Despite news of a turnaround in the country’s economic fortunes because of oil and gas, the Bankers Association of TT (BATT) says there is still much work to be done to consolidate the gains made and to press ahead with restructuring public finances.
“The optimistic tone struck in the 2017/2018 mid-year budget review was not at all surprising,” the association said yesterday in its response to the mid-year review which was presented by Finance Minister Colm Imbert on Thursday in Parliament.
“It was delivered against a backdrop of improved conditions in the domestic energy sector, with increased gas output and the international price of oil at US$71.36 per barrel (West Texas Intermediate) on the very day the review was delivered.
“Government is projecting the domestic economy to expand within the range of two and 2.5 per cent between 2018 and 2020, with the non-energy sector expected to record growth in 2019.”
BATT said, however, the potential for energy prices to fall during the period represented a significant downside risk to these projections.
“It is encouraging that the fiscal deficit ($4.2 billion) is expected to be less than initially budgeted ($4.76 billion). Nevertheless, it is still a major cause for concern that this outcome continues to be dependent on extraordinary revenue measures.”
The association added: “While government’s efforts to control expenditure is to be applauded, its expressed desire to maintain spending around $50 billion means that unless energy revenues increase significantly, fiscal deficits may continue to be a major feature of public finance for the foreseeable future.”
BATT said from the data presented, it was evident the economy was performing better “but there is still a lot of work to be done to consolidate the gains made and to press ahead with restructuring our public finances.”
“The country’s emergence from economic decline is still at a fairly fragile stage, and while it can be argued that some ‘progress is indeed being made’ we must be relentless in our efforts to ensure that the economy is better able to withstand negative external shocks when they occur.”
“The association said it looked forward to hearing more about measures to position the non-energy sector to play a greater role in driving the economy, and in so doing, provide a more stable foundation for public finance.”
BATT urged government to address structural imbalances, which, it said, were crucial to improving the competitiveness of TT’s investment climate.
The association said it was also important for effective measures to be implemented to address the worsening crime situation, as a matter of utmost urgency.