities for strengthening and
supporting our economy.

Madam Speaker, the pick-up in the energy sector is having a knock-on effect
on growth in the non-energy sector where that sector is projected to break even in 2018,              after years of decline, with growth estimates (for the non-oil
sector) in 2019 of 1.2 percent rising to 2.9 percent in 2020.
These improving growth forecasts are welcome in the context of the
lackluster performance of the economy over the 2013 to 2017 period.
Allow me to share with you some actual figures for revenue collection in the
non-oil sector.

Our projection for the collection of taxes on income and profits in this fiscal
year, up to April 2018, for “Other Companies”, which excludes oil and gas
companies, was $3.8 billion. The actual collection was $4.9 billion, an
increase of $1.1 billion.

Drilling deeper into the figures, in the petrochemical sector, collection of
corporation tax has moved from $371 million in the period October 2016 to
April 2017 to $1.2 billion in the period October 2017 to April 2018, an
increase year-on-year of $835 million.

Very importantly, in the non-energy sector, which excludes oil, gas and
petrochemical companies, collection of corporation tax has moved from $1.8
billion in the period October 2016 to April 2017 to $2.3 billion in the period
October 2017 to April 2018, an overall increase of $500 million year-on-year,
with revenue for assembly type industries increasing by $146 million and
revenue from the financial services sector increasing by $153 million yearon-year
from October to April.
It is clear, therefore, that not just the oil sector, but the non-oil sector
is finally recovering.

Total net collections of corporation tax in all sectors is up year-on-year for
the period October to April by $1.3 billion.
In the energy sector in particular, despite Petrotrin’s recalcitrance, actual
collection of petroleum profits tax and supplemental petroleum tax, excluding
royalties, is up by $500 million year-on-year for the first 7 months of fiscal
2018. Royalties, excluding Petrotrin, are also on target to reach $2 billion in
this year.

Further, because of the better than expected increases in natural gas
production in the second half of 2017, the GDP figures for 2017 are being
revised upwards and we expect that instead of negative growth of minus 2.6
percent in 2017, the actual growth figure will be closer to minus 1 percent.
This improved outturn for 2017 and the expected growth in 2018 will
have a substantial effect on our nominal GDP, which is expected to
increase by 9% to TT$168 billion in 2018. This will also have a direct
positive effect on our debt to GDP ratio, which is now estimated to drop
to well below 60%, even with the planned borrowing programme in
2018.

Our inflation rate has hit record lows. As reported by the Central Bank in its
March 2018 economic bulletin, headline inflation dropped to 1.3% by the end
of 2017, the lowest level in many years. This low inflation rate is a direct
result of this Government’s macroeconomic and monetary policies and is
intended to cushion the effect of the recession on the population. It is to be
noted that our inflation rate is currently well below the global average of 3.5%
and way below other oil producing countries, such as Nigeria, now at 14%,
and Egypt and Libya, each at 32% inflation for this year. Our economic
recovery is thus taking place in an environment of price stability, and as a
result of our policies, we expect growth without high inflation, which is the
most desirable outcome.

Basic Framework for FY 2018 Budget
Madam Speaker, in October 2017, we formulated our FY 2018 Budget on
price assumptions for oil at US$52.00 per barrel and gas at US$2.75 per
mmbtu. Since that time, crude oil prices have been strengthening and have
averaged US$59 over the first 6 months of the fiscal year.
WTI crossed US$71 per barrel yesterday.

A word of caution, however, to those who think that high oil prices
automatically translate into higher revenues. Regrettably, at the current fixed
prices for gasoline and auto diesel, a high oil price creates a requirement for
a high fuel subsidy. Indeed, if oil remains at US$70 a barrel, the fuel subsidy
could reach as high as $900 million in 2018, which was not budgeted for.
Additionally, our national oil company Petrotrin, which produces almost 60%
of the country’s oil, is not paying its taxes and royalties. At current prices,
this translates into $1 billion in lost revenue in 2018, which is untenable. It is
imperative, therefore, that in addition to transforming Petrotrin into a viable
and profitable organization, we must also complete the work on an
appropriate formula that allows the price of fuel at the pump to move up and
down with the movement of the price of refined petroleum products. As
stated previously, it is our interion to have this mechanism in place by the
end of 2018.

