By Andre Bagoo Thursday, June 13 2013
THE ECONOMY has made a “significant turnaround” by recording three successive quarters of economic growth, Finance and Economy Minister Larry Howai said yesterday as he predicted a lower deficit level with the State performing “$3.6 billion better” than expected.
Piloting legislation to raise the State’s spending appropriation for 2013 by $2.9 billion in the Parliament, Howai said the growth rates for the last two quarters of 2012 were 1.8 percent and one percent respectively. However, for the first quarter of 2012, the rate was 1.7 percent, the third successive quarter of growth. He said the rate of growth for the entire first half of the year has been projected by the Central Bank to be up to two percent.
“Two percent growth, coming from a position where during the course of last year for half of the year we showed no growth, I think is very significant,” Howai said during debate of the Finance Supplementary Appropriation Bill 2013. “The fiscal position of the Government remains solid.”
The Finance Minister said while the increased spending appropriation will raise the deficit from a projected $7.6 billion to a projected $9.2 billion (or 5.5 percent of GDP) in fact the deficit will be much lower than projected since revenues had been higher than expected.
“Obviously an increase in the deficit is something that would cause some concern to members and therefore, perhaps I should start by saying that last year that the projection was for a deficit of $8.9 billion. The actual deficit turned out to be $3.1 billion or over $6 billion below the announced deficit,” Howai noted. “As at middle of this year, the figures to the end of March show that the recurrent surplus was $2.9 billion. Actually we showed a surplus of $731 million. In fact we were $3.6 billion better.”
He said the position was even better overall for the year thus far.
“Overall, the overall deficit projected at $7 billion was actually $1.7 billion,” Howai said.
Howai said the increased allocation was, “to fund urgent and critical recurrent capital expenditure to September 30, 2013” and “involves salary adjustments of just under $1.8 billion. Every ministry is involved.”
He said the three largest heads other than personnel expenditure were for: the Ministry of the People and Social Development; the Ministry of Housing Land and Marine Affairs and the Ministry of National Security.
The Senator said the Ministry of the People and Social Development, “requires an additional $210 million to meet the payment of social programmes to the end of fiscal 2013.”
In the case of the Ministry of Housing, Land and Marine Affairs, “the additional resources are required to facilitate expenditure under CEPEP for 1) expansion of beautification and landscaping facilities; 2) four additional contractors; 3) the continued development of staff for emphasis on training.”
Howai said the increased funding for the Ministry of National Security is required to supplement current transfers and subsidies in order to 1) replenish the Strategic Services Agency allocation which was utilised to make, “an interim payment for the training and maintenance support programme arising from the acquisition of four AW139 medium twin-turbine helicopters; 2) to strengthen the disaster preparedness and mitigation capacities of the Office of Disaster Preparedness and Management agency in readiness for the upcoming hurricane season; 3) payment for arrears to TSTT for rollout of CCTV cameras in Trinidad and Tobago and 4) for the Hoop of Life Programme.”
Howai said after periods of stagnation and contraction, there have been, “increase growth in the 0.6 percent agriculture sector.”
The minister noted, “challenges in energy sector and industrial action unrest” which is to grow by 0.5 percent.
“It is the strength of the non-energy sector that took us to growth of 1.7 percent,” he said. Crude oil output fell by 2.3 percent due to significant industrial unrest. However, other areas of energy sector exploration and production and natural gas production increased by two percent. There is expected to be a 5.4 percent increase in energy output.
“So overall, we have been seeing very significant activity in a number of areas and once we get past the maintenance work that is required to be done in the energy sector, we expect to see much more robust growth for the economy going forward,” Howai said.
The Minister said the rate of inflation continues to remain well contained, and described the unemployment rate of five percent as “a manageable level”, much lower than unemployment rates in the Bahamas, Jamaica, the United States and European Union. He said the State expects 3,000 new jobs in the banking sector over the next five years, citing the opening of new banking units by Royal Bank, Scotiabank and a proposed office by Pan American Life.
“Within the next five years, we expect to create something like 3,000 new jobs in this particular sector,” Howai said. He said spending levels have been curbed by capacity issues within the State sector.
“There has been considerable suppression of expenditure and there is the issue of capacity which we have to address with a view going forward to ensure that the things that need to be done are done,” the Minister said.