Cur­tis Williams

Fi­nance Min­is­ter Colm Im­bert has re­vealed that the crash in oil prices and low­er pro­ject­ed rev­enue from nat­ur­al gas will lead to a bud­get short­fall of an ad­di­tion­al $3.5 bil­lion.

“Our cal­cu­la­tions tell us that this will re­sult in a loss of rev­enue some­where in the vicin­i­ty of 3.5 bil­lion dol­lars,” Im­bert told a news con­fer­ence yes­ter­day at his of­fice at the Er­ic Williams Fi­nan­cial Cen­tre in Port-of-Spain.

Im­bert said the short­fall will now re­sult in a bud­get deficit in ex­cess of $8.5 bil­lion. He al­so re­vealed that the Dr Kei­th Row­ley-led ad­min­is­tra­tion had re­vised down­ward its pro­jec­tion for the price of crude oil and nat­ur­al gas.

Im­bert said: “The Gov­ern­ment has done its pro­jec­tions and we are now us­ing an av­er­age price for the year of forty dol­lars for oil and a well­head price for gas.

“Again, there is a lot of con­fu­sion about what price we use for gas in cal­cu­lat­ing the na­tion­al bud­get, there is a mis­con­cep­tion that the Gov­ern­ment us­es the Hen­ry Hub price, which is what you see post­ed on­line. We don’t, we use a well-head price which is the ac­tu­al price for gas pro­duced in Trinidad and To­ba­go. So we have used a well-head price of three dol­lars for the bud­get, we are now us­ing a well-head price of $1.80 as­sum­ing a sort of worst-case sce­nario, so we are say­ing oil will av­er­age $40 for the fis­cal year and gas will av­er­age a well­head price of $1.80.”

The Fi­nance Min­is­ter blamed the fall in crude prices on the drain on glob­al de­mand caused by the COVID-19 and the price war be­tween Sau­di Ara­bia and Rus­sia. He lament­ed that T&T was a price tak­er and could do noth­ing about it.

In that case, Im­bert said Gov­ern­ment was still for­mu­lat­ing strate­gies on how to deal with the loss of $3.5 bil­lion in rev­enue but was con­fi­dent that it can han­dle the chal­lenge. (See ed­i­to­r­i­al on Page 12)

“We have gone this way be­fore and we have been able to suc­cess­ful­ly come out of it by very care­ful man­age­ment of the econ­o­my,” Im­bert told the news con­fer­ence.

“If we keep our ex­pen­di­ture as we planned, we ob­vi­ous­ly will have to fi­nance it through two mech­a­nisms, no ac­tu­al­ly three. One would be bor­row­ing ... Sec­ond­ly draw-down on the Her­itage and Sta­bil­i­sa­tion Fund. We will have to do some re­struc­tur­ing of the man­ner in which the fund op­er­ates. Third­ly will be ex­tra­or­di­nary rev­enue from sale of as­sets and so on, we are putting a plan right now on how to deal with the three and a half bil­lion dol­lar short­fall we had al­ready pro­ject­ed to fi­nance the five that was stat­ed in the 2020 bud­get.”

He de­fend­ed the de­ci­sion to keep ex­pen­di­ture at $52 bil­lion and not cut ex­pen­di­ture in keep­ing with the falling rev­enue streams. Im­bert said to do so would sti­fle the econ­o­my and could im­pact jobs.

“We are still plan­ning to keep our ex­pen­di­ture tar­get as is. One of the prob­lems with slash­ing ex­pen­di­ture is that it sti­fles the econ­o­my,” he said.

“So that when you have a sit­u­a­tion like this you can­not re­act with a knee-jerk re­ac­tion and just slash ex­pen­di­ture be­cause there are all sorts of im­pli­ca­tions that come out of cut­ting ex­pen­di­ture in a dras­tic man­ner. We have bills to pay to sup­pli­ers, we have the ques­tion of re­funds to busi­ness­es for VAT and we have to keep peo­ple in jobs.”

He added: “Re­mem­ber we have cut ex­pen­di­ture from the heady days of 2014 by $10 bil­lion dol­lars. Even though the ex­pen­di­ture pro­file is $2 bil­lion more in 2020 than 2019, it is still $10 bil­lion less than 2014. So we do not in­tend to sti­fle the econ­o­my.”

The Fi­nance Min­is­ter al­so re­vealed that Gov­ern­ment was now work­ing with a nat­ur­al gas pro­duc­tion fig­ure of 3.6 bil­lion cu­bic feet per day. This is 200bcf/d less than Im­bert had pro­ject­ed dur­ing the 2020 bud­get de­bate.

“So our nat­ur­al gas fig­ures for 2019 av­er­aged out at just be­low 3.6 bil­lion. We ex­pect that to con­tin­ue in the fore­see­able fu­ture, 3.6bscf of nat­ur­al gas per day, that’s the pro­duc­tion we ex­pect,” Im­bert said.

He al­so rub­bished sug­ges­tions that he is of­ten wrong in his bud­getary pro­jec­tions for crude prices, say­ing in terms of oil rev­enue last year the coun­try ex­ceed­ed its pro­jec­tions.