WHILE Finance Minister Colm Imbert “pulled some levers” to address revenue shortfalls, Colin Ramsey, partner at Ernst & Young, says persistent issues like heavy expenditure on subsidies, transfers and a bloated public sector, continue to drive the country’s annual budget deficits.
Ramsey shared his analysis at the TT Chamber of Industry and Commerce’s annual post-budget discussion at Hyatt Port of Spain, on October 1.
He expressed concern that TT revenue has failed to match annual expenditure every year for the last decade, barring 2022 when geopolitical forces impacted oil and gas prices, benefiting the country.
About $60 billion is spent annually on average, half of which is appropriated to recurring transfers and subsidies.
"We also find ourselves in a position where the government continues to be the major employer of citizens in the country."
In his post-budget analysis, Ramey, who serves on the chamber’s budget recommendations committee, pointed at systemic problems, such as declining oil and gas production and limited access to foreign exchange, particularly for small and medium-sized enterprises (SMEs).
"What has the minister done (to) address this revenue shortfall? (He) pulled levers to generate additional revenue."
Imbert announced the oil price assumption for 2025 would be US$77.80 per barrel, compared with US$85 per barrel in 2024.
The budget was also predicated on a natural gas price assumption of US$3.59 per mmbtu, compared with US$5 per mmbtu in 2024.
The assumed fiscal deficit of $5.517 billion or 2.9 per cent of TT’s GDP was within the international benchmark, Ramsey found, and the announcements were "positive overall in terms of where we are."
Recent diminished gas production in TT limited availability to the petrochemical sector, which may not improve until or around 2027, when the minister predicted a turnaround.
"(While) oil and gas sector continue to play such an important role, our forex reserves have also been declining over the period," he said, notwithstanding gross official reserves of US$5.5 billion or 7.7 months import cover, "which is quite healthy and relative to our neighbours (and) puts us in a very good position."
Yet forex supply remains a national issue.
While Imbert signalled the government’s intention to begin collecting taxes from oil and gas companies in US dollars, Ramsey said he was uncertain if that would alleviate the shortage.
Some of the more established businesses he admitted would have built relationships with their banks and thus better access to forex, leaving the SMEs limited to credit cards for purchases in US currency, who also "find it difficult with limits continuously dropping because of this foreign exchange issue."
Eximbank’s forex facilities for SMEs were addressed in the previous budget and brought up again by Imbert, who promoted its forex windows to help businesses access foreign exchange for critical purposes.
Eximbank’s products are intended to support export growth in the manufacturing sector by allowing manufact
