TRINIDAD and Tobago’s (T&T) total net public sector debt rose to $120.5 billion, or 71.7 per cent of the country’s gross domestic product at the end of July 2020, according to the Central Bank’s Economic Bulletin for July 2020, which was published on Tuesday.
T&T’s debt in July 2020 is 16.7 per cent higher that at the end of September 2019, when it totalled $103.2 billion, or 63.7 per cent of GDP.
According to the Central Bank report: “In the mid-year budget review (June 2020), it was indicated that the fiscal accounts are anticipated to record a deficit of $14.5 billion in
FY2019/20 compared to original estimates of $5.3 billion.
“The larger deficit is attributable to a falloff in revenue caused by a slump in energy prices, coupled with a rise in expenditure for support measures amid the Covid-19 pandemic.
“Some of these measures included salary relief and income supports grants, rent relief grants, accelerated income tax and VAT refunds, and additional food cards.”
The Economic Bulletin also indicated that the country’s external debt outstanding increased by 16.5 per cent to US$4.58 billion in July 2020, from US$3.93 billion at the end of September 2019.
The Central Bank said most of the external disbursements originated from three sources:
• The Corporación Andina de Fomento (CAF), the Development Bank of Latin America, which lent T&T US$400 million;
• Export Finance and Insurance Corporation of Australia, which disbursed US$139.0 million to T&T for the construction and delivery of the two fast ferries to service the inter-island sea bridge and for two patrol vessels;
• ExportImport Bank of China, which lent T&T US$31.6 million for the Phoenix Park Industrial Estate.
The Bank also noted that T&T’s external debt increased due to the issuance of a US$500 million bond on the international capital market in June 2020 and a US$20.0 million loan from the World Bank in July 2020. Half of the proceeds from the US$500 million bond was used to repay a US$250.0 million bond which matured in July 2020.
The foreign loans contributed to boosting T&T’s gross official reserves.
The Central Bank said: “At the end of August 2020, gross official reserves amounted to US$7,442.4 million (8.8 months of import cover), which was US$513.4 million higher than the end of 2019.
“Over the reference period, gross official reserves were boosted by drawdowns from the HSF and proceeds from central government borrowings.
“The Central Bank continued to intervene regularly in the foreign exchange market and sales to the authorised dealers amounted to US$890 million in the year to August
2020. The increase in gross official reserves suggests that the external accounts registered an overall surplus during the first eight months of 2020.”
The report states that the central government’s fiscal accounts registered an overall deficit of $10.7 billion for the period October 1, 2019 to June 30, 2020. The Central Bank said the higher deficit was primarily on account of lower revenues which outpaced the decline in expenditure.
The Economic Bulletin stated: “Central government total revenue collections declined by 30.2 per cent to roughly $25 billion over the nine months to June 2020. The reduction in earnings was reflective of a simultaneous fall-off in both energy and non-energy receipts.
“Energy revenue fell by 43.1 per cent to $5.9 billion owing to lower energy commodity prices.”
According to the Bank, West Texas Intermediate (WTI) crude oil prices averaged US$43.57 per barrel in the first nine months of the 2020 fiscal year compared with US$57.82 per barrel in the corresponding period of 2019.
Similarly, Henry Hub natural gas prices averaged US$2.01 per British Thermal Units (mmbtu) in the first nine months of 2020, compared with US$3.09 per mmbtu in the corresponding period of 2019.