GAIL ALEXAN­DER

Se­nior Po­lit­i­cal Re­porter

While there is a pro­ject­ed $9.67 bil­lion deficit for the 2025 fis­cal year and a loss of $556.7 mil­lion in rev­enue, Gov­ern­ment’s eco­nom­ic re­build­ing plan en­com­pass­es for­eign ex­change so­lu­tions - in­clud­ing re­port­ing oblig­a­tions for high-vol­ume im­porters and en­abling ex­porters to re­tain a por­tion of their Forex earn­ings.

That was the word from Fi­nance Min­is­ter Dave Tan­coo yes­ter­day, as he de­liv­ered his first Mid-year Bud­get Re­view in Par­lia­ment yes­ter­day.

“We met T&T’s econ­o­my in the in­ten­sive care unit (ICU) ... but we’ll fix it,” Tan­coo said, de­vot­ing half of his ad­dress to blam­ing the past Peo­ple’s Na­tion­al Move­ment gov­ern­ment’s man­age­ment for cur­rent prob­lems.

“We’re in cri­sis due to the PNM ... to­day we’re here to pay bills caused by the PNM ad­min­is­tra­tion. In this mid-year pack­age ‘clean-up’ bill, we’re forced to sup­ple­ment a PNM bud­get. This isn’t our short­fall. It’s the lat­est chap­ter in their long his­to­ry of se­r­i­al un­der­bud­get­ing.”

Tan­coo pi­lot­ed de­bate to ap­prove amend­ments to the 2025 Bud­get, which was $59.741B.

On Mon­day, Par­lia­ment’s Stand­ing Fi­nance Com­mit­tee pro­vid­ed $3.14B in sup­ple­men­tal fund­ing to the 2025 Bud­get. This was for 28 min­istries and di­vi­sions.

Funds in­volved Re­cur­rent Ex­pen­di­ture ($2,865,046,761) and the De­vel­op­ment Pro­gramme ($278, 937,000).

Tan­coo added, “These funds are nec­es­sary in large part to meet mul­ti­ple in­stances of de­lib­er­ate un­der-bud­get­ing or meet oblig­a­tions promised in the for­mer Fi­nance min­is­ter’s bud­get but for which no pro­vi­sion was ac­tu­al­ly made; or for new ini­tia­tives de­ter­mined by the then-gov­ern­ment where no pro­vi­sions were met.

“Bot­tom line: The PNM chron­i­cal­ly un­der­bud­get­ed crit­i­cal wages, rents, and es­sen­tial ser­vices. We’re clean­ing up the mess and clos­ing the gaps they de­lib­er­ate­ly left in their bud­get. They spent with­out any clear idea of where the mon­ey is com­ing from. No prop­er plan­ning or sus­tain­able fi­nanc­ing, just reck­less ex­pen­di­ture masked as gov­er­nance ... a cal­cu­lat­ed scheme of fi­nan­cial de­cep­tion year af­ter year, pass­ing de­lib­er­ate­ly un­der­fund­ed bud­gets. “

On the deficit and pro­ject­ed fis­cal per­for­mance, Tan­coo said the 2025 Bud­get was pred­i­cat­ed on an av­er­age oil price of US$77.80 per bar­rel and nat­ur­al gas price of US$3.59 per mmb­tu. The pro­ject­ed deficit was $5.517B.

But Tan­coo said, “Our es­ti­ma­tion for oil and gas prices to the end of the fis­cal year is US$66 and US$5 per mmb­tu. With this and oth­er ad­just­ments, we an­tic­i­pate a de­crease in to­tal rev­enue of $556.7 mil­lion, with a re­sul­tant over­all deficit of $9.67 bil­lion - PNM’s lega­cy.

“Giv­en the econ­o­my, we ex­pect to fund the in­crease deficit prin­ci­pal­ly via bor­row­ings on the lo­cal cap­i­tal mar­ket as well as by draw­ing down on ex­ist­ing mul­ti-lat­er­al fa­cil­i­ties.

