The 2018 Mid-year Budget Review was presented by the Honourable Colm Imbert, Minister of Finance in the House of Representatives yesterday – May 10th, 2018.
See the Minister’s full mid-year review here: Mid-Year-Review-2018
Here are the highlights:
- The turnaround of the economy is due to economic expansion in both the energy and non-energy sectors with a growth forecast of 2.0% in 2018 and 2.2% in 2019.
- The beginning of the last quarter of 2018 will see a number of new gas fields beginning production, boosting gas levels from 3.37 billion cubic feet per day in 2017 to an estimated 3.80 billion cubic feet in 2018 and 3.94 billion cubic feet in 2019.
- Gas production is up 20% from 2016 levels, to which Imbert claimed the energy sector has been revitalized.
- Additional gas from Venezuela will also generate substantial opportunities for strengthening and supporting the economy.
- The non-energy sector is expected to break even in 2018 after years of decline, with growth estimates in 2019 of 1.2% rising to 2.9% in 2020.
- The collection of taxes on income and profits in this fiscal year for “Other Companies” excluding oil and gas was $4.9 billion.
- Collection of corporation tax in the petrochemical sector moved from $371 million between October 2016 and April 2017 to $1.2 billion between October 2017 to April 2018.
- Similarly, within the same periods, collection of corporation tax in the non-energy sector moved from $1.8 billion to $2.3 billion.
“This improved outturn for 2017 and the expected growth in 2018 will have a substantial effect on our nominal GDP, which is expected to increase by 9% to TT$168 billion in 2018. This will also have a direct positive effect on our debt to GDP ratio, which is now estimated to drop to well below 60%, even with the planned borrowing programme in 2018.”
Revenue and Expenditure: October 2017-March/April 2018
- Headline inflation dropped to 1.3% by the end of 2017, with economic recovery taking place in an environment of price stability.
Although Government expenditure for the year has been revised to $48.88 billion from $50.50 billion, an additional $213.0 million is needed expenditure in key areas, such as:
- The Tobago House of Assembly is receiving $20.0 million to fund the expansion of the agricultural access roads programme and $100.0 million in reimbursement for backpay for TRHA workers.
- The Ministry of the Attorney General and Legal Affairs is receiving $30.0 million to meet the cost of legal and other fees arising from matters raised in the Commission of Enquiry into CL Financial Limited and Colonial Life Insurance (Trinidad) Company Limited.
- The Ministry of Community Development, Culture and Arts is receiving $2.0 million to enable the National Commission for Self Help to assist individuals in Tobago whose homes have been affected by flooding and other damages.
- The Ministry of Agriculture, Land and Fisheries is receiving $38.0 million of which $31.0 million would fund the cost of the subsidy due to farmers under the Agriculture Incentive Programme and $7.0 million to meet the cost of claims submitted by farmers for the loss of crops as a result of excessive rainfall and consequential flooding during the month of October 2017.
- The Ministry of Social Development and Family Services is being provided with the sum of $23.0 million to meet expenditure for the Senior Citizens Grant to September 30th, 2018.
- The Ministry of Works and Transport is receiving the sum of $62.5 million to continue and expand its infrastructure works programme.
- The Ministry of Health is receiving the sum of $121.0 million to assist with payments to trade creditors, inter alia.
- The Ministry of Education is receiving the sum of $159.0 million to pay for security and janitorial services at schools, inter alia.
- As at March 2018, net public sector debt to GDP ratio was 55%, down from 62% in 2017.
- The Net Asset Value of the Heritage and Stabilization Fund was US$5.87 billion at the end of April 2018. This was over US$200 million higher than the US$5.65 billion in the HSF at the end of September 2015, despite withdrawals totaling US$637 million between 2016 and 2017.
This is the first time in three (3) years that the credit rating of Trinidad and Tobago has not been downgraded.
- The Solomon Hochoy Highway to Point Fortin are in execution with completion dates in 2019/2020. The Curepe Flyover which would improve significantly traffic in the East-West Corridor is scheduled for completion by the end of 2019.
- The ANR Robinson International Airport is being modernized at a cost of $500.0 million, excluding land acquisition.
- Visitors to Maracas beach would soon have an engaging and exciting experience with the modernization of facilities. Other major beaches are being upgraded: Manzanilla and Las Cuevas Beach Facilities would be completed in 2018 and rehabilitation works are far advanced at the Vessigny Beach Facility.
- In collaboration with the Government of Canada, rebranding the Couva Medical and Multi-Training Facility is taking place as a first world hospital and medical training facility, with Interhealth Canada as the international operator. The facility would be jointly-owned by the Government of the Republic of Trinidad and Tobago and the UWI. The Government of India is offering opportunities to healthcare professionals to contribute to training at the facility by teaching traditional Indian medicine.
- The Point Fortin Hospital is expected to be completed in 2019, the Arima Hospital is expected to be completed in 2019 and the Port of Spain Central Block should begin construction as in 2018.
The National Investment Fund
- Approximately $4.0 billion of that debt owed by CLICO to the Government of the Republic of Trinidad and Tobago is being monetized with an Initial Public Offering (IPO) of 49.9 percent of the shareholding of a newly-incorporated company: the National Investment Fund Holding Company into which will be transferred the selected assets of Colonial Life Insurance Company (Trinidad) Limited (CLICO) and CLICO Investment Bank (CIB) in liquidation as well as an appropriate shareholding of Trinidad Generation Unlimited (TGU) owned by GORTT, inter alia.
- To date, as part of the first distribution of assets from Clico Investment Bank, a total of 42,475,362 shares of Republic Bank, valued at $4.3 billion have been transferred directly to the Corporation Sole and/or to State Enterprises and Clico, for onward transfer to the Government. This represents 26% of Republic Bank. It is to be noted that a further 25% of Republic Bank was already held by the Clico Investment Fund.
- In addition, 23% of One Caribbean Media valued at $200 million has been transferred to the Corporation Sole and/or State Enterprises and Clico for onward transfer to the Government, as well as 29.9% of Angostura, valued at $1.07 billion, 5.4% of WITCO valued at $402 million and 19.5 million shares of Home Construction, valued at $476 million.
- This Government has also recovered TT$3.8 billion in cash so far from Clico since September 2015 and lands in Tobago valued at $186 million for the site of the proposed Sandals Resort.
- The Government is also actively pursuing the sale or acquisition of shares held in Methanol Holdings International Limited, valued at over $2 billion, as well as the recovery of $500 million in bonds.
- Since assuming office in September 2015, the Government has so far recovered from Clico and CIB, 26% of Republic Bank valued at over $4 billion for the benefit of ALL citizens and $6 billion in cash and other assets.
- There is no plan yet for retroactive application of this tax.
Trinidad and Tobago Revenue Authority
- The Revenue Authority Bill is to be sent to a Joint Select Committee of Parliament for comments, contributions and recommendations of the Independents and the Opposition in this Committee. This major institutional reform would underpin efforts to stem the revenue collection leakages now inherent at the levels of the Board of Inland Revenue and the Customs and Excise Division as well as strengthen compliance risk management methodologies.
- Foreign Exchange Facility: The US$100.0 million Eximbank Foreign Exchange Facility is now operational with the grant to the Eximbank of a license by the Central Bank to trade in foreign exchange.
- Business Development Fund: A $50.0 million business development incentive programme is at an advanced stage of implementation. The facility would finance through grants the working and seed capital for small and medium-sized businesses which are envisaged to become key drivers of economic progress in this country.
- Border Control: The recently-installed mobile scanning technology at Point Lisas is strengthening border security with modernized customs functions and would add another dimension to the security of the environment. Port of Spain will follow shortly.