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BUSINESS GUARDIAN www.guardian.co.tt MARCH 2014 • WEEK TWO
Based on revised data from the
Ministry of Finance and the
Economy, central government's
operations resulted in an overall
deficit of $4.17 billion, equivalent
to 2.6 per cent of gross domestic product
(GDP), for the 2013 fiscal year, the Central
Bank said in its January 2014 Economic Bulletin
released March 6.
Central Government operations resulted in
a deficit of $2.1 billion in the 2012 fiscal year,
which was equal to a deficit of 1.4 per cent.
Both the 2012 and 2013 deficits are within
the 3 per cent range that is viewed as prudent
by the international financial institutions.
Preliminary data for the first quarter of the
2014 fiscal year (October-December 2013)
reveal an overall fiscal surplus of $4.15 billion
compared with a marginal deficit of $6.1 million
in October to December 2012.
Compared with the corresponding period
of the previous fiscal year, revenue for the first
quarter of 2014 was higher by 45.9 per cent
mainly due to the remittance of large dividends
from the state enterprise sector, divestment
proceeds and an expansion of earnings from
This far surpassed a slight increase of 6.6
per cent on the expenditure side due to higher
wages and salaries, goods and services and
interest payments, according to the Economic
Bulletin. However, administrative delays and
a slowing in the pace of implementation of
several infrastructural projects contributed to
a decline of 36.5 per cent in capital expenditure
in the country, the ministry said.
T&T's headline inflation remained on a
downward trend in 2013, in spite of some
uptick in the later months of the year, the
regulator said. During the fourth quarter of
2013, headline inflation averaged 4.2 per cent
compared with 8.2 per cent in the comparative
period of 2012.
Core inflation, which excludes food prices,
decelerated to 2.0 per cent at the end of 2013.
Food inflation, which dipped to an annual low
of 3.0 per cent in September 2013 from 13.8
per cent in January 2013, remained the main
impetus behind the slowdown in headline
inflation. This deceleration in food prices was
partly attributed to better weather conditions
locally, the bank said.
Against the background of low underlying
inflation and an improving economic growth
outlook, the Central Bank maintained an
accommodative monetary policy stance in the
second half of 2013, keeping the repo rate
unchanged at 2.75 per cent. Interest rates
remained low, which helped to stimulate activ-
ity in credit markets, the Central Bank said.
"Lending for consumer purposes and real
estate mortgages gained some momentum
while credit demand by business firms
remained lukewarm. Excess liquidity in the
banking system, however, continued to accu-
mulate and reached unprecedented highs in
the second half of 2013, resulting mainly from
the Government's fiscal injections.
"This prompted the Central Bank to intensify
its efforts to remove the excess liquidity. The
Central Bank issued the second treasury bond
for the year in August 2013, taking out $559.3
million from the financial system, and extended
by one year $3.5 billion in commercial banks'
compulsory interest bearing deposits at the
Central Bank when they expired.
A total of $5.26 billion was absorbed by
these monetary policy measures and the Cen-
tral Bank's intervention in the foreign exchange
market in the second half of 2013.
T&T's total public debt as at the end of
2013 amounted to $96.1 billion, which was
55.3 per cent of GDP. Nominal GDP at the
end of 2013 was estimated at $173.7 billion.
If treasury bills, notes and bonds issued for
open market operations (OMOs) are excluded
from T&T's total public debt, central govern-
ment domestic debt amounted to $55 billion,
which was 40.6 per cent of GDP at the end
of December 2013.
At the end of 2013, T&T's foreign debt
jumped by 35.1 per cent during the first quarter
of the fiscal year (October-December 2013)
from US$1.6 billion at the end of September
2013 to US$2.16 billion at the end of December
The jump in T&T's foreign debt resulted
from the US$550 million Eurobond that the
Government entered into at the end of last
year as well as new loan disbursements, mainly
from the Inter-American Development Bank.
According to the Central Bank, T&T's foreign
debt amounted to 7.5 per cent of GDP at the
end of December 2013, compared with 5.7 per
cent at the end of September of last year.
Balance of payments
On the external account, the country's bal-
ance of payments continued to be healthy,
registering a surplus of US$226.8 million for
the first nine months of the year and is esti-
mated to record a larger surplus of US$786.3
million for all of 2013.
"Gross international reserves climbed to
US$9,987 million at the end of December
2013, representing an import cover of 12
months of prospective imports of goods and
non-factor services," the bulletin said.
Motor vehicle sales in the fourth quarter of
2013 were up on a year-on-year basis by more
than 25 per cent, compared with just over 13
per cent in the third quarter of 2013, suggesting
that activity within the distribution sector
continued to be robust, the bank said.
Local sales of cement, an indication of con-
struction activity, increased by 2.5 per cent in
the fourth quarter of 2013, the bulletin said.
On the inflation front, pressures are likely
to build in 2014 as economic activity ramps
up, the Central Bank said. Given the still high
degree of spare capacity in the economy, an
expansion in output, fuelled by a rise in gov-
ernment spending, could become inflationary
as it has the potential to drive demand.
The private sector is also expected to provide
a fillip to economic activity but this largely
depends on the pace of implementation of
several planned projects. Drought in 11 western
and central states in the US, especially in Cal-
ifornia which is a major producer of meat,
fruits and vegetables, may lead to additional
pressures on international and domestic food
prices in 2014.
The Central Bank said: "In addition, there
may be some upward pressure on fish prices
in 2014 partly reflecting the impact of the
December 2013 oil spills on fishing areas in
the south-western coast of Trinidad."
Central Bank bulletin:
T&T's 2013 deficit
more than double 2012
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