“We’ll al­so work as­sid­u­ous­ly to im­prove the rev­enue mo­bil­i­sa­tion ca­pac­i­ty of the In­land Rev­enue Di­vi­sion and ex­plore fur­ther ex­pen­di­ture con­sol­i­da­tion and ef­fi­cien­cy ini­tia­tives in the com­ing months.”

Tan­coo said the plans are in­ter­im strate­gies aimed at restor­ing fi­nan­cial sta­bil­i­ty.

“It will be fol­lowed by more com­pre­hen­sive and im­pact­ful re­forms in the 2025/2026 Bud­get”

Forex short­age so­lu­tions

Ac­cus­ing the PNM of con­tract­ing the econ­o­my by 20 per cent, Tan­coo de­tailed neg­a­tive eco­nom­ic fac­tors, in­clud­ing on­ly sev­en and a half months left of Forex im­port cov­er.

To ad­dress per­sis­tent Forex short­ages, Tan­coo said Gov­ern­ment will col­lab­o­rate with the nec­es­sary stake­hold­ers to es­tab­lish a for­eign ex­change al­lo­ca­tion com­mit­tee to bring greater trans­paren­cy, eq­ui­ty and strat­e­gy to the al­lo­ca­tion of scarce Forex re­sources.

“We’ll be im­ple­ment­ing re­port­ing oblig­a­tions for high-vol­ume im­porters to en­sure that for­eign cur­ren­cy in­flows and out­flows are bet­ter mon­i­tored and aligned with T&T’s na­tion­al strate­gic eco­nom­ic pri­or­i­ties,” he said.

“We’ll en­sure en­hanced in­vestor con­fi­dence through the de­vel­op­ment of prof­it repa­tri­a­tion pro­to­cols, div­i­dend safe­guards and in­vest­ment pro­tec­tion frame­works, draw­ing on best prac­tices such as those in Bar­ba­dos.”

Tan­coo added, “We’ll ex­plore for­eign cur­ren­cy tax ex­emp­tions and in­vest­ment tax cred­its as tools to en­cour­age re­ten­tion and rein­vest­ment of for­eign ex­change with­in the do­mes­tic econ­o­my. We’ll re­view T&T’s net­work of bi­lat­er­al tax treaties and work with Cari­com part­ners to ad­vance re­gion­al tax har­mon­i­sa­tion, pro­mot­ing cross-bor­der in­vest­ment and re­duc­ing ad­min­is­tra­tive bur­dens on re­gion­al busi­ness­es.”

Say­ing ex­port-led growth is crit­i­cal to build­ing a re­silient and di­ver­si­fied econ­o­my, Tan­coo added, “To this end, we’ll ex­am­ine in­tro­duc­tion of an ex­port al­lowance and ex­port growth in­cen­tive, with a fo­cus on high-po­ten­tial non-Cari­com mar­kets and tar­get pri­or­i­ty sec­tors, in­clud­ing agro-pro­cess­ing, ICT ser­vices and niche mar­kets.

“We’ll con­sid­er es­tab­lish­ment of an ex­port pro­ceeds re­ten­tion fa­cil­i­ty, en­abling ex­porters to re­tain a por­tion of their for­eign cur­ren­cy earn­ings, there­by en­sur­ing more pre­dictable ac­cess to for­eign ex­change for rein­vest­ment and op­er­a­tional ex­pan­sion and we’ll al­so ex­pand our in­ter­na­tion­al trade rep­re­sen­ta­tion.”

Oth­er pri­or­i­ty plans

On im­me­di­ate pri­or­i­ty ac­tions to re­ori­ent the econ­o­my, Tan­coo said, “Con­gru­ent to our strate­gic na­tion­al de­vel­op­ment plan, we’re al­ready im­ple­ment­ing the fol­low­ing suite of pol­i­cy mea­sures and struc­tur­al re­forms:

• Re­peal of the T&T Rev­enue Au­thor­i­ty and Prop­er­ty Tax laws.

