Finance Minister Colm Imbert said the government was expecting a rebound in oil and gas prices by 2022.
In delivering the 2021/2022 budget presentation on Monday afternoon he said budgeting within a medium-term economic framework was vital in maintaining fiscal and balance of payment discipline.
The budget for fiscal year 2021/2022 was pegged against oil at US$65 per barrel and US$3.75 per mmbtu for gas.
Imbert said with the volatility of the market due to the covid19 pandemic, the quoted figures were “conservative.”
“Oil prices have become extremely volatile and difficult to forecast; but we have been reviewing consistently the in-depth analyses undertaken by the international institutions and the US Energy Information Administration on the outlook for oil and gas prices.
“These institutions are forecasting oil prices to stabilise at approximately US$66 per barrel during the period 2022-2024. Natural gas prices have been going through the roof recently, crossing $5 per mmbtu in the US and $20 per mmbtu in the far East, but we have chosen to be conservative.”
Based on the figures, Imbert said, oil revenue was forecast to be TT$12.614 billion.
Former finance minister Winston Dookeran told Newsday the next fiscal year seemed to be promising for recovery and the estimates presented by Imbert were safe, but he was sceptical about the tax incentives.
“I do not know if tax incentives are going to generate investment. I think the issue of investment is deeper than taxations. It’s good that the International Monetary Fund’s (IMF) special drawings rights were accepted.
“It looks like next year will be a much better year in terms of economic activity, and how that will reflect itself in the energy sector is yet to be seen. Overall, it paints a picture of confidence and a growth momentum for 2022.”
Dookeran said while there was still a lot to do on the diversification front, TT has done well in building its resilience, especially in a pandemic.
He said, however, there was very little in the budget about going beyond survival mode.
“We have to try to move from survival to recovery, and then we have to move from recovery to sustainability. There was a fair amount in the budget for survival to recovery, but there was not sufficient to move to sustainability.
“It is positive that (Imbert) went to the IMF and got its balance-of-payments situation fixed and now...with the reprise of oil and gas, we can see an improvement in the economic life of the country.”
Dookeran pointed out that there were still gaps in many sectors, especially in agriculture and how sustainability will be funded.
“The funding of it is not clear. There needs to be a retailed funding plan for the future.”
President of the Couva/Point Lisas Chamber of Commerce Mukesh Ramsingh said its members were hopeful for the recovery of the Point Lisas Industrial Estate, where many plants have been shuttered owing to financial challenges.
He said there was still much to consider with regard to the estate, and oil and gas prices were heavily influenced by external markets.
“The energy sector is not doing too bad at the moment.
"I do not want to say much on the Point Lisas Industrial Estate at the moment because of external factors.
"Once the price goes up, things look positive for the future,” Ramsingh said.