Home' Trinidad and Tobago Guardian : September 2nd 2014 Contents One of the most controversial issues in the life
of any administration---especially one in the
last year of its five-year term---is how much
money did it spend, and whether the citizens
of the country received value for the money
that was spent.
The People s Partnership has delivered four budgets: the 2011
appropriation presented by former Minister of Finance, Winston
Dookeran, on September 8, 2010; the 2012 budget presented by
Mr Dookeran on October 10, 2011; the 2013 budget delivered by
the current Finance Minister, Larry Howai, on October 1, 2012
and the 2014 budget, which was also presented by Mr Howai,
on September 9, 2013.
According to the 2013 Review of the Economy, the total expen-
diture for the 2011 budget was $51.492 billion and for the 2012
budget, it was $52.806 billion. That s $104.298 billion.
In his 2013 budget presentation, Mr Howai announced total
expenditure net of capital repayments and sinking fund contribution
of $58.405 billion.
But in piloting the Supplementary Appropriation Bill, 2013 on
June 14, 2013, the Minister of Finance sought Parliament s approval
to increase the 2013 budget by an additional $3.3 billion---which
included about $1.8 billion in salary adjustment and the settlement
of industrial agreements for various periods of time 2008---2010,
2009---2012 and, in some cases, some interim settlements for
2011---2013. That puts the total expenditure for the 2013 fiscal
year at $61.705 billion.
In delivering the 2014 budget speech, Mr Howai estimated
total expenditure net of net of capital repayments and sinking
Fund contributions of $61.398 billion. But on July 1, 2014, the
Minister of Finance got parliamentary approval to increase the
2014 budget by $3.8 billion. This takes the amount of money
spent during 2014 so far to $65.19 billion.
That means that for the four budgets presented by the Peoples
Partnership administration, the total expenditure is about $231.87
How was that $231.87 billion spent?
The IMF staff report on the 2014 Article IV consultations with
T&T reveals that in total $114.08 billion was spent, or estimated
to be spent by the Government on transfers and subsidies in the
four budgets of the current administration.
That s about 49 per cent of the total expenditure since October
2010. That money, which many economists and international
financial institutions argue is unsustainable, goes to subsidise
gasolene, pharmacueticals, healthcare, pensions, education from
nursery to tertiary; electricity, water, housing, public transport
within the country; ferry and air transport between Trinidad and
Tobago as well as the many social programmes that the admin-
The transfers and subsidies sum totaled $24.34 billion in the
2011 financial year; $26.84 billion in the 2012 financial year; an
actual expenditure of $30.30 billion in 2013 and a budgeted expen-
diture of $32.60 billion for 2014, according to the IMF report.
How much has the PP saved?
At the end of June 2010, the total market value of the Heritage
and Stabilisation Fund (HSF) portfolio was US$3.083 billion.
At the end of March 2014, HSF totaled US$5.429 billion, which
means that the value of T&T s rainy day savings increased by
about 76 per cent or US$2.34 billion in about four years.
The annual and quarterly reports of the HSF between the
quarter after the current administration assumed office in May
2010 and the quarter ending March 2014 indicates that some
$1.074 billion was set aside by the Government, which is about
45 per cent of the increase.
The money contributed to the HSF by the PP comprises the
• In the July to Sept 2010 quarter, the new PP government
contributed US$375 million:
• In 2011, US$451.4 million was contributed;
• In 2012, US$207.5 million was put into the HSF;
• For 2013, US$41.5 million was ploughed into the HSF.
To a large extent, therefore, the performance of the HSF has
more to do with the performance of the international equity and
bond markets that the sovereign wealth fund portfolio is invested
in than on the amount of money that the Government placed
in the fund.
CONTINUES FROM PAGE BG1
In the 2014 budget presentation, Finance
Minister Larry Howai projected total expen-
diture net of capital repayments and sinking
fund contributions of $61.39 billion.
