AS HE prepares to deliver his seventh budget, Finance Minister Colm Imbert has not met all the expectations of his 2021 budget, titled “Resetting the Economy for Growth and Innovation”.
Last October, Imbert presented a $49.57 billion budget, based on an oil price of US$45 per barrel, and $3 mmbtu for natural gas.
The country’s private sector was negatively impacted by the third spike of Covid cases after the Easter 2021 break and budget-support measures designed to grow the economy, such as wide-ranging incentives for the construction sector, fell flat.
The country’s ongoing state of emergency and its curfew also affects business operational hours.
Rather than meet the budgeted goal of boosting jobs, Imbert was tasked by Prime Minister Dr Keith Rowley to find unbudgeted monies to provide salary relief grants for more than one month as the third lockdown dragged on.
In February, Imbert had said after the first four months of the 2021 fiscal year, T&T had an almost $2 billion fiscal deficit.
For the first four months of the 2021 fiscal year, taxes on income and profits were down by $436 million while non-tax revenue was down by $1.43 billion or 35 per cent. Profits from State enterprises were down by $22 million or 15.3 per cent, as companies struggled with the commercial fallout from the virus.
So how does Budget 2021 stand up in these circumstances?
Key items are in different stage: Legislation for the liberalisation of the fuel sector has been passed but has not yet been implemented and the property tax will be implemented next fiscal year.
With the country’s health crisis intertwined with its economic challenges, the innovations proposed in the 2021 budget, particularly with regard to digital transformation, have lagged... and not for the first time.
Dr Rowley’s goal of digital transformation crawled for almost a year until he delinked the Ministry of Public Administration and Digitial Transformation to create a standalone Ministry of Digital Transformation (MDT).
Senator Hassel Bacchus was made a full minister in July. His first task was ensuring the successful roll-out of TTravelPass, which allowed the country’s borders to reopen for commercial use that month.
While outlining the forex haemorrhage on private motor cars—T&T spends $2.5 billion per year or US$400 million per year importing an average of 25,000 motor vehicles—and despite making agriculture a tax-free industry in 2021, T&T’s food import bill is still costing the country billions in foreign exchange. Imbert has failed to implement value added tax (VAT) on luxury food products.
“The full VAT of 12.5 per cent will now be applied to a wide range of imported luxury food items, such as lobster, escargot, smoked salmon, pâté, clams, strawberries, champagne, apples and grapes. The full list will be published in due course and will take effect on January 1, 2021,” he had said in Budget 2021.
That did not happen.
What did happen?
The legislation for the Gaming and Betting Control Bill was passed and it is being implemented with a Gaming and Betting Commission to come into force.
What will happen?
Imbert will finally be able to tick the Trinidad and Tobago Revenue Authority off his to-do list as the bill was laid and is set to debated in Parliament next week. It requires a simple majority to pass.
Private sector support
In the 2021 budget, the Government extended an olive branch to the private sector.
It offered up the country’s main port, the Port of Port of Spain for privatisation, announced the liberalisation of the fuel market and offered incentives for enterpreneurs in construction, technology and manufacturing.
With lower earnings from the energy sector, the Government is hoping that the private sector fills the gap to help fund its economic plan for the country for the next fiscal year.
“These public-private-partnerships will relieve the funding constraints in our economic programme. This mechanism will bring private sector technology, greater efficiency and innovation into the provision of better public services,” Imbert said in his 2021 budget presentation.
Here is where it stands:
• The Port of Port of Spain
Despite hoping to complete this initiative by the end of the fiscal year, only two weeks ago the Port Authority of Trinidad and Tobago issued a Request for Expressions of Interest for a potential public-private partnership project.
• The liberalisation of the liquid petroleum fuel market
Despite passing the legislation to liberalise the fuel market in Parliament, it has not yet been implemented. It will carry over into Budget 2022.
Imbert had also announced the sale of NP gas stations, but no further development has since been announced. According to its website, NP has about 160 gas stations.
• Construction — The Government’s policy for the construction sector was to get smaller companies working again.
Imbert had said 20 per cent of all State housing construction projects would be reserved for small and medium contractors. However, the third lockdown significantly affected this programme.
• Agriculture — By making agriculture a tax-free industry, the Government is hoping it can attract a new wave of technologically driven farmers to shore up the country’s food security. Here’s what the Government is hoping that would yield: develop industries which produce bioethanol, biodiesel, and biogas from organic waste; deepen integration within the private sector by connecting micro and big businesses to create a strong agribusiness ecosystem; and creating more public-private partnership arrangements for agri- businesses. Many of those projects are in the works.
• Digital T&T — As part of its digitisation thrust, Imbert has proposed the establishment of a tech investment fund and a Tech Promotions and Development Company, which would be available to all viable tech start-ups and new tech businesses. The Sunday Express was unable to find any information on the Fund or find the company on the company registry.
Overhang of 2021 into 2022
In the next fiscal year, the country’s utilities—the Water and Sewerage Authority (WASA) and the Trinidad and Tobago Electricity Company (T&TEC)—will also be subject to scrutiny as they both undergo rate reviews and, in WASA’s case, the start of its transformation. The rate reviews were supposed to have been conducted in fiscal 2021.
In Budget 2021, Imbert had observed that at the National Insurance Board, with expenditure on benefits now exceeding contribution income, the Government will take whatever steps necessary to maintain the integrity and viability of the NIB, including a serious examination of the need to extend the retirement age to 65. This proposal will likely find its way into Budget 2022.
The proposed National Statistical Institute, a proposal in the works for years, is still before a Joint Select Committee of Parliament.
In his 2020 budget, Imbert had also indicated the Government’s intention to develop a maritime industry from the assets it acquired at CL Marine. The progress of this industry was revealed in the joint liquidators (JLs), in charge of CL Financial (CLF), seventh report to the court, dated December 18, 2020.
“The Minister of Finance wishes to further inform the public that given the economic impact of Covid-19 and with the focus on building resilience towards economic recovery in the next five years, citizens can look forward to the benefits of this diversification initiative in due course,” a statement in September 2020 had said.
The ministry said it is expected that, in addition to private sector customers, the shipyard will be used to maintain, service and repair the Government’s fleet of vessels, including two new fast ferries, the APT James and the Buccoo Reef, along with two new Cape Class military vessels which are under construction in Australia, the Galleon’s Passage and the existing Trinidad and Tobago Coast Guard fleet, among others.
As for procurement?
Regulations have been laid in Parliament and will be debated in the coming fiscal year.
The regulations, ten individual regulations, were laid in Parliament by Finance Minister Colm Imbert on July 2, and were open for public comment for a two-month period, which ended this month.
“The Government proposes to debate these regulations later in the year, since the Parliament is due to go on its annual fixed recess from Friday, July 9, 2021, to Friday, September 3, 2021,” the Ministry of Finance’s statement said.
The proposed establishment of a National Special Economic Zone Regime is still in legislative stage.
Imbert had also said an aluminium industry would be revisited, but no plans have since been announced.
A National Social Services Card System remains in the works.