$6B Budget shortfall

“In terms of revenues projected in our present Budget, we expect to fall short by $6 billion for this financial year,” Manning said in a televised address to the nation.

He said the lower predicted revenue, due to falling prices of the country’s commodity- exports — oil, natural gas, petroleum products, methanol, urea and steel — meant government ministers have been told to identify areas in their budget for cuts which he would announce next week.

His remarks came on the day oil prices fell to a three-year low of US$49.62 per barrel, the IMF’s call on Monday for a $3 billion Budget-cut and the Central Bank’s warning that high government-spending could worsen the inflation rate.

Saying no country could escape the effects of a global recession, Manning said TT has already suffered revenue-losses due to falling prices of commodity-exports and referred to the recent closure of several plants at the Pt Lisas Industrial Estate.

“Due to decreased demand, there have been a number of temporary plant closures as well as reduced output at Pt Lisas, further aggravating the revenue situation for the country,” he said, adding that, “The situation is made worse by reduced sale of natural gas at the industrial estate.”

He further claimed, “Up to the end of September when the Budget was presented, there was no indication of any impending international economic problems of the magnitude we are now experiencing.”

The Budget prices for oil and gas at US$70 per barrel and US$4 per MMBTU respectively, were therefore based on the best global advice from expert agencies, including the IMF. Things are turning out quite differently.”

“In other words, ladies and gentlemen, things could get more challenging.

“It is clearly a very serious situation, requiring immediate action. After very careful monitoring of the situation, the Government has now done a reassessment of its planned expenditure.”

Manning said Cabinet yesterday heard Finance Minister Karen Nunez-Tesheira’s proposals for trimming allocations to ministries, departments and statutory authorities.

“The areas targetted include discretionary expenditure like promotion, publicity and printing, materials and supplies.”

He added that goods and services and minor equipment have also been targetted and also listed the developmental projects due to be reduced as, “new projects other than those of an urgent or critical nature, those projects for which there were no firm contractual obligations, ongoing projects for which the pace of implementation could be reduced without legal penalties and ongoing projects for which some components could be deferred.”

“Ministers have been directed to review their budgets along these lines and next week, the Cabinet will decide on the actual adjustments to our programmes to ensure that expenditure is kept in line with revenue.”

Manning urged the population to tighten their belts, even as he vowed to take care of the more vulnerable by an increase in social spending.

“Our priority in these challenging times will continue to be the welfare of the people.”

He was confident that falling prices globally of agricultural commodities would reduce inflation, currently at 14.8 percent, as he vowed that the Ministry of Legal Affairs would ensure such savings are passed on to the consumer.

“We will not allow profiteering and greed to defeat our efforts at national stabilisation.”

He said the key to survival was productivity, as he alluded that trade unions should show restraint.

Manning urged the population to be “disciplined, discerning and inventive.”