Imbert: Trinidad and Tobago not adversely affected by commodity price changes
FINANCE Minister Colm Imbert rejected claims from the Opposition and other critics that the rise and fall of revenues of certain commodities fall occasionally, and do not necessarily negatively affect the economy.
He spoke at a virtual news conference on Monday to deal with the concluding statement of the International Monetary Fund's (IMF) 2023 Article IV mission to Trinidad and Tobago, released on March 16.
"I want to make a point. I have made it before. TT benefits from a revised formula for revenue from the natural gas sector in particular, where the prices that we get for tax and revenue purposes are not simply based on income."
Government now relies on three natural gas benchmarks: Henry Hub (US), NBP (UK) and JKM (Japan/Korea Republic).
Referring to a recent decline in the Henry Hub price, Imbert said a fall in gas price on one benchmark could be offset by the performance of the other two.
"So that the netback prices that we get for gas are not based on Henry Hub."
Imbert also said there are different netback prices for liquefied natural gas (LNG) and petrochemicals
As an example, he said the latter is based on the price of the respective commodity (urea, ammonia etc).
"As these prices are high. You get a high netback price from revenue purposes for the petrochemical sector.
While TT is a member of the IMF, Imbert said, "TT is not in an IMF programme. We have not been in an IMF programme for over 30 years."
That last happened between 1986 and 1991. Imbert said, "We all know what went on there," referring to structural adjustment policies of the NAR administration. Public servants' salaries being cut and people being retrenched were some of the events that followed.
Imbert reminded the media those things happened because government then "had to follow the dictates of the IMF."
But he predicted it is unlikely that TT will ever find itself in another IMF programme while the PNM is in office.
Article IV consultations are held regularly between the IMF and its member states to monitor the economic development of the latter. Imbert reiterated that although TT is not in an IMF programme, it is not bound by any of the recommendations the organisation makes with respect to the economy.
The press conference was necessary, he said, because there was misinformation in the public domain about the contents of the IMF's concluding statements.
He added that he had received complaints from members of the private sector who had read the statement in its entirety and felt aggrieved about the way it was reported in the media.
The IMF noted Government's its prudent management of the economy to date and projected economic recovery "to gain broad-based momentum in 2023 with a 3.2 per cent GDP expansion."
The IMF observed that Central government debt declined to 53.8 per cent of GDP (from 60 per cent of GDP in and gross public debt declined to 71 per cent of GDP (from 79.2 per cent of GDP in financial year 2021).
The IMF added, "Public financial buffers remain strong with total assets in the Heritage and Stabilization Fund (HSF) at US$5.0 billion (18.6 per cent of GDP) by end of financial year 2022."
It, however, cautioned that budget deficits will widen as public-sector wage negotiations continue, while issues with the precarious state of the National Insurance System and the impact of a global reduction in fossil-fuel use threaten the country's economic balance.
It also recommended more exchange-rate flexibility and the implementation of a more efficient foreign-exchange infrastructure.
"Imbert: Trinidad and Tobago not adversely affected by commodity price changes"