Imbert: TT in a good place

FINANCE Minister Colm Imbert said due to Government’s prudent economic management, TT is in a good place despite the dual shocks of lower energy revenues and covid19.

“There is no question that fiscal 2020 will be exceptionally difficult although the pandemic is expected to fade in the second half of the year allowing for the gradual lifting of the containment measures and a reopening of the economy.

“In 2020, therefore, our objective has been to keep the economy moving, stimulate economic activity, provide financial assistance to individuals and businesses, and keep as many people employed as is possible, including all workers in the public sector.”

He was speaking in the House Friday as he presented the 2020 Supplementary Appropriation and Mid-Year Budget Review. “This...review...is taking place at a time without modern precedent. The pandemic has severely impacted economic activity, which we are addressing with a robust fiscal stimulus and financial support programme.”

WE USED $1B

NOT $20B

He said to finance initiatives to assist various sectors Government will tap the domestic capital market for any necessary resources and this was being facilitated by the recent amendment to the Development Loans Act, which created substantial headroom for funding mechanisms. He reported to date Government has utilised just over $1 billion of the $10 billion available under the act.

“Not the $20 billion touted by the Opposition. We have just utilised $1 billion.” He also reported on May 15, 2020, the Government withdrew US $400 million from the Heritage and Stabilisation Fund (HSF) for budgetary support and not $10 billion as touted by the Opposition. He said over the last five years the HSF assets increased from just over 24 per cent of GDP to almost 28 per cent of GDP, and the country has eight months of import cover.

“Simply put, under this Government, and my team at the Ministry of Finance, we are in a good place.” He said it is projected that, after the initial shock of 2020, there will be a moderate rebound over the next 12 months, aided by the full use of short-term simulative policies, which have been have been activated in support of the economy.

“Such balance-sheet flexibility is a differentiating factor, as compared to many countries of the region and once the necessary stimulus has helped stabilise the economy, we plan to bring our debt levels back on their earlier trajectory by the year 2023. We will do this at a pace that balances the goal of avoiding a contractionary consolidation while minimising financial risk.”

GROWTH

EXPECTED

Imbert reported that based on Government’s fiscal stimulus programme a decline in GDP in 2020 of just 2.4 per cent was projected, rebounding to growth of 4.7 per cent in 2021, with a continuing inflation rate of one per cent or less.

He further reported that total expenditure for fiscal 2020 has been revised to $53.107 billion – almost the same as the original budgeted expenditure of $53.036 billion. Total revenue was originally projected at $47.749 billion, predicated on an average oil price of US$60 per barrel and a natural gas price of US$3 per mmbtu.

Imbert said the 2020 Budget originally projected an overall fiscal deficit of $5.2875 billion, or 3.15 per cent of GDP, for the whole year. He explained that, after a later revision, a new six-month deficit for the period October 1, 2019 to March 31, 2020 was projected to be $5,885.6 million. That figure would have been reduced later on, as revenue came in. He said, however, based on the actual revenue received and expenditure incurred, the Government realised a deficit of $5,387 million for the first six months of the fiscal year, approximately $498.6 million less than the projected outcome.

“This was as a result of lower than projected revenue collections and lower expenditure.”

He also said Government would protect the lives of citizens at all cost and would not be reckless with human life.

“During this pandemic, whatever the health sector needs, the health sector will receive.”

The overall fiscal deficit for the 2020 Budget has been revised upward to $14.533 billion or 8.8 per cent of GDP. Almost three times the deficit that was originally projected.

Imbert pointed out that the Standing Finance Committee met on Wednesday and agreed to a Supplementary Appropriation of $2,686,000,800 for the Financial Year 2020 in order to fund urgent and critical recurrent and capital needs to September 30, 2020. Debate ended at 8 pm and the bill was read a second time and passed with no objections. The House was then adjourned to next Tuesday.