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BUDGET STATEMENT 2011

BUDGET STATEMENT 2011. FACING THE ISSUES TURNING THE ECONOMY AROUND Comments By Kelvin Sergeant. The Local and International Environment. Budget delivered against the background of International uncertainties, and tremendous risks locally

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BUDGET STATEMENT 2011

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  1. BUDGET STATEMENT 2011 FACING THE ISSUES TURNING THE ECONOMY AROUND Comments By Kelvin Sergeant

  2. The Local and International Environment • Budget delivered against the background of International uncertainties, and tremendous risks locally • Economy remains flat. Only the energy sector is growing. • Business Confidence remained low • Crime a serious problem • Budget presented against the background of manifesto promises, so certain expectations prevailed. • Inflation now double digits (Food Inflation )

  3. Budget Highlights • The Fiscal Accounts • Budget estimates total expenditure of $49 billion and total revenue of $41.3Billion • An overall Deficit of $7.7 billion is projected or 5.8% of GDP • Total debt to GDP estimated at 49% • Revenue Projections Comprise $15.2 billion from the energy sector and $26.1 billion from the non-energy sector.

  4. BUDGET ASSUMPTIONS • The 2011 Budget calculation was based on real GDP growth projection of 2 percent, an average inflation rate of 7 percent, an oil price of US$65 per barrel and gas price of US$2.75 per mmbtu.

  5. Expenditure Breakdown • Education and Training will receive $8.3 billion • Works, Transport, Public Utilities – Infrastructure will get $5.9 Billion • Health - $4.3 Billion • National Security – 4.7 billion • Agriculture - $1.8 billion • Housing - $1.8 billion

  6. FIRST ISSUE • How much more fiscal deficits can Trinidad and Tobago entertain? • Can we expect the Total debt to be contained at 50% of GDP or is it expected to increase in the future? What will be the implication for T&Ts Credit Rating By Standard and Poor’s or Moody’s?

  7. Other Measures • No New taxes/Improvements in oil and gas incentives/ • CLICO/HCU Bailout • No Smelter • No Rapid rail • Capital market initiatives • Divestment/Rationalization of state sector • Efficiency in the Public Service • Measures to increase competitiveness

  8. Measures Con’t • Tax Amnesty • Property Tax axed and Lands and Building Taxes re-introduced at original rates and Values • Investment Ceiling Removed for Free Zone Companies • Incentives for ESOPs • New Energy Tax Regime to encourage exploration/Investments

  9. Measures Con’t • Tax allowance for Contribution to the Children’s Life Fund • First Time Home Owner Allowance • Manufacturing Allowances • Increased pensions and Minimum pensions to Public servants

  10. Pensions

  11. Measures • Go Green initiatives • CNG • Solar Water Heating • Wind Energy • Energy Audits

  12. Entrepreneurship The 2011 Budget statement places tremendous reliance on entrepreneurship and the private sector as seen in the no. of initiatives

  13. Diversification • Opening New Economic Space – 5 Poles • Free Zones • Agriculture • Small Business development and Innovation • Real Estate/Construction • Tourism

  14. My Comments On Budget in General • CLICO/ HCU Bailout is a welcomed intervention but what is the true story with respect to the CL Financial group in particular and the MOU which was signed last year between the Gov’t, the Central Bank and CLICO. What is the value of the assets of the CL financial group and How Much of those assets are now controlled by the State?

  15. Financial Sector Challenges • Rise in non-performing loans and contraction in commercial credit • Confidence Issues • The Role of the Capital market- Can we ensure wide participation when companies are divested or will shares be tightly held?

  16. Manufacturing Sector and Tourism • How effective will the Measures announced in the 2011 budget as it relates to Manufacturing Sector? • Are we tapping the full potential of the Tourism Sector?

  17. Some Concerns • Implementation Challenge • What are the Milestones? • Can the measures announced and the sectors “picked” ensure a resumption to Growth in the shortest possible time? • How do we ensure that the inflation problem is not further exacerbated, give the $20B injection into the economy?

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