T&T’s Total General Government Debt now stands at over $137 billion.
This is an increase of $6.7 billion from last year.
If this year’s debt were to be equally divided among T&T’s estimated 1.4 million citizens, then each one of us owes roughly around $98,000.
According to the Review of the Economy 2021, T&T’s Total General Government Debt moved from $130,469.4 million in fiscal 2020 to $137,192.7 million in fiscal 2021.
The term Total General Government Debt is a new methodology that has been adopted by the Finance Ministry to better align with international standards.
“Traditionally, the term ‘Total Public Sector Debt’ has been used to describe the sum of all Central Government Debt, all Government Guaranteed Debt of State Owned Entities and all debt arising from the conduct of open market operations by the Central Bank of Trinidad and Tobago (CBTT),” the Review of the Economy 2021 stated.
However the Ministry of Finance said over the past year it sought to enhance its focus on the management of the country’s debt, including the reporting metrics utilised with a view to providing a more accurate picture of the Government’s direct debt obligations.
“To this end, the Ministry of Finance contracted the services of a financial advisory and asset management firm, to provide advisory services on several areas including debt management. The firm advised that the country’s methodology for reporting on public sector debt was not in alignment with international standards and in fact overstated the direct obligations of the Central Government,” it stated.
“Consequently, the methodology was adjusted in accordance with internationally acceptable standards thus improving clarity and comparability with other jurisdictions,” it stated.
According to the Finance Ministry the Total General Government Debt figure comprises Adjusted General Government Debt ($1,266 billion) plus borrowings for Open Market Operations (OMOs), which consist of Treasury Bills ($8.479 billion), Treasury Notes ($1.632 billion) and Treasury Bonds ($459.3 million).
Proceeds of OMO instruments are not utilised by the Central Government for its operations, but are held or sterilised at the CBTT to facilitate repayment upon maturity.
“Given that borrowings for the purpose of OMOs are expected to decrease by $1,500.0 million in 2021, in accordance with CBTT monetary policy, the overall $6,723.4 million increase in Total General Government Debt is due to an increase of $8,223.4 million in Adjusted General Government Debt,” it stated.
The Adjusted General Government Debt Stock comprises Central Government Domestic Debt (50.9 per cent), Central Government External Debt (24.7 per cent) and Non-Self Serviced Government Guaranteed Debt (24.4 per cent).
The Review of the Economy stated that it is anticipated that Adjusted General Government Debt will increase by 6.9 per cent from $118.3 billion in fiscal 2020 to $126.6 billion by the end of fiscal 2021.
Adjusted General Government Debt as a percentage of GDP is estimated to increase by 5.1 percentage points from 79.6 per cent at the end of fiscal 2020 to 84.8 per cent at the end of fiscal 2021,” it stated.
Domestic Debt, which accounts for 75 per cent of Adjusted General Government Debt and includes direct Central Government and Non-Self Serviced Government Guaranteed debt issued domestically, is projected to increase by $8.8 billion or 10.3 per cent in fiscal 2021 and equates to 63.6 per cent of GDP in fiscal 2021.
External Debt, which accounts for 25 per cent of Adjusted General Government Debt, is anticipated to decrease by $621.8 million or 1.9 per cent by the end of fiscal 2021.
As a per cent of GDP, this category of debt is expected to decrease from 21.7 per cent in fiscal 2020 to 21.2 per cent in fiscal 2021.
Of Adjusted General Government Debt, direct Central Government Debt, both domestic and external, is expected to increase by 8.6 per cent or $7.5 billion from $88.1 billion or 59.3 per cent of GDP in fiscal 2020 to $95.6 billion or 64.1 per cent of GDP in fiscal 2021.
The Review of the Economy stated that Central Government External Debt is projected to decrease by 1.1 per cent from $31.6 billion in fiscal 2020 to $31.2 billion in fiscal 2021.
