Review of the 2010 2011 national budget
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Review of the 2010/2011 National Budget. Kyren Greigg Department of Economics UWI, St. Augustine. Demas/ Rampersad Series September 9, 2010. Presentation Outline. The present economic environment Budget assumptions & Arithmetic

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Review of the 2010/2011 National Budget

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Review of the 2010 2011 national budget

Review of the 2010/2011 National Budget

Kyren Greigg

Department of Economics

UWI, St. Augustine

Demas/ Rampersad Series

September 9, 2010


Presentation outline

Presentation Outline

  • The present economic environment

  • Budget assumptions & Arithmetic

  • What should be Government’s response in the context of a 3D (3rd Deficit) Budget.

    • Attaining short-term economic stability

    • Medium term aspirations

    • Has the Budget met these objectives: An assessment of Budget measures

    • Concluding remarks


The present economic environment

The Present Economic Environment

Source: Ministry of Finance- Review of the Economy 2010


The present economic environment1

The Present Economic Environment

Source: Ministry of Finance- Review of the Economy 2010


The present economic environment2

The Present Economic Environment

Source: Ministry of Finance- Review of the Economy 2010


The present economic environment3

The Present Economic Environment


Budget assumptions arithmetic

Budget Assumptions & Arithmetic

  • GDP growth of 2 percent

  • Average inflation rate of 7 percent

  • Oil price of US$65 per barrel

  • Gas price of US$ 2.75 per mmbtu.

  • Total revenue $41.3 billion

    • of which: energy sector revenue = $15.2 billion

      non-energy sector revenue = $26.1 billion

    • Total Expenditure $49 billion

    • Fiscal Deficit $7.7 billion (5.48 %of GDP)


What should be government s response

What should be Government’s response!

  • Put in place measures that would stimulate the economy and instill confidence on the part of investors and citizens in general.

  • Give a clear picture of the medium term policy framework, in terms of its diversification and development policy.

  • Have some continuity of development projects and programmes that are of merit.


Government s response short term stability

Government’s Response: Short term stability

Fiscal Incentives: Energy Tax regime

  • PPT(Deep water) 50% 35%

  • Mature & small marine fields SPT 20%

  • Investment tax credit of 20% on qualifying CAPEX.

  • Return to conventional PSCs with flexible bidding


Government s response short term stability1

Government’s Response: Short term stability

Fiscal Incentives:

Increase in minimum wear and tear allowance to manufacturing companies from 10% to 25%

Tax amnesty:

Amnesty for tax penalities for late filing of returns and late payment of income , corporation and VAT, business levy, environmental levy and lands & buildings taxes.


Government s response short term stability2

Government’s Response: Short term stability

Income distribution:

  • Senior Citizens’ Pension $3000 per mth.

  • Increase in min. pension of retired public officers to $3000 per mth.


Government s response medium term aspirations

Government’s Response: Medium term aspirations

  • Expand the energy sector

  • Realign the economy

  • Revitalize the Agriculture sector

  • Expand Tourism

  • Standardize our Environmental regulations


Government s response medium term aspirations expanding energy sector

Government’s Response: Medium term aspirations- Expanding Energy Sector

  • Signing of Unitization Agreement with Venezuela will allow access to approx. 2.7 tcf of gas to be monetized in the Loran-Manatee field.

  • Exploring the development of alternative energy sources such as wind and solar.

  • The export of energy advisory services.

  • Further diversification within the energy sector.


Has the budget met these objectives an assessment of budget measures

Has the Budget met these objectives: An assessment of Budget measures

  • Some measures have been taken to bring stability and turn around government finances. The question are these enough?

  • The medium to long term measures needs to be distilled to allow a better analysis of their viability with respect to economic diversification and development


Concluding remarks

Concluding remarks

  • Continuity of development programmes that are of merit.

  • Put measures in place to have a grip on inflation.

  • Getting back to a surplus budget position.

  • Minimum wage implications.

  • Implications of measures for employment

  • Public sector wage negotiations


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