Government will not be contributing to the Heritage and Stabilisation Fund (HSF) in the next national budget covering the 2009/10 fiscal period, said Finance Minister, Karen Tesheira. “Those surpluses will not be achieved this year. As a matter of fact, we have actually met the criteria for drawing down from the fund. However, the Government has no plans to access the fund, as we are in a very good position and can draw on other resources to fund the deficit in the budget.” In an exclusive interview with the Guardian yesterday, Tesheira said next year’s 2010 budget expenditure is expected to be just about the same as it was last year, but that government was anticipating a shortfall in revenues.

Contribution to the fund is automatic by law, once specific surpluses are achieved through taxes from the energy sector. The fund currently stands at more than US$3 billion, and government has not made a contribution to the fund since September 2008. The HSF was established with the passing of the HSF Act No 6 in March 2007. This fund was previously known as the Interim Revenue Stabilisation Fund (IRSF), which has been in existence since 2000. All proceeds from the IRSF were transferred into the HSF, which is quoted in US dollars. The purpose of the fund is to save and invest surplus petroleum revenues derived from production business in order to cushion the impact of, or to sustain public expenditure, during periods of revenue downturn, whether caused by depletion of petroleum resources or a fall in prices of crude oil or natural gas.

It also provides a heritage for future generations of T&T, through savings and investment income derived from excess revenues. Contributions are automatically made to the HSF when revenues from the energy sector exceed estimates by more than 10 per cent per quarter for any fiscal year. Amounts earned in excess of 10 per cent must be deposited into the HSF. The Finance Minister has some discretion to deposit surpluses into the fund, even if the surplus does not meet the 10 per cent threshold prescribed by law. Similarly, if revenues from oil and gas fall short by more than 10 per cent of the budgeted estimates, Government can access the HSF to fund a proportion of the difference. In the interview, Tesheira said the fund was able to grow quickly because in the past, apart from the mandatory contributions required by law, Government also voluntarily added its budget surpluses to the fund so more funding would be available in the future if T&T’s situation becomes difficult.

“Many people do not realise that even though we will record a deficit in this year’s $54 billion budget, more than $12 billion of that expenditure will be savings. This includes $6.5 billion to the Stabilisation Fund and $2.5 billion for the Infrastructure Development Fund. The remainder was transferred to other funds.” She said Government has worked hard at putting the economy and T&T in a very good position to deal with the global economic crisis and patience and confidence are required to get the country through this situation. “T&T is now better off than the rest of the region. This has not happened by chance. This was all part of government’s plan to diversify the economy. The next budget will focus on building and supporting the economy even further, by bringing back confidence in the market and preparing our people for the future,” Tesheira said.