“In fiscal 2021, the Government contracted a US$20 million, 7-year, floating rate loan from the International Bank for Reconstruction and Development (IBRD) of the World Bank Group and a US$24.45 million, 20-year, floating rate Policy Based Loan from the Inter-American Development Bank (IDB), both of which are expected to be disbursed in fiscal 2022,” it stated.
The document noted that in addition, during fiscal 2021, disbursements totalling $919.2 million, were received from existing facilities from the Export Finance and Insurance Corporation of Australia (EFIC), the Export-Import Bank of China, the UniCredit Bank Austria AG and the Inter-American Development Bank (IDB).
“Non-Self Serviced Government Guaranteed Debt of State Enterprises and Statutory Bodies that are serviced by the Central Government on behalf of the borrower, are backed either by Letters of Guarantee or Deeds of Guarantee. This category of debt is anticipated to increase by $634.7 million or 2.1 per cent from $30,289.3 million in fiscal 2020 to $30,924.1 million in fiscal 2021,” it stated.
The Review stated that Letters of Guarantee issued are forecast to increase by $2.09 billion or 13.6 per cent from $15.4 billion in fiscal 2020 to $17.5 billion in fiscal 2021.
“Of this sum, Statutory Authorities and State Enterprises account for 30.7 per cent and 69.3 per cent, respectively. In addition, principal repayments and disbursements of debt backed by Letters of Guarantee totalled $1,729.7 million and $4,228.2 million, respectively and also reflects the conversion of one Letter of Guarantee to Deed of Guarantee during the fiscal year 2021,” it stated.
The review stated that Letters of Guarantee issued to Statutory Authorities at the end of fiscal 2021 are expected to increase to $5.3 billion, representing a 37.6 per cent increase from fiscal 2020.
Reasons for increases
The increase in Letters of Guarantee was mainly attributable to the following three entities:
• The Water and Sewerage Authority (WASA) for a US$35.4 million loan facility to settle outstanding obligations to the Desalination Company of Trinidad and Tobago (DESALCOTT) and a $200 million overdraft facility for working capital purposes;
• the Housing Development Corporation (HDC) for a $60 million overdraft facility to assist with working capital requirements and a $300 million loan facility to assist with works under the Housing Construction Programme
• and the Eastern Regional Health Authority (ERHA) for a $469.8 million loan facility to provide funding for the settlement of outstanding trade payables by all four Regional Health Authorities.
Letters of Guarantee issued to State Enterprises at the end of fiscal 2021 are expected to increase to $12.1 billion in fiscal 2021.
The increase is mainly due to the following four entities:
• the Urban Development Corporation of Trinidad and Tobago (UDeCOTT) for a $500 million loan facility to settle outstanding sums owed by Client Ministries, for two (2) loan facilities namely, US$8.3 million and $46.9 million as partial financing for the Redevelopment of the Central Block at the Port of Spain General Hospital and a $40.0 million loan facility for the Outfitting of Tower D at the International Waterfront Centre for the Relocation of the Civil High Court and Civil Division of the Court of Appeal
• Caribbean Airlines Limited (CAL) for a US$50 million loan facility to meet the critical outstanding liabilities for the restart of operations as a result of the re-opening of the Trinidad and Tobago borders;
• the Rural Development Company of Trinidad and Tobago (RDC) for a $200.4 million loan facility to meet expenditure for critical projects for fiscal year 2020/2021 and to fulfil payment obligations to contractors;
• and the National Insurance and Property Development Company (NIPDEC) for two (2) loan facilities namely, $284.2 million and $272.4 million for the procurement, storage and distribution of pharmaceuticals and non-pharmaceuticals for the Ministry of Health for fiscal 2021 and a $200 million loan facility to settle outstanding obligations in respect of the procurement of Goods and Services and Other Minor Equipment for the TTPS for the fiscal years 2020 and 2021.
The Review stated that in addition, it should be noted that there was one Self-Serviced Government Guarantee issued on behalf of UDeCOTT for a $142.6 million loan facility to restructure a formerly non-guaranteed loan, during the fiscal year 2021.