Govt’s $B dip into HSF

This US$251 million drawdown will leave a balance of US$5.44 billion (or TT$37 billion) in the HSF, and follows a 2016 Mid Year Review decision to use a mix of methods such as borrowings and drawdowns to plug an overall $16 billion Budget deficit. Finance Minister Colm Imbert told Newsday the drawdown is for an acrossthe- board partial funding of the PSIP, and not any specific project.

Saying an open announcement of the drawdown will avert undue speculation/criticism, Imbert cited the statement saying that Cabinet’s decision last Thursday was published, “in the interest of full public disclosure.” Imbert recalled that last May’s drawdown was also used to fund the PSIP deficit.

Caroni Central MP Dr Bhoe Tewarie yesterday said both HSF drawdowns total $4.2 billion, and asked how this would be repaid.

“As the country continues to experience severe revenue shortfalls as a result of depressed petroleum prices, the HSF will be carefully used by the Government to ensure the country’s financial stability,” a Finance Ministry statement said.

The statement added that Government’s first-ever drawdown of US$375 million last May had since been replenished by the HSF’s earnings of US$274 million.

“At that time (May 2016), the balance in the Fund was US$5.796 Billion, and, after the withdrawal, the balance was US$5.420 billion.

Since then the Fund has been able to recover through good management and good return on investments.

“In fact, the balance in the HSF increased from US$5.420 Billion in May 2016 to US$5.695 Billion in March 2017. In other words, between May 2016 and March 2017, the HSF recovered US$274 million.” The statement said Thursday’s drawdown leaves the HSF at US$5.44 billion, the same level just after the May drawdown.

It stated the deficit to be plugged.

“In the 2017 Budget Statement it was stated that ‘in 2017, core revenue — defined essentially as revenue from taxation, royalties and customs duties — is only projected to be of the order of $37 billion, some $20 billion less than two years ago. This leaves a fiscal gap in 2017 of over $16 billion, which must be financed by a combination of borrowings and drawdowns from the HSF and one-off sources of income, such as the sale of assets, dividends from state enterprises, repayment of past lending and so on, the Ministry stated.

The statement said both drawdowns were done in line with the HSF Act. Amid TT’s worsening debt-to-GDP ratio, Dr Tewarie said Government failed to spur development, investment, growth and diversification, resulting in a “parked up” private sector and unstimulated economy.

Alleging that Imbert ignored his query on TT’s state in last Wednesday’s Lower House debate on the Andean Development Corporation, Tewarie said details are needed of Government’s borrowing strategy, allocation of such sums and exactly how supportive is the Central Bank’s monetary policy.