Budget part of strategy to transform economy - T&T gov't

The Trinidad and Tobago government Monday presented a TT$54.6 billion (US$9.1 billion) budget to Parliament, reiterating its resolve to transform the economy, create jobs and a safer environment for investment.

Finance Minister Winston Dookeran said that while the local economy remains resilient and the financial system is strong, "our national economy is still at risk and remains vulnerable to external shocks".

He insisted that it was necessary for the oil-rich twin-island republic to "stay on course in this time of uncertainty".

He told legislators that the budget was based on an oil price of US$75 per barrel, and that the Kamla Persad Bissessar-led five party People's Partnership coalition estimates a real gross domestic product (GDP) growth of 1.7 per cent and an average inflation rate of seven per cent.

"The total revenue is projected at TT$47 billion (US$7.8 billion) comprising $18.1 billion (US$3.01 billion) from the energy sector, and TT$28.9 billion (US$4.81 billion) from the non-energy sector.

"Total expenditure is projected at TT$54.6 billion (US$9.1 billion) resulting in a fiscal deficit of $7.6 billion (US$1.26 billion) or 4.89 per cent of our GDP. The debt to GDP ratio remains sustainable and well within international benchmarks," he added.

Dookeran, a former Central Bank governor, said that with regards to the financing of the deficit, "we estimate that 52.7 per cent of the financing requirement will be met from domestic sources, while the remainder will be sourced from external sources, including multilateral financial institutions.

"Our government and leadership shall remain firm in our resolve to transform the economy and, in concert with the people of our nation, we have the confidence to create more jobs, achieve a safer environment and increase our investment for the development and benefit of all our citizens."

In outlining the fiscal measures to support the "broad and specific policies", Dookeran said the government would provide incentives for small and medium-size businesses (SMEs) to access the stock exchange since they are better served by raising capital on the domestic capital market.

"For too long, they have been relying on high cost commercial finance which has limited their viability and expansion. In our efforts to assist the SME sector and at the same time strengthen the domestic capital market we are proposing to encourage them to access the facilities provided by the Trinidad and Tobago Stock Exchange (TTSE)."

He said SMEs with a minimum capital of five million (US$833,330) will be able to list on the TTSE provided that they have at least 25 shareholders holding at least 30 per cent of the share capital, which must not exceed TT$50 million (US$8.3 million).

He said that to encourage such development, the Corporation Tax Act will be amended to provide for a reduced corporation tax at a rate of 10 per cent on taxable profits, for the first five years of operations.

Dookeran said there would also be an expansion of the deposit insurance system which he described as an important component in the financial system for protecting depositors.

There would also be a broadening of the social security net as the government seeks to introduce changes that will be of significant benefit to the elderly, and, at the same time, contain the rate of growth in expenditure for retirement income in the fiscal accounts.

The finance minister said that the government would also be introducing new measures within the energy sector including new petroleum licences in an industry that "continues to be the main driver of government revenues and exports.