SMALL MAN BUDGET

FINANCE Minister Colm Imbert titled yesterday’s budget for fiscal year 2019 “a genuine economic turnaround,” signalling a sustained shift from economic stagnation to growth, but drivers faced with an immediate additional $1 per litre for super gasoline might not share his optimism.

The fuel price adjustment was expected as he had said as much in last year’s budget, but Imbert attempted to temper the blow maintaining a steady diesel fuel price as government’s attempt to “slow down the complete deregulation of fuel prices in order to ease the burden on taxpayers.”

The new price of super will be $4.97 per litre up from $3.97, but has the potential to save the government up to 50 per cent in subsidy payments. If there was no adjustment to the fuel price, at current oil prices, the 2019 subsidy would be at least $1.5 billion. From 2002 to now, he said, the state had spent $29 billion in subsidies.

NO REAL SURPRISES

Increased fuel prices were the most disruptive element of an otherwise lacklustre budget speech that lasted for three hours, mostly consisting of the minister’s adulation of the achievements of his administration’s tenure, with frequent barbs over alleged mismanagement by the previous government.

Despite this being his fourth budget presentation, Imbert could not resist revisiting an economic overview of the now Opposition’s time in office, and their murmurs of disagreement prompted Speaker Bridgid Annisette-George’s first of eight calls to order.

Overall, though, there were no real surprises in Imbert’s budget. There were also no real “goodies” per se, although social safety nets were expanded, including increased pension ceilings, increased food card limits, higher disability and public assistance grants, tax allowances for tertiary education, stamp duty waivers for first time home-owners, 24/7 rural health centres, and substantial increases in the fines for cruelty to children, littering and starting bush fires. All of these are expected to come into effect on January 1.

Imbert’s second biggest announcement of the day had to do with Petrotrin, currently the most pervasive issue in the country. During a recap of the government’s decision to close the Pointe-a-Pierre refinery, Imbert said the final cost for termination packages for permanent, temporary and casual employees would be $2.6 billion.

The breakdown, he said, would be $1.8 billion for all employees under the separation packages negotiated by nine collective agreements, $550 million in backpay and $203 million in vacation pay for all employees, and $30 million in ex-gratia (not legally required but done out of moral obligation) to all contingent employees.

NOT OUT
OF WOODS

Otherwise, Imbert was cautious, reminding his audience that the country was “not yet out of the woods.”

“We are ever mindful of the impact of the volatility in energy prices with the level and direction of change difficult to predict,” he said. The country was, however, poised for economic growth in 2018 of 1.9 per cent, he said.

“Revenue for 2018 was $42.7 billion, while expenditure was $48.9 billion, leaving a $6.2 billion deficit. Public sector debt was a “manageable” 60.9 per cent and, Imbert said, with external reserves totalling US$13.7 billion as at September 25, that was more than enough to cover the country’s US$3.7 billion external debt.

The Finance Minister also hit back at his critics, especially those who questioned his foreign exchange policy. “Several analysts in 2015 warned us in 2015 that if we did not immediately devalue the dollar our foreign reserves would evaporate within a year! However, this calamity did not materialise,” The decline in external reserves (currently (US$7.7 billion, the lowest in a decade) was inevitable, he said, because of the government’s strategy, but the rate is slowing down.

Availability of foreign exchange is improving, he said, and with a stable exchange rate, appropriate incentives, including a proposed tax credit to manufacturers who earn foreign exchange, are being provided for producers to assist with growth in non-energy sector.