The de­ci­sion by the Min­istry of Fi­nance to ac­cess US$160.38 mil­lion ($1.09 bil­lion) from the Her­itage and Sta­bil­i­sa­tion Fund (HSF) on De­cem­ber 18, 2023, may have come as a sur­prise to many cit­i­zens of T&T, main­ly be­cause, be­fore last month, Fi­nance Min­is­ter Colm Im­bert had not sig­nalled to the coun­try that en­er­gy rev­enues were a prob­lem.

The HSF Act, how­ev­er, is clear that when pe­tro­le­um (en­er­gy) rev­enue for any fi­nan­cial year is ten per cent less than the es­ti­mate, the Gov­ern­ment can with­draw 60 per cent of the short­fall or 25 per cent of the bal­ance of the fund, whichev­er is less.

The prob­lem, there­fore, is not that the Gov­ern­ment with­drew the funds from the HSF, but that there was a lag of al­most six months be­fore the de­ci­sion to tap this coun­try’s rainy day fund was dis­closed. The mo st re­cent quar­ter­ly re­port of the HSF avail­able to the pub­lic is for the pe­ri­od Oc­to­ber 1 to De­cem­ber 31, 2023. That re­port, which is on the web­site of the Min­istry of Fi­nance, is dat­ed June 18, 2023.

The HSF Act pro­vides that the Cen­tral Bank is the man­ag­er of the fund. One of the re­spon­si­bil­i­ties of the Cen­tral Bank, out­lined in the sched­ule of the act, is to en­sure “the sub­mis­sion of quar­ter­ly re­ports to the board (of the HSF) on the hold­ings, per­for­mance and risk of the fund no lat­er than one month af­ter the end of each quar­ter.”

If the HSF Act is be­ing scrupu­lous­ly fol­lowed, the fund man­ag­er should have sub­mit­ted the most re­cent quar­ter­ly re­port to the Cen­tral Bank no lat­er than the end of Jan­u­ary 2024. The re­port should then have been sub­mit­ted im­me­di­ate­ly to the board of the in­sti­tu­tion and to the Min­istry of Fi­nance.

If the fund man­agers have main­tained the re­quire­ment to sub­mit the quar­ter­ly re­port in a time­ly fash­ion, there is no rea­son why quar­ter­ly re­ports can­not be made pub­lic with­in six weeks of the end of each quar­ter.

The Min­is­ter of Fi­nance should es­tab­lish a well-pub­li­cised sched­ule for the pub­li­ca­tion of the quar­ter­ly re­ports of the HSF so that the cit­i­zens of T&T, the ul­ti­mate ben­e­fi­cia­ries of the fund, are aware of the fi­nan­cial po­si­tion of the coun­try’s sov­er­eign wealth fund.

The HSF Act does not ob­lig­ate the Min­is­ter of Fi­nance to make pub­lic dis­clo­sures of de­posits or with­drawals from the fund. But in the in­ter­est of trans­paren­cy and ac­count­abil­i­ty, the au­thor­i­ties should en­sure that this in­for­ma­tion is known as soon as pos­si­ble.

The dif­fer­ence be­tween the coun­try know­ing that a with­draw­al of US$160.38 mil­lion was made from the HSF in mid-Jan­u­ary 2024 as op­posed to mid-June 2024 is that the pop­u­la­tion would have been aware five months ear­li­er that there was a short­fall in pe­tro­le­um rev­enues for the 2023 fis­cal year.

As it stands, most of T&T be­came aware that the de­cline in en­er­gy rev­enues was a prob­lem for T&T ear­ly last month, when seg­ments of an af­fi­davit from Fi­nance Min­is­ter Colm Im­bert were made pub­lic. That af­fi­davit re­vealed that for the first six months of fis­cal 2024, from Oc­to­ber 1, 2023, to March 31, 2024, the net­back price for nat­ur­al gas was 36 per cent be­low the bud­get price.

If glob­al nat­ur­al gas prices re­main low, the T&T deficit for 2024 could be as high as $9 bil­lion, even with ad­di­tion­al one-off as­set sales, said the min­is­ter, and the Gov­ern­ment may well have to tap the HSF again.