Cur­tis Williams

In the five months since the 2012 bud­get was pre­sent­ed, oil prices have av­er­age more than 33 per cent above bud­get. Ac­cord­ing to fig­ures from the US En­er­gy In­for­ma­tion Agency, prices for Brent crude av­er­aged in Oc­to­ber 2011, US$109.25 per bar­rel, No­vem­ber, US$110.77 per bar­rel, De­cem­ber, US$107.88 and Jan­u­ary US$110.69.

When one fac­tors in the re­duced prices for T&T's mix of crude in­clud­ing the dif­fer­ent API ranges of the crude, T&T's bas­ket of crude fetched close to US$100 a bar­rel over the last five months. In Sep­tem­ber, Fi­nance Min­is­ter Win­ston Dook­er­an told Par­lia­ment that he was bas­ing the bud­get on US$75 a bar­rel. He said: "Our fis­cal 2012 bud­get cal­cu­la­tion was based on an oil price of US$75 per bar­rel and a gas price of US$2.75 per mmb­tu."

For­mer en­er­gy min­is­ter Con­rad Enill said the coun­try will be able to tell how well the Gov­ern­ment is do­ing on its rev­enue pro­jec­tions by the amount of the ex­cess mon­ey it places in­to the Her­itage and Sta­bil­i­sa­tion Fund. Enill told the Busi­ness Guardian: "If he puts a lot of the ex­tra rev­enues in­to the HSF, then we know that he is meet­ing his rev­enue pro­jec­tions in oth­er ar­eas. If he does not place most in­to the HSF, then it could sug­gest he is hav­ing dif­fi­cul­ties in oth­er ar­eas in meet­ing his rev­enue pro­jec­tions." In a tele­phone in­ter­view on Tues­day, Enill said it was like­ly that the gov­ern­ment rev­enues would be much high­er than was bud­get­ed be­cause crude prices have av­er­age close to US$100 a bar­rel and the nat­ur­al gas prices have al­so been more than was bud­get­ed.

"It is true that the high­er oil prices will mean a high­er fu­el sub­sidy bill, but the net ben­e­fit will be the dif­fer­ence be­tween the amount of lo­cal used and the to­tal crude pro­duc­tion. In that re­spect, the Min­is­ter of Fi­nance will be in an over­all bet­ter po­si­tion that he had ex­pect­ed when he pre­sent­ed the bud­get last year," Enill said. Econ­o­mist Jwala Ram­bar­ran said he ex­pect­ed gov­ern­ment rev­enues will come in much high­er than ex­pect­ed should crude prices con­tin­ue to hold. He re­mind­ed that last fis­cal year, the gov­ern­ment's rev­enues were high­er on both the en­er­gy and non-en­er­gy sides of the econ­o­my, but pre­dict­ed this year it will be weak­er on the non-en­er­gy side be­cause the tax amnesty aid­ed non-en­er­gy rev­enues in the last fis­cal year and is not avail­able in 2012.

Ram­bar­ran not­ed that while there will be high­er en­er­gy rev­enues, un­der law, the Min­is­ter of Fi­nance will have to place at least 60 per cent of the ad­di­tion­al rev­enues in the HSF. He feels that the Gov­ern­ment should spend the oth­er 40 per cent be­cause of the stim­u­lus ef­fect it can have on the econ­o­my. "We should in­crease the ex­pen­di­ture to en­sure that the econ­o­my gets go­ing again." In a tele­phone in­ter­view on Tues­day, the econ­o­mist said there are signs of move­ment in the econ­o­my, but felt part of the prob­lem that the Min­is­ter of Fi­nance and the Gov­ern­ment were fac­ing was a chal­lenge in com­mu­ni­ca­tion. He said the pop­u­la­tion is un­aware of the many small­er projects that are tak­ing place and are of the view that the econ­o­my is on stand­still. He said the var­i­ous min­istries and state sec­tor com­pa­nies have been in­struct­ed to en­sure they are in a po­si­tion to im­ple­ment their Pub­lic Sec­tor In­vest­ment Pro­gramme be­cause it is a sure way to get the econ­o­my grow­ing again. The Gov­ern­ment has pro­ject­ed a deficit in ex­cess of five per cent of gross do­mes­tic prod­uct.