MOVEMENT for Social Justice (MSJ) political leader David Abdulah is predicting a devaluation of the TT dollar over the next two years as foreign exchange reserves will dwindle due to the impending closure of the Pointe-a-Pierre oil refinery.
Addressing a media briefing at the party’s St Joseph road, San Fernando headquarters yesterday, Abdulah said the refinery’s closure would mean forex once earned by the refinery would have to be used to purchase fuels (gasoline, diesel, aviation fuel) on the international market. Fuels which he said had once been produced by the refinery.
“So given the fact that foreign exchange reserves have been declining over the past few years because the central bank is using reserves, we are in trouble. Given the rate of decline of foreign exchange reserves in 2 years’ time we will be in a difficult place.”
He said government’s economic policy seemed to be on encouraging development which consume forex instead of earning it through the sale of goods and services on the international market.
“So we close down the refinery and we will now import those fuels and we will be using foreign exchange to import fuels. Government says it will offset that with sale of fuel in Trinmar but we have done our calculations and we have found that importation of 28,000 barrels of day of fuel at average price US $85 exceeds what we will get if we sell 40,000 barrels of oil per day, which sells way below the price of West Texas Intermediary because our crude is a poor quality crude, high in sulphur. So we will lose more foreign exchange.”
Abdulah said local crude would fetch between seven or eight dollars lower than international benchmark WTI which is currently trading at US $70.78 per barrel.
“The government lauds developers who are importing goods and we are importing more luxury vehicles and that puts pressure on foreign exchange resulting in a worsening of the foreign exchange crisis and we will very well get a large change in exchange rate which will put a crisis for foreign exchange reserves.”
Abdulah also poured scorn on minister in the Ministry of Finance Allyson West’s recent prediction that TT would experience “better days ahead” saying the last time a Finance Minister said he was seeing blue skies ahead, Petrotrin was earmarked for closure.
“Better days are coming- not under this government, the Minister of Finance said he could see clearly now with blue skies ahead after the mid-year review and then what has happened since he said that, they decide to close the refinery and retrench the workers. That can’t be better day and that can’t be blue skies.”