As to the future, based on the best advice available, we do not envisage oil
or gas prices to deviate significantly from their current trends, particularly in
the context of the pick-up in global growth now being forecast for 2017 and
2018 of 3.6 percent and 3.7 percent respectively.

Revenue and Expenditure: October 2017-March/April 2018

Madam Speaker, since our assumption of Office, this Administration has
been rebalancing the economy to cater for lower oil and gas prices and lower
production volumes. In October 2017, this House adopted the FY 18 Budget
which established expenditure of $50.50 billion, including a capital
expenditure programme of $5.1 billion and revenue of $45.74 billion,
including capital revenue of $6.42 billion. A fiscal deficit of $4.76 billion or
3.0 percent of GDP was projected to be financed through net external
borrowing of $3.69 billion and net domestic borrowing of $1.07 billion.
I can now report that our revenue projections for 2018 are on-track.

When deposits in the suspense account at the Treasury are taken into account, we
have collected in excess of $19.5 billion in current revenue up to the end of
March 2018, as compared to the projected collections of $18.7 billion.
Our projected capital revenue, largely due to come from the recovery of debt
from CL Financial and its subsidiaries, has not yet fully materialized, but we
are making significant progress towards the launch of the National
Investment Fund which is intended to monetize the assets transferred to the
Government from Clico and CIB. I will deal with this project later in my
presentation.

Madam Speaker, in keeping with our programme of fiscal consolidation, the
expenditure by the end of March 2018 is estimated to be $21.69 billion some
15 percent lower than the originally projected mid-year expenditure of
$25.03 billion. The lower-than programmed expenditure arises from
reductions in the purchase of goods and services, capital expenditure and
transfers and subsidies. However, and significantly, expenditure on
wages and salaries has remained as budgeted.

Expenditure on the capital programme reached $1.54 billion by April 2018,
and we expect to close out the year at close to $4 billion in PSIP expenditure.
Delays in project implementation and the careful processing of claims for
payment in the context of our focus on prudent cash flow management are
contributing factors to this reduced level of programmed expenditure.

Madam Speaker, the rebalancing of the economy from the unsustainable
and profligate expenditure of $62 billion in 2014 to a more realistic, but still
difficult, level of $50 billion in 2018 is taking place within a structured and
well-planned framework. Despite the difficulty, the adjustment process is
moving steadily in the right direction:
- the monetization of the CLICO assets is in progress, and, nearly seven (7) years after it was placed in compulsory liquidation, CLICO
Investment Bank (CIB) has made its first dividend distribution to its
creditors, including the Government of Trinidad and Tobago;
- the Ministry of Finance has been reviewing the evolution of budgeted
revenue and expenditure and has determined at this 2018 Mid-Year
Review that while expenditure should continue to be constrained, it
should be reprioritized.

Accordingly, although Government expenditure
for the year as a whole has been revised downwards by $1.62 billion
or 3.3 percent to $48.88 billion from $50.50 billion, we are providing
through supplementation and variation an additional $213.0 million for
much needed expenditure in key areas, such as, but not limited to:
- the Tobago House of Assembly is receiving $20.0 million to fund
the expansion of the agricultural access roads programme and
$100.0 million in reimbursement for backpay for TRHA workers;
- the Ministry of the Attorney General and Legal Affairs is receiving
$30.0 million to meet the cost of legal and other fees arising from
matters raised in the Commission of Enquiry into CL Financial
Limited and Colonial Life Insurance (Trinidad) Company Limited;
- the Ministry of Community Development, Culture and Arts is
receiving $2.0 million to enable the National Commission for
Self Help to assist individuals in Tobago whose homes have
been affected by flooding and other damages;
- the Ministry of Agriculture, Land and Fisheries is receiving $38.0
million of which $31.0 million would fund the cost of the subsidy
due to farmers under the Agriculture Incentive Programme and
$7.0 million to meet the cost of claims submitted by farmers for
the loss of crops as a result of excessive rainfall and
consequential flooding during the month of October 2017;
- the Ministry of Social Development and Family Services is being
provided with the sum of $23.0 million to meet expenditure for
the Senior Citizens Grant to September 30th
, 2018; and
- the Ministry of Works and Transport is receiving the sum of $62.5
million to continue and expand its infrastructure works
programme.
- The Ministry of Health is receiving the sum of $121.0 million to
assist with payments to trade creditors, inter alia
- The Ministry of Education is receiving the sum of $159.0 million
to pay for security and janitorial services at schools, inert alia
Madam Speaker, the Ministry of Finance has determined that the oil and gas
price assumptions and other assumptions which informed the revenue
projections for the FY 2018 Budget should remain as is for the time being.
Notably, in stark contrast to 2016 and 2017, we expect to generally meet
our fiscal targets for FY 2018.
However, the actual fiscal outturn for FY 2018 will depend heavily on the
soon to be launched National Investment Fund
Madam Speaker, as a result of these revenue and expenditure adjustments
the overall deficit for FY 2018 is now being projected at approximately $4.2
billion or over $500 million lower than the original FY 2018 budgeted
amount of $4.76 billion. Relative to GDP, the budget deficit is now projected
at 2.5 percent of GDP. Compare this to last year’s deficit of 8 percent of
GDP. Progress is indeed being made!

