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Mid-year review—MPs prepare Tuesday

Saturday, May 5, 2018

Finance Minister Colm Imbert had his customary short answers for Opposition questions in Parliament yesterday.

Was he aware of deficiencies in the Galleons Passage ferry detected by US Coast Guard, UNC MP Khan probed.

“No deficiencies were detected by the US Coast Guard. You grasping at straws,” Imbert declared.

Imbert’s next spotlight—his Budget 2018 mid-year review next Thursday—should elicit more than brief, terse commentary. Particularly since his “good-news” hint on this yesterday.

Curtain raiser regarding expected review reportage during his address at yesterday’s Exim Bank Forex facility function. Some of the “good news”: steady foreign reserves, energy sector/oil price rebound, increased Forex levels. Exim’s facility itself, fruition of a Budget plan arriving on review eve.

Prepping for review, Parliament’s Finance committee meets Tuesday for the standard “Variation of Appropriation” bill done annually at review time. A variation usually involves reworking/shifting sums within a year’s Budget to meet national expenses. What Tuesday’s deliberations mean for review announcements lie ahead.

After seven months, experts have assessed how the $50.7b Budget’s performed. Economist Valmiki Ajoon—a speaker at last year’s pre-2018 Budget presentation—expects some very small 2018 economic growth. “But any growth’s artificial—due to Juniper field gas production work of years ago. It doesn’t translate into better economic conditions.

“Overall: the economy’s nowhere near better than end of 2016/17.”

He added, “Fiscal deficit’s down, but not because of more earnings. It doesn’t mean better quality of life or value for money. Contractors’ payments are outstanding, VAT refunds overdue, crime’s high, sales low, ease of doing business slashing confidence in the economy.”

Solutions? Arjoon hopes the review at least reduces the 30 per cent Corporation Tax to 20 per cent—permitting business growth space—allows companies to deduct VAT refunds from their taxes and doesn’t hike gas prices.

Economist Indira Sagewan-Ali said signals are that things are looking up. “We’re suddenly hearing about laptops for schools. Seems Government knows something we don’t. However, the country’s sense is different: purchasing power is down, business activity and other aspects contracting. Still, a lot is happening in pockets—agriculture, small enterprises because people have to live.

“The challenge is how to match Government optimism with economic activities. If we do that there’s chance of an answer to where T&T needs to go. And answers don’t reside with oil/gas.”

How much political gloss will be applied in the review to economic facts remains to be determined.

At this mid-mark juncture following a term of cutbacks, attention will be on how much Budget 2018 has fulfilled its theme, “Changing the Paradigm, Putting the Economy on Sustainable Path.”

Detail will be expected whether Government’s on track to projected 2018 revenue (45.74B) from which sectors, any exceeding of planned $50b expenditure and whether deficit’s higher or lower. The latter was projected due to Tuesdayrecovery of Clico debts and asset sales—still to materialise.

However, anticipation’s high, not just because of Imbert’s recent optimistic hints, but also with Budget 2018 pegged on a (US)$52 oil price and higher prices occurring. Plus expectations from upcoming energy talks concerning royalty tax projections.

How well has T&T’s “economic engine” restarted away from energy will be gauged. Particularly since one “gear”—the agricultural incentive plan—hasn’t begun. Minister Clarence Rambharath said it’ll start this month once groundwork’s completed.

What traction’s been gained via incentivising tourism sectors also lies ahead—but must be juxtaposed with damage done by extended ferry problems.

Contractors’ responses to concessions to build public housing and returns from gaming sector fee hikes, new fees and exemptions, will also be tracked.

Updates will be sought on what’s done (beyond Exim Bank facilities) and outstanding: sale of Clico assets, Petrotrin restructuring, Sandals’ plans, Cepep/URP reviews. For immediate matters—property tax law being finalised in Senate next week, post review—what amendments will be made concerning collection, start date and processes.

From trends, the last half of the fiscal year may be busier if the rest of Budget plans are to be fulfilled. Question is, will John Public feel fulfilled enough by Imbert’s “good news” to step up.


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