(Trinidad Guardian) While there is a projected $9.67 billion deficit for the 2025 fiscal year and a loss of $556.7 million in revenue, Government’s economic rebuilding plan encompasses foreign exchange solutions – including reporting obligations for high-volume importers and enabling exporters to retain a portion of their Forex earnings.
That was the word from Finance Minister Dave Tancoo yesterday, as he delivered his first Mid-year Budget Review in Parliament yesterday.
“We met T&T’s economy in the intensive care unit (ICU) … but we’ll fix it,” Tancoo said, devoting half of his address to blaming the past People’s National Movement government’s management for current problems.
“We’re in crisis due to the PNM … today we’re here to pay bills caused by the PNM administration. In this mid-year package ‘clean-up’ bill, we’re forced to supplement a PNM budget. This isn’t our shortfall. It’s the latest chapter in their long history of serial underbudgeting.”
Tancoo piloted debate to approve amendments to the 2025 Budget, which was $59.741B.
On Monday, Parliament’s Standing Finance Committee provided $3.14B in supplemental funding to the 2025 Budget. This was for 28 ministries and divisions.
Funds involved Recurrent Expenditure ($2,865,046,761) and the Development Programme ($278, 937,000).
Tancoo added, “These funds are necessary in large part to meet multiple instances of deliberate under-budgeting or meet obligations promised in the former Finance minister’s budget but for which no provision was actually made; or for new initiatives determined by the then-government where no provisions were met.
“Bottom line: The PNM chronically underbudgeted critical wages, rents, and essential services. We’re cleaning up the mess and closing the gaps they deliberately left in their budget. They spent without any clear idea of where the money is coming from. No proper planning or sustainable financing, just reckless expenditure masked as governance … a calculated scheme of financial deception year after year, passing deliberately underfunded budgets. “
On the deficit and projected fiscal performance, Tancoo said the 2025 Budget was predicated on an average oil price of US$77.80 per barrel and natural gas price of US$3.59 per mmbtu. The projected deficit was $5.517B.
But Tancoo said, “Our estimation for oil and gas prices to the end of the fiscal year is US$66 and US$5 per mmbtu. With this and other adjustments, we anticipate a decrease in total revenue of $556.7 million, with a resultant overall deficit of $9.67 billion – PNM’s legacy.
“Given the economy, we expect to fund the increase deficit principally via borrowings on the local capital market as well as by drawing down on existing multi-lateral facilities.
“We’ll also work assiduously to improve the revenue mobilisation capacity of the Inland Revenue Division and explore further expenditure consolidation and efficiency initiatives in the coming months.”
Tancoo said the plans are interim strategies aimed at restoring financial stability.
“It will be followed by more comprehensive and impactful reforms in the 2025/2026 Budget”
Forex shortage solutions
Accusing the PNM of contracting the economy by 20 per cent, Tancoo detailed negative economic factors, including only seven and a half months left of Forex import cover.
To address persistent Forex shortages, Tancoo said Government will collaborate with the necessary stakeholders to establish a foreign exchange allocation committee to bring greater transparency, equity and strategy to the allocation of scarce Forex resources.
“We’ll be implementing reporting obligations for high-volume importers to ensure that foreign currency inflows and outflows are better monitored and aligned with T&T’s national strategic economic priorities,” he said.
“We’ll ensure enhanced investor confidence through the development of profit repatriation protocols, dividend safeguards and investment protection frameworks, drawing on best practices such as those in Barbados.”
Tancoo added, “We’ll explore foreign currency tax exemptions and investment tax credits as tools to encourage retention and reinvestment of foreign exchange within the domestic economy. We’ll review T&T’s network of bilateral tax treaties and work with Caricom partners to advance regional tax harmonisation, promoting cross-border investment and reducing administrative burdens on regional businesses.”
Saying export-led growth is critical to building a resilient and diversified economy, Tancoo added, “To this end, we’ll examine introduction of an export allowance and export growth incentive, with a focus on high-potential non-Caricom markets and target priority sectors, including agro-processing, ICT services and niche markets.
“We’ll consider establishment of an export proceeds retention facility, enabling exporters to retain a portion of their foreign currency earnings, thereby ensuring more predictable access to foreign exchange for reinvestment and operational expansion and we’ll also expand our international trade representation.”
Other priority plans
On immediate priority actions to reorient the economy, Tancoo said, “Congruent to our strategic national development plan, we’re already implementing the following suite of policy measures and structural reforms:
• Repeal of the T&T Revenue Authority and Property Tax laws.
• Ensuring public safety and justice via committees to recommend legislation on ‘Stand-Your-Ground’ policy and home invasions.
• Launch of the feasibility study on reopening the Petrotrin refinery.
• Distribution of laptops to all incoming secondary school students from September 2025.
• Refurbishment and completion of all long-abandoned schools; opening the UWI Debe Campus.
• Establish catheterisation laboratories to address the rising incidences of cardiovascular disease.
• Amending the Children’s Life Fund Act to allow coverage of children with life-limiting conditions.
• Review/eliminate unnecessary state-funded goods and services, including security details and “abusive” property rentals.
• Transfer pricing legislation ensuring profits earned in T&T are taxed fairly and in accordance with international standards.
Other priorities ahead:
• Global Forum compliance: to implement necessary international tax standards to remove T&T from the European Union list of non-cooperative jurisdictions for tax purposes.
• Exchange of Information on Request and Combined Peer Review (to assist delisting of T&T by the European Union and commitment to cooperation in global tax matters.
• Business Levy reform.
• Tax Incentives.
• Permanent establishment (statutory definition in domestic tax law providing greater legal certainty for foreign investors and strengthening source-based taxation).
• Qualified domestic minimum top-up tax – will be considered for only very large multinational enterprise groups, with global revenues of at least Euro 750 million paying less than 15 per cent effective tax on their profits in T&T. Tax to bring them up to 15 per cent minimum.
Tancoo added, “There are multiple opportunities presented to us to develop ideas we’d begged the PNM for … now they have the gall to ask where we’re going to get the money from? We’ll put those plans into action, UNC’s minifestos give a clear idea where we’ll be taking T&T.”
STATE OF THE ECONOMY—TANCOO’S DETAILS
• ↓Adjusted general Government debt increased by 92% since 2015. “Reckless borrowing” by the PNM racked up the debt to $145B billion
• ↓External debt has more than doubled from US$2 billion to US$5.48 billion over the same period
• ↓Net foreign exchange holdings have dropped by 50 per cent under the PNM from $10.5 US billion to $5.3 US billion. Today, T&T has a mere 7.5 months of import cover and Forex.
• ↓“Raiding” of the Heritage and Stabilisation Fund 11 times in nine and a half years to the tune of almost TT$20 billion
• ↓Non-energy sector collapsed by 12 per cent under the PNM
• ↓Energy sector plummeted by over 33 per cent
• ↓Agricultural output collapsed by 50 per cent
• ↓48,000 fewer persons with jobs today compared to 2015