We are moving into a period of long-term fiscal health and we are doing so
at reasonable unemployment levels. In 2017 unemployment was on average
in the vicinity of 5 percent compared with an average of 4 percent in the
time of plenty from 2011-2015.

The economic adjustment is also taking place with stabilization of the public
debt. As at March 2018, our net public sector debt to GDP ratio was 55
percent, down from 62 percent in 2017, well within international
benchmarks and well below our planned limit of 65 percent. Furthermore,
our external financial savings or financial buffers are at healthy levels. At the
end of April 2018, notwithstanding injection by the Central Bank of the
Government’s foreign reserves into the banking sector of US$6 billion over
the last 3 years, our net official reserves were US$8.11 billion - or import
cover of over nine (9) months. Indeed, for the first time in years, we actually
saw a small increase in foreign reserves between March and April 2018!

This careful management of our foreign reserves and our exchange rate since
2015 flies in the face of the predictions of the prophets of doom and gloom
who told us that our foreign reserves would “evaporate” in 6 months unless
we devalued the dollar to 10 to 1. How wrong these “experts” were.
Further, the Net Asset Value of the Heritage and Stabilization Fund was
US$5.87 billion at the end of April 2018. This was over US$200 million
higher than the US$5.65 billion in the HSF at the end of September 2015,
despite withdrawals totaling US$637 million between 2016 and 2017.
Clearly, therefore, all of the old talk from members opposite and uniformed
commentators about the Government “raiding” and “destroying” the HSF was
unfounded foolishness. The truth is that we have managed the HSF
prudently, resulting in income of over US$850 million from the Fund since
we took office.

Madam Speaker, it was those considerations which led S&P Global Ratings
to confirm the recovery which is now taking place in Trinidad and Tobago
and informed the S&P affirmation of the Trinidad and Tobago ratings with
the retention of investment grade status of its long-term sovereign rating at
BBB+.

Further, Madam Speaker, we are in no doubt that had the most up-to-date
gas production data been available to S&P in a timely manner, not only our
credit rating but our outlook might have been retained.
However, most importantly, this is the first time in three (3) years that
the credit rating of Trinidad and Tobago has not been downgraded.
As our economy continues to improve, we expect a ratings improvement over
the medium-term in the context of our improving internal and external
balances and the increasing likelihood that our gas supply would meet the
demands of our downstream sectors on a sustainable basis and the pick-up
in the non-energy sector would be strengthened.

Financing
Madam Speaker, in the period October 2017-March 2018 our internal
financing operations generated an excess of resources which was utilized to
cover the short-fall in the external financing requirements; but we are now
filling that gap with the recently executed US$300 million or TT$2 billion
loan agreement with the Andean Development Corporation - Development
Bank of Latin America or CAF.
As the economy adjusts to lower levels of revenue and expenditure, we are
ensuring that the adjustment would take place in a growth-oriented
environment with appropriate and adequate facilitating mechanisms. Let me
share with you some of those activities.

Infrastructure
Madam Speaker, we are safe-guarding the gains which are emerging in
domestic economic activity. We are tackling the most binding impediments
to growth. Our priorities include improving the quality of infrastructure,
strengthening governance and institutions and enhancing the business
climate. Some examples are:

Highways
Madam Speaker, our new road network is at various stages of
implementation. Some are still at the conceptual design framework for
instance the Valencia - Toco Road and others like the Churchill-Roosevelt
Highway Extension to Manzanilla (temporarily suspended) and the Solomon
Hochoy Highway to Point Fortin are in execution with completion dates in
2019/2020. The Curepe Flyover which would improve significantly traffic in
the East-West Corridor is scheduled for completion by the end of 2019.