• En­sur­ing pub­lic safe­ty and jus­tice via com­mit­tees to rec­om­mend leg­is­la­tion on ‘Stand-Your-Ground’ pol­i­cy and home in­va­sions.

• Launch of the fea­si­bil­i­ty study on re­open­ing the Petrotrin re­fin­ery.

• Dis­tri­b­u­tion of lap­tops to all in­com­ing sec­ondary school stu­dents from Sep­tem­ber 2025.

• Re­fur­bish­ment and com­ple­tion of all long-aban­doned schools; open­ing the UWI Debe Cam­pus.

• Es­tab­lish catheter­i­sa­tion lab­o­ra­to­ries to ad­dress the ris­ing in­ci­dences of car­dio­vas­cu­lar dis­ease.

• Amend­ing the Chil­dren’s Life Fund Act to al­low cov­er­age of chil­dren with life-lim­it­ing con­di­tions.

• Re­view/elim­i­nate un­nec­es­sary state-fund­ed goods and ser­vices, in­clud­ing se­cu­ri­ty de­tails and “abu­sive” prop­er­ty rentals.

• Trans­fer pric­ing leg­is­la­tion en­sur­ing prof­its earned in T&T are taxed fair­ly and in ac­cor­dance with in­ter­na­tion­al stan­dards.

Oth­er pri­or­i­ties ahead:

• Glob­al Fo­rum com­pli­ance: to im­ple­ment nec­es­sary in­ter­na­tion­al tax stan­dards to re­move T&T from the Eu­ro­pean Union list of non-co­op­er­a­tive ju­ris­dic­tions for tax pur­pos­es.

• Ex­change of In­for­ma­tion on Re­quest and Com­bined Peer Re­view (to as­sist delist­ing of T&T by the Eu­ro­pean Union and com­mit­ment to co­op­er­a­tion in glob­al tax mat­ters.

• Busi­ness Levy re­form.

• Tax In­cen­tives.

• Per­ma­nent es­tab­lish­ment (statu­to­ry de­f­i­n­i­tion in do­mes­tic tax law pro­vid­ing greater le­gal cer­tain­ty for for­eign in­vestors and strength­en­ing source-based tax­a­tion).

• Qual­i­fied do­mes­tic min­i­mum top-up tax - will be con­sid­ered for on­ly very large multi­na­tion­al en­ter­prise groups, with glob­al rev­enues of at least Eu­ro 750 mil­lion pay­ing less than 15 per cent ef­fec­tive tax on their prof­its in T&T. Tax to bring them up to 15 per cent min­i­mum.

Tan­coo added, “There are mul­ti­ple op­por­tu­ni­ties pre­sent­ed to us to de­vel­op ideas we’d begged the PNM for ... now they have the gall to ask where we’re go­ing to get the mon­ey from? We’ll put those plans in­to ac­tion, UNC’s minifestos give a clear idea where we’ll be tak­ing T&T.”

STATE OF THE ECON­O­MY—TAN­COO’S DE­TAILS

• ↓Ad­just­ed gen­er­al Gov­ern­ment debt in­creased by 92% since 2015. “Reck­less bor­row­ing” by the PNM racked up the debt to $145B bil­lion

• ↓Ex­ter­nal debt has more than dou­bled from US$2 bil­lion to US$5.48 bil­lion over the same pe­ri­od

• ↓Net for­eign ex­change hold­ings have dropped by 50 per cent un­der the PNM from $10.5 US bil­lion to $5.3 US bil­lion. To­day, T&T has a mere 7.5 months of im­port cov­er and Forex.

• ↓“Raid­ing” of the Her­itage and Sta­bil­i­sa­tion Fund 11 times in nine and a half years to the tune of al­most TT$20 bil­lion

• ↓Non-en­er­gy sec­tor col­lapsed by 12 per cent un­der the PNM

• ↓En­er­gy sec­tor plum­met­ed by over 33 per cent

• ↓Agri­cul­tur­al out­put col­lapsed by 50 per cent

• ↓48,000 few­er per­sons with jobs to­day com­pared to 2015