Trinidad and Tobago has to prepare for a very difficult financial year ahead and Prime Minister Patrick Manning has been advised to put his election promises on hold.
Manning yesterday received the report of the Committee Established to Determine the Current State of the Public Finances of TT from UWI Economist Dr Dhanayshar Mahabir, chairman of the five- member Committee.
The report indicated that TT's finances were very weak and that Government might have to borrow money in order to fulfil its election promises.
However, the Committee warned against borrowing more money as this would exacerbate the country's large debt, which could mean that pensioners might have to forgo an increase in their pensions and public servants might have to wait a bit longer for their monthly allowance.
Mahabir said the 2001/2002 Budget revenue projections must be amended given the changing economic circumstances. He said the slowing down of the global economy, the recession in the United States (US) before and after the events of September 11, the fall in oil price, the decline in demand for all TT's exports and a reduction in the growth rate will force Government to cut down on its expenses.
"We have to revise the budget figures which were instituted by former Finance Minister Gerald Yetming. Revenue projections based on an oil price of US $22 a barrel for the year must now be revisited on account of the global economic slowdown."
Highlights of the Report:
*Public debt as at December 31, 2001 $35.268M
*Central Bank reserves as a Jan. 3, 2002 US$1,769M
*Interim Revenue Stabilization Fund US$161M
*Funds held by State Enterprise US$$546.7M
*Deposits at Central Bank in 12 accounts TT$3,718M
*Revenue projections $15,802M
*Expenditure projections $15,799M
*Revised oil price for budget US$20.50
*Revenues based on new oil price $US14,128M
*With expenditure unchanged, deficit will be $1,671M
*Borrowing will increase from $1,949M to $3,620M
*Expenditures to be reduced in Goods and Services, current transfers and subsidies, transfers to State Boards and Capital Expenditure
*Establish legislation for Revenue Stabilization Fund
*Revenue will strengthen during next fiscal year on account of Atlantic LNG's increased production of LNG.
*Weak fiscal situation is temporary and economic growth will continue when international recession is reversed.
*Exchange rates should remain stable
*Inflation and interest rates can remain stable
*Government has little discretion in spending its $14B.
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