Airport Terminal in Tobago
Madam Speaker, in order to meet the demands of a tourism-driven economy,
the ANR Robinson International Airport is being modernized at a cost of
$500.0 million, excluding land acquisition. A public-private-partnership,
utilizing a Build-Own-Lease-Transfer (BOLT) mechanism, would establish in
2020 the new terminal and associated works. At present, the Development
Bank of Latin America (CAF) is supporting the project with technical advisory
services.

Beach Facilities
Madam Speaker, visitors to Maracas beach would soon have an engaging
and exciting experience with the modernization of facilities. Maracas beach
would now become an important visitor point in the itinerary of international
visitors. Other major beaches are being upgraded: Manzanilla and Las
Cuevas Beach Facilities would be completed in 2018 and rehabilitation
works are far advanced at the Vessigny Beach Facility.

Hospitals
Madam Speaker, our hospital progamme is well underway, including our
drive to enter the area of health tourism. To that end, and in collaboration
with the Government of Canada, we are rebranding the Couva Medical and
Multi-Training Facility as a first world hospital and medical training facility.
We have now secured an international operator for the Facility: Interhealth
Canada. The facility would be jointly-owned by the Government of the
Republic of Trinidad and Tobago and the University of the West Indies. In
the interim, the Government of India is offering opportunities to healthcare
professionals to contribute to training at the facility by teaching traditional
Indian medicine.

Madam Speaker, this hospital, like the others which we are now establishing,
would offer state-of-the-art healthcare to our citizens and simultaneously
promote health tourism:
- the Point Fortin Hospital is expected to be completed in 2019. It
would make available 100 beds to service up to 100,000 of our
citizens in the south-west peninsula;
- the Arima Hospital is expected to be completed in 2019. It would
make available 150 beds to service up to 150,000 of our citizens
in the north eastern district including D’abadie, La Horquetta,
Malabar and Arouca. and
- the Port of Spain Central Block should begin construction as in
2018 and on completion provide 540 beds to service up to
500,000 of our citizens in North Trinidad.

Institutional Arrangements
- The National Investment Fund
Madam Speaker, the debt owed by CLICO to the Government of the
Republic of Trinidad and Tobago (Government) is finally being settled. As an
initial step, we are monetizing approximately $4.0 billion of that debt with an
Initial Public Offering (IPO) of 49.9 percent of the shareholding of a newly incorporated
company: the National Investment Fund Holding Company into
which will be transferred the selected assets of Colonial Life Insurance

Company (Trinidad) Limited (CLICO) and CLICO Investment Bank (CIB) in
liquidation as well as an appropriate shareholding of Trinidad Generation
Unlimited (TGU) owned by GORTT, inter alia.
Madam Speaker, we propose that the initial public offering would take place
in June 2018 thereby serving to widen and deepen the domestic capital
market and at the same time ensuring that ALL of our citizens, large and
small, participate in the benefits, regular dividends and shareholding growth,
flowing from the quality of the companies in the National Investment Fund
Holding Company.
In particular, in contrast to those naysayers who said it couldn’t be done, let
me give some details of what this Government has achieved so far in terms
of the recovery of the $23 billion pumped into the Clico Bailout.
To date, as part of the first distribution of assets from Clico Investment Bank,
a total of 42,475,362 shares of Republic Bank, valued at $4.3 billion have
been transferred directly to the Corporation Sole and/or to State Enterprises
and Clico, for onward transfer to the Government. This represents 26% of
Republic Bank. It is to be noted that a further 25% of Republic Bank was
already held by the Clico Investment Fund.

In addition, 23% of One Caribbean Media valued at $200 million has been
transferred to the Corporation Sole and/or State Enterprises and Clico for
onward transfer to the Government, as well as 29.9% of Angostura, valued
at $1.07 billion, 5.4% of WITCO valued at $402 million and 19.5 million
shares of Home Construction, valued at $476 million.
This Government has also recovered TT$3.8 billion in cash so far from Clico
since September 2015 and lands in Tobago valued at $186 million for the
site of the proposed Sandals Resort. The Government is also actively
pursuing the sale or acquisition of shares held in Methanol Holdings
International Limited, valued at over $2 billion, as well as the recovery of
$500 million in bonds.

