Trinidad and Tobago’s bracing for a possible gas price hike.
That’s what some people are doing since there’s been no assurance from Government that there won’t be any hike in the price of diesel and super gasoline in this afternoon’s Budget 2021 announcements.
Finance Minister Colm Imbert will deliver his 2020/2021 prescription for T&T at 1.30 pm at Parliament.
The 2019/2020 Budget’s theme was “Stability, Strength, Growth.” But after the “lost” economic year of 2020 following energy price shocks and COVID-19 costs, the 2020/21 Budget is expected to focus on re-engineering the economy to move on from COVID. It will also underscore leaving no one behind – something Government keeps stressing.
The Budget comes as T&T’s active COVID cases from the second wave stood at 1,839 last evening with 81 deaths so far.
At last week’s Budget forum on T&T’s financial circumstances, Imbert projected 2021 Budget expenditure of $52 billion and projected revenue of about $40 billion. These are decreased figures from the 2019/2020 Budget of $53b and projected $47b in revenue with a $5b deficit. However, subsequent energy price and COVID problems left T&T in a $15b deficit hole, Government said.
The last Budget was pegged on an oil price of US$60 per barrel and gas price of US$3/MMBTU. Yesterday’s oil price was US$39-$41 and gas price just over US$2.
Imbert and Prime Minister Dr Keith Rowley said last week that “hard” and “difficult decisions” have to be made ahead and things which were once postponed can’t be any further. Rowley said much of what Government has been doing cannot be sustained as before – Government would have to cut to suit its cloth and may have to give up some responsibilities.
Sources yesterday said Government’s fight to balance revenue and expenditure for 2021 has attempted to have a mixture of “good” with the “bad” in the Budget. They said since no devaluation will be done – which Imbert confirmed – subsidies and transfers to state enterprises are among the few things Government can adjust to cut costs.
Over the last term, Imbert indicated intent to remove gasoline subsidies. As a result of removal, fuel prices were raised three times in 2016. It was also raised in the 2018/19 Budget. Then he’d raised the price of Super by $1 to $4.97 but left the price of diesel at $3.41. The latter was at a cost of $700m to the state. Imbert said he’d slowed de-regulation of fuel subsidies in order not to affect public transport and related items. There was no gas price hike in the Budget for the 2020 election year.
Last Saturday, sources said they were waiting to see if Imbert removes the last of the subsidies which would then increase prices of diesel and super gasoline. But sources said any price hike would be minimal. They, however, acknowledged gas price increases always drive the prices of other items upwards, since it will increase the price of transportation costs which has a trickle down effect to consumers.
After concerns by Government about carrying debts by T&TEC and WASA, sources also hinted the Budget may put citizens on notice that applications for rate increases for at least one utility may be made to the Regulated Industries Commission.
Preparations were being made by T&TEC and WASA in the last term regarding rate hikes status-wise. The T&T Guardian confirmed that TTEC’s business plan needed to apply for an increase was ready, save for finalising a gas price with the National Gas Company. WASA’s business plan was incomplete.
Yesterday, Government officials agreed any WASA rate hike would have to be considered in the context of its inefficiencies from leaks to rate collection deficiencies. A review of WASA being completed next month will help determine WASA’s state.
When property tax begins
Today’s Budget is expected to give the status of the Property Tax implementation exercises. Finance Minister Colm Imbert has made it clear the tax will be collected and it’s projected to earn about $1 billion.
A judgement is pending regarding an appeal by UNC’s Devant Maharaj on Government’s partial success with the tax law. Under the system, the tax can be collected when half of T&T’s houses – estimated at 200,000 – are on the rolls. But Finance Ministry sources said there are issues – stemming from the court matter – preventing demands for people to fill out valuation forms or show assessors their premises.
Imbert’s also expected to speak about Caribbean Airlines after the company implemented cuts and reduced staffing recently to manage pandemic effects.
Word is also expected on border reopening. Last week, the International Air Transport Association called on Caribean and Latin countries to reopen borders and remove restrictions.
Rowley recently spoke about a “Caricom travel bubble” being opened by next Sunday. He said if T&T had an average of 20 COVID cases daily, T&T could participate in this.
Since COVID cases are beginning to see a downward trend, PNM sources speculated more of the Budget’s “good news” might come in terms of removal of other restrictions. There’ve been calls for opening beaches and other areas.
Priority Budget allocations are expected to go to National Security, Health, Education, Social Development, Housing and Agriculture.
Since Parliament’s arrangement for the Budget under COVID protocols has ruled out guests, Tobago House of Assembly chairman Ancil Dennis is monitoring the speech from Tobago.
Regardless of measures, some costs will increase. Supermarkets Association head Rajiv Diptee said last week that some supermarkets have indicated some prices hikes will be coming after the Budget. He said supermarkets are doing their best to absorb incremental price increases on food items and talks were on with suppliers to find “workarounds,” as there will be cases where increases are as a direct result of the Budget.
Yesterday, several experts—including Roadmap Recovery member Vasant Bharath—and other groups warned Imbert on the effects of certain measures, suggesting alternatives.
BUDGET 2021 PLUS SIDE
* PM Dr Keith Rowley’s assured priorities will be maintained from social sector spending (to support those unable to care for themselves), job creation, development opportunities for youth and debt servicing.
* Finance Minister Colm Imbert said devaluation and public service retrenchment isn’t being done “at this time.”
* Government removed VAT on computer and similar electronic devices and software for online teaching.
* Details expected on energy boundary expansion and sector which Rowley said is being done.
* Recommendations from the Recovery Roadmap committee will form a significant part of Budget contents.
* In sharper diversification thrust, emphasis on agriculture for food self-sufficiency after COVID affects on world food stocks, solar energy-powered facilities.
*Construction to kickstart the economy including housing development and other projects.
* Facility to promote project management businesses for T&T workers/resources to become employed locally and internationally.
* Focus on tourism for possible markets by 2022, despite the toll COVID has taken on travel. Other tourism-dependent islands have promoted markets with innovative offers.
* THA’s seeking $4.71b from the Budget. The ANR Robinson terminal project is expected to begin. Tobago is getting two passenger ferries later this year and next year and another cargo vessel due December. THA elections expected by end of January.