Transcript Review of the 2010/2011 National Budget

Review of the 2010/2011
National Budget
Kyren Greigg
Department of Economics
UWI, St. Augustine
Demas/ Rampersad Series
September 9, 2010
Presentation Outline
The present economic environment
 Budget assumptions & Arithmetic
 What should be Government’s response
in the context of a 3D (3rd Deficit)
Budget.

◦ Attaining short-term economic stability
◦ Medium term aspirations
• Has the Budget met these objectives: An
assessment of Budget measures
• Concluding remarks
The Present Economic Environment
Source: Ministry of Finance- Review of the Economy 2010
The Present Economic Environment
Source: Ministry of Finance- Review of the Economy 2010
The Present Economic Environment
Source: Ministry of Finance- Review of the Economy 2010
The Present Economic Environment
Budget Assumptions & Arithmetic




GDP growth of 2 percent
Average inflation rate of 7 percent
Oil price of US$65 per barrel
Gas price of US$ 2.75 per mmbtu.
 Total
revenue $41.3 billion
◦ of which: energy sector revenue = $15.2 billion
non-energy sector revenue
= $26.1 billion
Total Expenditure $49 billion
Fiscal Deficit $7.7 billion (5.48 %of GDP)
What should be Government’s
response!
Put in place measures that would
stimulate the economy and instill
confidence on the part of investors and
citizens in general.
 Give a clear picture of the medium term
policy framework, in terms of its
diversification and development policy.
 Have some continuity of development
projects and programmes that are of
merit.

Government’s Response: Short term
stability
Fiscal Incentives: Energy Tax regime
PPT(Deep water) 50% 35%
 Mature & small marine fields SPT 20%
 Investment tax credit of 20% on qualifying
CAPEX.
 Return to conventional PSCs with flexible
bidding

Government’s Response: Short term
stability
Fiscal Incentives:
Increase in minimum wear and tear allowance
to manufacturing companies from 10% to
25%
Tax amnesty:
Amnesty for tax penalities for late filing of
returns and late payment of income ,
corporation and VAT, business levy,
environmental levy and lands & buildings
taxes.
Government’s Response: Short term
stability
Income distribution:
 Senior Citizens’ Pension $3000 per mth.
 Increase in min. pension of retired public
officers to $3000 per mth.
Government’s Response: Medium
term aspirations
Expand the energy sector
 Realign the economy
 Revitalize the Agriculture sector
 Expand Tourism
 Standardize our Environmental
regulations

Government’s Response: Medium term
aspirations- Expanding Energy Sector
Signing of Unitization Agreement with
Venezuela will allow access to approx. 2.7
tcf of gas to be monetized in the LoranManatee field.
 Exploring the development of alternative
energy sources such as wind and solar.
 The export of energy advisory services.
 Further diversification within the energy
sector.

Has the Budget met these objectives:
An assessment of Budget measures
Some measures have been taken to bring
stability and turn around government
finances. The question are these enough?
 The medium to long term measures
needs to be distilled to allow a better
analysis of their viability with respect to
economic diversification and development

Concluding remarks
Continuity of development programmes
that are of merit.
 Put measures in place to have a grip on
inflation.
 Getting back to a surplus budget position.
 Minimum wage implications.
 Implications of measures for employment
 Public sector wage negotiations