And this is not all, Madam Speaker, since there remains a further
approximately 40% of Angostura held by CL Financial and/or Clico, among
other assets to be recovered.

A selected portfolio of these assets will thus be placed in the National
Investment Fund for offer for sale to the public in 2018. We anticipate that in
the first instance, the value of the shares that will underwrite the Fund will be
between $8 billion and $10 billion, of which we plan to offer up to 49.9% in
this year 2018. Our target date for the launch of the National Investment
Fund Prospectus and offer for sale of shares or units to the public in the NIF
is June 2018, and our objective is to monetize the assets of the Fund and
realize our projected capital revenue by the end of July 2018.

At this juncture, let me point out that with respect to the recovery of billions
of dollars of taxpayers’ dollars that has been spent on the Clico bailout, this
Government and this Minister of Finance have achieved what our
predecessors failed to achieve. Without any ballyhoo, since we took
office in September 2015, we have so far recovered from Clico and CIB,
26% of Republic Bank valued at over $4 billion for the benefit of ALL
our citizens and $6 billion in cash and other assets.

Madam Speaker, before I continue, allow me to say that details of the
performance at mid-year of various Ministries and State Enterprises and
specific variations of appropriation will be dealt with by the respective
Ministers. My statement today is primarily intended to report on the fiscal
outturn for 2018 thus far and to give an insight into how we plan to finance
the service of Republic of Trinidad and Tobago for this fiscal year, and how
we plan to achieve the variations of appropriation and supplementary funding
that we are discussing in this debate.

Please also note that because of time constraints, this statement is not
exhaustive. It is simply not possible in 55 minutes to report on everything that
we are doing and achieving. We are doing so much.
However, I can give some brief details of specific projects, as follows:
o the industrial estates and business parks of Evolving
TecKnologies and Enterprise Development Companies Limited
(eTecK) are being modernized and expanded with the aim to
assist in the diversification of the economy. Twenty-nine (29)
bids have been received for one (1) existing commercial building:
the Duncan Street Complex and five (5) underdeveloped land
areas: Reform, Preysal, Connector Road, Frederick Settlement
and Tarouba. Evaluation of bids is now in process;

- the sale of the Rice Mill owned by National Flour Mills to a
preferred investor is at an advanced stage of conclusion; and
- the securing of an investor to partner with the Government of
Trinidad and Tobago in the management of The Vehicle
Management Corporation of Trinidad and Tobago Limited is also
advancing to the Request for Proposal Stage.

Property Tax
Madam Speaker, we are making progress in establishing the long-envisaged
Property Tax Regime. In early February 2018 we introduced in the House
of Representatives two (2) pieces of legislation: the Property Tax
(Amendment) Bill, 2018 and the Valuation of Land (Amendment) Bill, 2018
which seek mainly to correct anomalies which exist with these two (2) pieces
of legislation. I wish to make it clear that contrary to rumor, there is no plan
for retroactive application of this tax. Accordingly, the waiver with respect to
the payment of property tax would be extended at this time to the end of
December 2017, since it is our policy to collect the tax in the year that all of
the required administrative work is completed, such as, for example, the
valuation of 50% of properties in Trinidad and Tobago in various categories.

Trinidad and Tobago Revenue Authority
Madam Speaker, like the Property Tax Regime, we have made progress in
finalizing the proposed structure of the Trinidad and Tobago Revenue
Authority, which is absolutely essential to stop the billion-dollar leakage of
tax revenue and tax avoidance that is prevalent in Trinidad and Tobago
today. I wish to put Honorable members on notice that we will be bringing
the required legislation for the Revenue Authority for the consideration of this
Honorable House in the near future and that after seeking advice from
eminent senior counsel, we are of the view that the legislation is best passed
with a special majority. It is thus our intention to send the Revenue Authority
Bill to a Joint Select Committee of Parliament and we look forward to the
comments contributions and recommendations of the Independents and the
Opposition in this Committee.

