TTCSI calls for transparency about HSF withdrawals

THE TT Coalition of Services Industries is calling for transparency with respect to the recent withdrawal of US$160.38 million from the Heritage and Stabilsation Fund (HSF).

This withdrawal was mentioned in the HSF's quarterly investment report for October to December 2023 which was released on June 18.

The report said, "As at the end of December 2023, the total net asset value of the HSF was US$5,658.6 million, approximately US$268.5 million higher than the previous quarter’s closing value of US$5,390.2 million.

"During the quarter, US$160.4 million was withdrawn from the HSF under Section 15 of the Act (2007) for the financial year 2022/2023, which was funded from the fund’s liquid assets.."

Section 15 (1) states, "Subject to subsections (2) and (3), where the petroleum revenues collected in any financial year fall below the estimated petroleum revenues for that financial year by at least ten per cent, withdrawals may be made from the fund as follows, whichever is the lesser amount: Either sixty per cent of the amount of the shortfall of petroleum revenues for that year or 25 per cent of the balance standing to the credit of the fund at the beginning of that year."

Section 15(2) states, "The amount withdrawn from the fund in accordance with subsection (1), shall be deposited into the Consolidated Fund within 48 hours of such withdrawal."

Section 15 (3) states, "Notwithstanding subsection (1), no withdrawal may be made from the fund in any financial year, where the balance standing to the credit of the fund would fall below one billion dollars in the currency of the USA, if such withdrawal were to be made."

In a statement on July 12, TTCSI president Dianne Joseph said, "The HSF is a critical financial buffer for our nation, established to ensure economic stability and savings for future generations. It is imperative that the government maintains transparency regarding the use of these funds to uphold public trust and ensure that withdrawals align with the objectives of the HSF Act."

The TTCSI, she continued, recognised that one of the HSF's purposes is to take care of declines in natural gas prices.

Joseph acknowledged this has happened with natural gas prices declining by approximately 40 per cent.

"This development will likely trigger the instruments which can be used by the Minister of Finance under the HSF Act, to make a drawdown, which is one of the reasons for the HSF."

Joseph said it is in government's best interest to provide appropriate details on the US$160.4 million withdrawal "and to take strategic steps to address the current economic gaps while safeguarding the nation's financial future."

In a statement, the Confederation of Regional Business Chambers (CRBC) said the total net asset value of the fund as at the end of December 31, 2023 was US$5.658 billion.

The CRBC added that against this background "the withdrawal of US$160.38 million does not seem to make any kind of financial dent on the overall balance of the Fund."

But some members of the CRBC expressed concern about the withdrawal.

Gasparillo Chamber of Commerce president Samuel George asked what the withdrawn funds were used for.

Fyzabad Chamber of Commerce president Angie Villy Jairam said the HSF quarterly report said government has been withdrawing from the HSF to deal with shortfalls in oil and natural gas revenues.

"This is very concerning."

CRBC vice-chairman Ricardo Mohammed said no information was provided about what the withdrawn funds were to be used for.

CRBC chairman Vivek Charran wondered if the withdrawn funds were to cover a shortfall in government expenses or strengthen Central Bank foreign exchange reserves.

He said if there were good reasons for the withdrawal which the government could be transparent about, it could inform the public about them.

In a statement, the TT Chamber of Industry and Commerce said, "“The HSF cannot be used to directly finance capital expenditure or as collateral for government borrowing,” said the T&T Chamber, adding that there is specific guidance in the Act, so once the Fund is being utilised in the stipulated manner, there is no reason for concern."