Stating that the manufacturing sector has held its own when it comes to contributing to the economy, Finance Minister Colm Imbert said government is exploring the option of having a US currency loan facility at EXIMBANK for manufacturers to access US currency and for repayment of that loan to be in TT currency.
He said the manufacturing sector is the sector that is "saving" T&T, while the energy sector is giving this country a "big hit" namely, oil, gas and petro-chemicals. T&T is losing billions of dollars in the petro-chemicals sector.
Imbert acknowledged that manufacturers have creditors who need to be paid in US currency and therefore, the Government needs to manage the supply of US currency very carefully. He said for 2016, the private sector has contributed well in excess of US$1 billion and therefore government needs to work with manufacturers to increase capacity.
"One of the things we are going to look at ... is to make a foreign exchange window available at the EXIMBANK for manufacturers. I am toying with the idea that you can access foreign exchange. Of course you would have to borrow as it's a bank. I am toying with the idea that you can pay it in TT dollars."
Imbert who was delivering the feature address at the T&T Manufacturers' Association Annual General Meeting held at the Hilton hotel and conference centre, St Ann's said it was time for manufacturers to get incentives. Referring to 1986, he said the foreign exchange reserves had disappeared in six months.
At that time, Imbert said the oil price had collapsed from US$40 to US$9 per barrel and stayed there for years. He said that all the foreign exchange reserves that had been built up were utilised between the period 1982 and 1986 to support the economy. When the Government changed, foreign exchange reserves were down to naught.
Explaining his strategy for managing the economy, he said T&T has 11 months of import cover and what he has been doing, "is very carefully balancing the demands of our exchange, the availability of our exchange to maintain the import cover. There are theories; do we need that much import cover?"
Stating that it's a new environment and there is need to discuss the issue of whether T&T needs 11 months of import cover Imbert said. Some economists, he added believe that the country does not need more than three months of cover.There is need for the public to have information but he said one of the things that annoyed him was that there was no information available and disclosure was "almost a bad word."
Referring to the Energy sector revenues he said there was a downturn in investment in the Energy sector in 2013.
"Prior to 2013, the oil companies had to write off their capital expenditure for exploration over a five year period. In 2013, the fiscal regime changed and oil companies can now right off their capital expenditure in one year. Instead of getting a hit of 20 per cent capital expenditure on your revenue, you get 100 per cent coming at you in the first year. That regime began in 2014 and will continue until 2017."
Concerning VAT refunds, he said there is need for discussions on ways in which the VAT refunds can be expedited.For a second term, Rolph Balgobin is President of TTMA.
Colm on oil prices
He said even though he is new to Finance he has never seen a scenario where the prices have been this depressed for so long.
"The oil prices is so sensitive nowadays that somebody just has to says something, a Saudi prince just has to get up in the morning alright we not cutting production, oil price drops US$3 I saw that last week.... That's the paradigm that we are in, it's crazy. What kind of commodity behaves like that? That is where we are and that is the base of this economy and we have to change that."