Home' Trinidad and Tobago Guardian : June 8th 2014 Contents SBG6 NEWS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JUNE 8 • 2014
The Central Bank reported last
week that T&T s production
of oil and natural gas---which
generates the most revenue for
the country s fiscal authori-
ties---declined in the first quar-
ter of 2014, following strong growth in the
fourth quarter of 2013.
In the May 2014 Monetary Policy Report,
which was released to the monetary authority s
Web site late last week, the Central Bank said
that the pick-up in the energy sector expe-
rienced in the fourth quarter of 2013 did not
carry over into early 2014.
"Oil and gas production were adversely
affected in January 2014 when bpTT tem-
porarily took down its Savonette Platform to
accommodate drilling at another well. As a
result, crude oil production fell 2.6 per cent
(year-on-year) during first quarter 2014, while
natural gas output slipped 2.5 per cent over
the same period," according to the report,
which added that the production of oil and
gas "rebounded" during March.
The refining sub sector declined by 7.0 per
cent during the first quarter as "Petrotrin s
planned maintenance at its facilities in Pointe-
à-Pierre during early 2014 negatively affected"
While the production of oil and natural gas
declined in the first quarter, the output in the
petrochemical sector was up 2.9 per cent (year-
on-year) during the first three months of 2014.
T&T recorded a 4.6 per cent increase in the
production of fertilisers and a 1.2 per cent hike
in methanol output, according to the Monetary
With moderate and temporary declines in
oil and gas production during the first quarter,
The Central Bank reported that "initial indi-
cators point towards a favourable outturn by
the non-energy sector in the first quarter of
2014, with increases in local sales of cement
(7.4 per cent) and new motor vehicles sales
(12.6 per cent), which were described as
"gauges of economic activity within the con-
struction and distribution sectors."
The bank said given the increased sales of
cement and new vehicles, the construction
and distribution sectors should maintain their
growth momentum in the first quarter of 2014.
"The construction sector is expected to
benefit from several on-going large public sec-
tor projects such as the highway to Point Fortin,
the Housing Development Corporation s (HDC)
Housing Repair Programme, the National
Aquatic Centre, the Children s Hospital, the
National Tennis Complex, the Valencia by-
pass and the Bridges Programme."
The report said that the private sector is
also expected to provide a fillip to economic
activity through several on-going projects,
including a $500 million C3 movie and shop-
ping complex in Corinth, south Trinidad.
There was also an indication that increasing
deposit and credit activity within the com-
mercial banking system suggests that output
in the finance, insurance and real-estate sector
is likely to continue to trend upward.
Lower gas subsidy drives
small fiscal surplus
The Monetary Policy Report stated that
central government accounts for the first half
of the 2014 fiscal year---October 2013 to March
2014---recorded an overall surplus of just under
0.5 per cent of GDP in contrast to a deficit
of over 2.0 per cent of GDP in the correspon-
ding period in the 2013 fiscal year.
The Central Bank said: "Despite several on-
going public sector projects such as the Point
Fortin Highway, the Children s Hospital and
the National Aquatic Centre in Couva, recorded
expenditure was 6.9 per cent lower than in
the corresponding period one year ago.
"There was a substantial fall-off in transfers
and subsidies, as petroleum subsidy payments
amounted to $700.3 million in the first half
of the 2014 compared with $4,230.6 million
in the same period one year earlier.
"Nevertheless, these payments are expected
to increase in the second half of the fiscal year
as the Government seeks to reduce the petro-
leum subsidy arrears.
The report indicated that total government
revenue in the period October 2013 to March
2014 "was up marginally from a year earlier
as higher non-energy receipts compensated
for a drop in energy revenues."
The Government s coffers experienced a
boost from non-energy revenues, with receipts
from the First Citizens Bank Ltd IPO and a
large one-off dividend payment from an
unnamed state enterprise.
"Consistent with higher non-energy rev-
enues, the non-energy fiscal deficit fell to
roughly 11 per cent of GDP from 18 per cent
in the first six months of the previous fiscal
year. While the resulting net domestic fiscal
injection of $6,221.3 million (October 2013 to
March 2014) was roughly 40 per cent lower
than a year ago, when added to an already
liquid banking system, it placed considerable
upward pressure on commercial banks excess
The Central Bank also said that it expected
the pace of spending to increase during the
second half of the 2014 fiscal year (April to
September) "in line with the Central Govern-
ment s expansionary fiscal stance."
Such an expansion, the bank said, would
have "implications for monetary policy as the
rise in spending will lead to an increase in net
domestic fiscal injections and add to the liq-
uidity in the financial system."
Positive external account
"The movement in international reserves
suggests that the external accounts registered
an overall surplus of US$786.4 million in 2013.
Strengthened by inflows from an external bond
issued by the Government in December 2013,
the level of gross official reserves climbed to
US$9,987.1 million or 12 months of prospective
imports of goods and non-factor services at
the end of 2013.
"The current account is estimated to have
recorded a surplus of US$2,571.5 million, while
the capital and financial account remained in
deficit, posting a deficit of US$1,785.1 million.
Based on the change in international
reserves, the external account is expected to
realise a surplus of US$26.2 million in the first
quarter of 2014. The major contributor to for-
eign exchange inflows were oil and gas receipts
which rose by 25.8 per cent (year-on-year),
while partial outflows data show a slight decline
in Government payments to international
Central Bank sales of foreign exchange for
the first quarter of 2014 were recorded at
US$360 million, an increase of US$55 million
over the first quarter of 2013.
T&T's oil, gas
output dip in
Strong growth in 4Q
The Central Bank said: "The do-
mestic economy rebounded in the
fourth quarter of 2013 on the
strength of a resurgence of activity
in the energy sector. Provisional esti-
mates from the Central Bank's Quar-
terly Gross Domestic Product
(QGDP) Index suggest that the T&T
economy grew by 2.1 per cent on a
year-on-year basis in the fourth
quarter of 2013.
"The energy sector expanded by
2.4 per cent as operations in the oil
and gas industries normalized fol-
lowing extensive maintenance activ-
ity in the previous quarter, while the
non-energy sector returned a fair
performance, increasing by 1.9 per
In the fourth quarter of 2013, ac-
cording to the Central Bank, the fi-
nance, insurance and real estate
sector led growth within the non-en-
ergy sector, increasing by 3.9 per
cent, while the construction and dis-
tribution sectors rose by 2.5 per cent
and 1.2 per cent, respectively. Output
in the manufacturing sector was rel-
atively robust at 2.1 per cent in the
However, manufacturing compa-
nies continued to utilise just about
two-thirds of their existing capacity,
the bank said.
The Government's coffers
experienced a boost from
non-energy revenues, with
receipts from the First Citizens
Bank Ltd IPO and a large one-off
dividend payment from an
unnamed state enterprise.
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