Minister of Finance Colm Imbert. Photo: Parliament of T&T
TRINIDAD and Tobago has made 13% less than what it estimated in the first quarter of the fiscal year 2021.
This was revealed by Finance Minister Colm Imbert at a virtual press conference on Wednesday.
He said the economy made $2 billion less than what it was estimated to make by the end of January.
Imbert said, “Primarily as a result of the adverse effects of the pandemic, the actual revenue collection for this four-month period was $12.020 billion, a negative variance of $1.803 billion, or 13 per cent less than the estimates.”
He said if this trend continued, the country could lose up to $5 billion in revenue for fiscal 2021.
Imbert said the shortfall in revenue occurred in a number of areas including taxes on Income and Profits down by $436 million compared with estimates.
He said a decrease in tax revenue from oil and gas companies was also significant since there have been depressed prices for oil and gas and lower than expected production volumes.
Imbert said non-tax revenue dropped by $1.430 billion or 35 % of what was expected.
To cover the deficit, the government had to dip into the Heritage and Stabilisation Fund.
The finance minister said, “The effect of all this is that the government has been seriously challenged in the first four months of the financial year to find the money necessary to keep the country running and to meet mandatory commitments and has had to resort to loan financing and withdrawals from the Heritage and Stabilisation Fund, to make up the deficit between income and expenditure.
“We have so far borrowed $3 billion for direct budgetary support and withdrawn the equivalent of a further $2 billion from the Heritage and Stabilisation Fund, simply to pay salaries and wages and pensions and keep our health sector functioning in the face of the demands of Covid-19.”
He noted that the payment of salaries and wages of the approximately 90,000 public servants was top priority. He said these wages cost the country a “staggering $3.5 billion per month, each and every month.”
Imbert said, “However, as we move forward, our primary objective as a Government must be to preserve jobs and maintain essential government services.
“In this context, demands from trade unions for wage increases, with associated billions of dollars in backpay, are difficult to understand.
“With a persistent budget deficit and uncertainty as to when the global and local economy will fully recover from the destructive effects of Covid-19, we simply can’t afford significant wage increases at this time. By way of example, the Industrial Court has determined a wage increase for National Petroleum with consolidation of COLA going back nine years to 2011. The effective wage increases were in excess of 20% and having implemented the increases, NP has moved from barely breaking even to a loss position of over $50 million in 2020, which is just not sustainable.”
Imbert said support to the Water and Sewerage Authority (WASA) in the past three years has been in the sum of $7.28 billion.
And more than $800 million a year was required to pay for natural gas to be used by the Trinidad and Tobago Electricity Commission (T&TEC) to produce electricity and to service a series of loans, the minister said.
He said subsidies and transfers made up almost 50 % of the annual budget.