Transcript Mr. Kelvin Sergeant

FACING THE ISSUES
TURNING THE ECONOMY AROUND
Comments By Kelvin Sergeant
1
The Local and International
Environment
 Budget delivered against the background of
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International uncertainties, and tremendous risks
locally
Economy remains flat. Only the energy sector is
growing.
Business Confidence remained low
Crime a serious problem
Budget presented against the background of manifesto
promises, so certain expectations prevailed.
Inflation now double digits (Food Inflation )
Budget Highlights
 The Fiscal Accounts
 Budget estimates total expenditure of $49 billion and
total revenue of $41.3Billion
 An overall Deficit of $7.7 billion is projected or 5.8% of
GDP
 Total debt to GDP estimated at 49%
 Revenue Projections Comprise $15.2 billion from the
energy sector and $26.1 billion from the non-energy
sector.
BUDGET ASSUMPTIONS
 The 2011 Budget calculation was based on real GDP
growth projection of 2 percent, an average inflation
rate of 7 percent, an oil price of US$65 per barrel and
gas price of US$2.75 per mmbtu.
Expenditure Breakdown
 Education and Training will receive $8.3 billion
 Works, Transport, Public Utilities – Infrastructure will
get $5.9 Billion
 Health - $4.3 Billion
 National Security – 4.7 billion
 Agriculture - $1.8 billion
 Housing - $1.8 billion
FIRST ISSUE
 How much more fiscal deficits can Trinidad and
Tobago entertain?
 Can we expect the Total debt to be contained at 50% of
GDP or is it expected to increase in the future? What
will be the implication for T&Ts Credit Rating By
Standard and Poor’s or Moody’s?
Other Measures
 No New taxes/Improvements in oil and gas incentives/
 CLICO/HCU Bailout
 No Smelter
 No Rapid rail
 Capital market initiatives
 Divestment/Rationalization of state sector
 Efficiency in the Public Service
 Measures to increase competitiveness
Measures Con’t
 Tax Amnesty
 Property Tax axed and Lands and Building Taxes re-
introduced at original rates and Values
 Investment Ceiling Removed for Free Zone Companies
 Incentives for ESOPs
 New Energy Tax Regime to encourage
exploration/Investments
Measures Con’t
 Tax allowance for Contribution to the Children’s Life
Fund
 First Time Home Owner Allowance
 Manufacturing Allowances
 Increased pensions and Minimum pensions to Public
servants
Pensions
Where Person Receives Monthly Income
of
Pension Entitlement
Not exceeding $500
$3,000
Exceeding $500 but not exceeding $1,400
$2,550
Exceeding $1,450but not exceeding $1,650
$2,350
Exceeding $1,650 but not exceeding $1,800
$2,200
Exceeding $1,800 but not exceeding $2,000
$2,000
Exceeding $2,000 but not exceeding $2,200
$1,800
Exceeding $2,200 but not exceeding $2,400
$1,600
Exceeding $2,400 but not exceeding $2,600
$1,400
Exceeding $2,600 but not exceeding $2,800
$1,200
Measures
 Go Green initiatives
 CNG
 Solar Water Heating
 Wind Energy
 Energy Audits
Entrepreneurship
The 2011 Budget statement places tremendous reliance
on entrepreneurship and the private sector as seen in
the no. of initiatives
Diversification
 Opening New Economic Space – 5 Poles
 Free Zones
 Agriculture
 Small Business development and Innovation
 Real Estate/Construction
 Tourism
My Comments On Budget in
General
 CLICO/ HCU Bailout is a welcomed intervention but
what is the true story with respect to the CL Financial
group in particular and the MOU which was signed
last year between the Gov’t, the Central Bank and
CLICO. What is the value of the assets of the CL
financial group and How Much of those assets are now
controlled by the State?
Financial Sector Challenges
 Rise in non-performing loans and contraction in
commercial credit
 Confidence Issues
 The Role of the Capital market- Can we ensure wide
participation when companies are divested or will
shares be tightly held?
Manufacturing Sector and Tourism
 How effective will the Measures announced in the 2011
budget as it relates to Manufacturing Sector?
 Are we tapping the full potential of the Tourism
Sector?
Some Concerns
 Implementation Challenge
 What are the Milestones?
 Can the measures announced and the sectors “picked”
ensure a resumption to Growth in the shortest possible
time?
 How do we ensure that the inflation problem is not
further exacerbated, give the $20B injection into the
economy?