T&T’s fu­el and elec­tric­i­ty sub­si­dies will like­ly have to rise due to high­er than bud­get­ed oil and gas prices, Econ­o­mist Mar­la Dukha­ran has said.

In her Caribbean Eco­nom­ic Month Re­port for Au­gust, the econ­o­mist said, “High­er than bud­get­ed Oil & Gas prices means gov­ern­ment would like­ly have to con­tribute to the Her­itage and Sta­bil­i­sa­tion Fund and the cost of the fu­el and elec­tric­i­ty sub­si­dies will rise, mak­ing the fi­nal ef­fect of high­er O&G prices on the deficit mixed.”

The econ­o­mist al­so com­ment­ed on S&P’s re­cent pos­i­tive ad­just­ment of Trinidad and To­ba­go’s cred­it rat­ing, not­ing it was based on ex­pect rev­enue in­creas­es as a re­sult of high en­er­gy prices. She how­ev­er lament­ed the fact pro­duc­tions lev­els are not op­ti­mal.

Dukha­ran said, “The out­look for S&P’s BBB—cred­it rat­ing for T&T was re­vised to sta­ble from neg­a­tive, based on an ex­pect­ed in­crease in fis­cal rev­enue from high en­er­gy prices, which should sup­port a nar­row­er deficit. While O&G prices are above bud­get es­ti­mates, pro­duc­tion re­mains far be­low tar­gets.”

She said, “Av­er­age WTI prices for Jan-Jul were USD101.3/bbl vs a bud­get es­ti­mate of USD65/bbl, and av­er­age Hen­ry Hub prices were USD5.58/mmb­tu vs bud­get of USD3.75/mmb­tu. Jan­u­ary-June 2022 oil pro­duc­tion av­er­aged 31% be­low bud­get at 59.16 kbpd and gas pro­duc­tion was 22 per cent be­low tar­get at 2,612 mm­scf/d.”

She how­ev­er not­ed that while Food prices rose 7.8 per cent year on year in June, Trinidad and To­ba­go’s sub­si­dies on fu­el and elec­tric­i­ty kept those prices down, damp­en­ing over­all in­fla­tion for June to 4.9 per cent. The re­port not­ed un­em­ploy­ment in Trinidad and To­ba­go was list­ed 5.1 per cent for the first Quar­ter of 2022 vs 4.2 per cent in the first quar­ter of 2020 while the labour force de­clined 2.2 per cent in the first quar­ter of 2022 vs Q1 2020.

In her re­port Dukha­ran not­ed the IMF fore­cast growth of 5.5 per cent in 2022, 3 per cent in 2023, then av­er­ag­ing 1 per­cent to 2027. Ac­cord­ing to the re­port, a bal­ance of pay­ments cri­sis is ex­pect­ed to de­vel­op this year, ab­sent sig­nif­i­cant re­forms and eco­nom­ic re­cov­ery.