This major institutional reform would underpin our efforts to stem the revenue collection leakages now inherent at the levels of the Board of Inland Revenue and the Customs and Excise Division and also to strengthen our compliance risk management methodologies.
Honourable members would recall that on March 16th, 2018, I shared with
this House the Tax Administration Diagnostic Assessment Tool (TADAT)
Performance Report on Trinidad and Tobago, which was not very
complimentary about our local tax authority. The recommendations from
this Report are guiding our tax reform and modernization agenda with its
emphasis on improving business processes and automation. These skills
would be enhanced as the staff transitions to the Trinidad and Tobago
Revenue Authority (TTRA) which, now embracing best practice standards in
domestic tax administration, would improve efficiency and domestic tax
mobilization. We would witness the full benefits of this reform in the next
fiscal year in the context of the functioning of the Trinidad and Tobago
Revenue Authority.

The Gambling Industry
Madam Speaker, the Joint Select Committee (JSC) of Parliament is also
hard at work on the review of the Gambling (Gaming and Betting) Control Bill
and we expect that if all goes well, this legislation will be finalized for the
approval of this House by the end of this year 2018. In 2019, therefore, we
should have in place a well-structured and regulated gambling environment,
generating good quality jobs and making its rightful contribution to public
revenue.

Procurement
Madam Speaker, we now have in place a procurement regulator who is
Chairman of the Procurement Board. With staffing and training in progress,
the new procurement regime utilizing best practice among all our institutions
would be operational shortly

Business Climate

Foreign Exchange Facility
Madam Speaker, the US$100.0 million Eximbank Foreign Exchange Facility
is now operational with the grant to the Eximbank of a license by the Central
Bank to trade in foreign exchange. Eligible established and fledgling small
and medium-sized manufacturers would now be able to access the facility to
finance material inputs for their export operations. This strategic initiative is
geared to promote the expansion of our local export sector while at the same
time creating a new financial model to improve our foreign exchange
earnings.

Business Development Fund
Madam Speaker, our $50.0 million business development incentive
programme is at an advanced stage of implementation. The facility would
finance through grants the working and seed capital for small and medium sized
businesses which we envisage to become key drivers of economic
progress in this country.

Border Control                                                                                                                          With respect to Border Control, I am pleased to report that at long last, the
recently-installed mobile scanning technology at Point Lisas is strengthening
our border security with modernized customs functions and would add
another dimension to the security of our environment. Port of Spain will follow
shortly. Importation of contraband specifically narcotics, illegal firearm and
ammunition will now be detected with modern technology and interdicted
while at the same time trade would be facilitated through easier inspection
and faster delivery times.

Conclusion
Madam Speaker, we are moving into an era of macro-economic stability
which is now underpinning our recovery. We are very much aware that the
continuing consolidation of our fiscal finances is an essential condition for
achieving this objective. Our tax and expenditure adjustments and broad-based
reforms are contributing towards the establishment of this foundation.
Over the medium-term we are improving tax administrations and our budget
procedures; and we are seeking, with World Bank Technical Assistance, to
eliminate waste and duplication in large areas of expenditure, such as
education, health, national security and social programmes. We recognize
that this process is of a long-term nature and is painstaking; but it is essential
for growth to be placed on a self-sustaining and long-term basis. As a
Government, we would always ensure that the benefits from our economic
development are shared equitably among the members of our national
community. And all shall be treated equally and fairly. We are not out of
the woods yet, but after the sacrifices and prudent fiscal management of
the last 2 ½ years, our economy is turning around.

In particular, our core revenues from taxation are still fragile and still below
$40 billion, while we are running a $50 billion economy, but we are finally
experiencing growth and recovery in 2018.
I am convinced that as long as we as a people are disciplined and productive,
our country will recover, grow and prosper. And from all indicators, we are
on the road to economic revival.
In the words of Johnny Nash: - “I can see clearly now, the rain is gone”. And
if I am allowed some artistic license – “Under this PNM Government, it’s going
to be a bright sun-shining day”
Madam Speaker, I wish now to commend to this House the Report of the
Standing Finance Committee and the Finance (Supplementation and
Variation of Appropriation) (Financial Year 2018) Bill, 2018. The object of this
Bill is to supplement and vary the appropriation provided for by the
Appropriation (Financial Year 2018) Act, 2017 and to authorize the utilization
of any sum accruing from a reduction of expenditure under a Head of
Expenditure for the purpose of meeting any liability incurred through the
increase in expenditure under other Heads.
I thank you and I beg to move.

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