In July, Howai got parliamentary approval
to add $3.82 billion to 2014 expenditure, which
would bring total spending in the current
financial year to over $65.21 billion.
But, he said, the good news is there is also
a projected increase in revenue for the 2014
financial year of $4.5 billion, which is expected
to take revenue for the current financial year
from $55 billion to $59.5 billion. This will
result in a fiscal deficit for 2014 of $5.8 billion,
which is expected to be equal to 3.3 per cent.
Has the 2014 budget been good for busi-
Theoretically, budgets have an impact on
the total demand in a country.
In a small, open, energy-dependent econ-
omy in which the State is the largest economic
player, Government spending is the single,
most important determinant in T&T s aggre-
Government spending directly impacts on
demand because when the Ministry of Finance
allocates an additional $1.8 billion for infra-
structural development, some of that money
goes to pay the labourers on construction
sites around the country. Some of the money
goes to buy cement, aggregate, steel and nails.
Likewise, the supplemetal allocation of $1
billion to pay, among other things, backpay
to daily rated workers, would go directly to
the employees who would then go out and
spend some of that lumpsum on clothes, new
cars, furniture and appliances.
In that indirect way, then, Government
spending also has an impact on the fortunes
of the private sector as the more people that
are working in an economy, the more money
would be generated by the private sector.
A good example of this is Massy Holdings,
whose total group revenue increased by $962
million or 12.7 per cent to $8.5 billion for the
first nine months of its financial year.
The Government, during the 2014 financial
year, also directly impacted on the private
sector by its reduction in the Value Added
Tax backlog. In his July presentation on the
supplementation of the 2014 budget, the
Minister of Finance said that the VAT backlog
had been reduced by over $1 billion for the
first seven months of the fiscal year, "and I
expect that this will continue to be reduced
over the coming months."
The Government's initial projected expenditure for the
2014 financial year was based on revenue projections that
were predicated on oil and gas price assumptions of
US$80.00 per barrel and US$2.75 per mmBtu respectively.
Those oil and gas price assumptions were expected to
generate revenues of $55 billion, which would have led to a
fiscal deficit of $6.35 billion or about 3.6 per cent of GDP.
In his speech on July 1, Howai said that for the first six
months of the fiscal year, the budget had projected an overall
deficit of $2.7 billion.
"Based on actual revenue received and expenditure
incurred, the Central Government fiscal operations recorded a
surplus of $247 million in the first six months of the fiscal
"This is a performance which is a little over $3 billion better
than had originally been budgeted. This position was mainly
due to lower than anticipated expenditure.
"Revenues were also lower but this was primarily due to a
lower take from oil companies because of the late payment
of current liabilities by one state-owned company, and the
late collection of taxes from production sharing companies
and other companies, as well as withholding tax, which were
both related to industrial action at the Board of Inland
Revenue. These taxes have since been received."
budget special 2015
Tuesday, September 2, 2014 www.guardian.co.tt Guardian
...Fundamentals suggest more spending in '15 In the Supplemetation and Variation of
Appropriation legislation, which was passed in
July 2014, the Government got approval for
the further issue of $3.82 billion from the
Consolidated Fund for the financial year
ending September 30, 2014.
Of the additional appropriation of $3.82
billion, Howai said that $1.6 billion represented
a transfer to the Infrastructure Development
Fund and the Public Sector Investment
Programme. Another $1.02 billion was used
towards the payment of salaries, NIS, COLA,
allowances, stipend, travelling, subsistence
and arrears for public servants, including the
settlement of the collective agreement for
over 20,000 daily-paid workers.
Approximately $1.2 billion will be spent on
the needs of various Ministries, particularly
the Ministries of Housing and Urban
Development, Water Resources, Health, Land
and Marine Resource and National Security
WHERE DID THE EXTRA
$3.8 BILLION GO?
FISCAL SURPLUS IN FIRST HALF
How much has the PP spent...and saved?
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