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T&T’s oil, gas output dip in first quarter
The Central Bank reported last week that T&T’s production of oil and natural gas—which generates the most revenue for the country’s fiscal authorities—declined in the first quarter of 2014, following strong growth in the fourth quarter of 2013. In the May 2014 Monetary Policy Report, which was released to the monetary authority’s Web site late last week, the Central Bank said that the pick-up in the energy sector experienced in the fourth quarter of 2013 did not carry over into early 2014.
“Oil and gas production were adversely affected in January 2014 when bpTT temporarily took down its Savonette Platform to accommodate drilling at another well. As a result, crude oil production fell 2.6 per cent (year-on-year) during first quarter 2014, while natural gas output slipped 2.5 per cent over the same period,” according to the report, which added that the production of oil and gas “rebounded” during March.
The refining sub sector declined by 7.0 per cent during the first quarter as “Petrotrin’s planned maintenance at its facilities in Pointe-à-Pierre during early 2014 negatively affected” it. While the production of oil and natural gas declined in the first quarter, the output in the petrochemical sector was up 2.9 per cent (year-on-year) during the first three months of 2014. T&T recorded a 4.6 per cent increase in the production of fertilisers and a 1.2 per cent hike in methanol output, according to the Monetary Policy Report.
With moderate and temporary declines in oil and gas production during the first quarter, The Central Bank reported that “initial indicators point towards a favourable outturn by the non-energy sector in the first quarter of 2014, with increases in local sales of cement (7.4 per cent) and new motor vehicles sales (12.6 per cent), which were described as “gauges of economic activity within the construction and distribution sectors.”
The bank said given the increased sales of cement and new vehicles, the construction and distribution sectors should maintain their growth momentum in the first quarter of 2014. “The construction sector is expected to benefit from several on-going large public sector projects such as the highway to Point Fortin, the Housing Development Corporation’s (HDC) Housing Repair Programme, the National Aquatic Centre, the Children’s Hospital, the National Tennis Complex, the Valencia by-pass and the Bridges Programme.”
The report said that the private sector is also expected to provide a fillip to economic activity through several on-going projects, including a $500 million C3 movie and shopping complex in Corinth, south Trinidad. There was also an indication that increasing deposit and credit activity within the commercial banking system suggests that output in the finance, insurance and real-estate sector is likely to continue to trend upward.
Lower gas subsidy drives small fiscal surplus
The Monetary Policy Report stated that central government accounts for the first half of the 2014 fiscal year—October 2013 to March 2014—recorded an overall surplus of just under 0.5 per cent of GDP in contrast to a deficit of over 2.0 per cent of GDP in the corresponding period in the 2013 fiscal year.
The Central Bank said: “Despite several on-going public sector projects such as the Point Fortin Highway, the Children’s Hospital and the National Aquatic Centre in Couva, recorded expenditure was 6.9 per cent lower than in the corresponding period one year ago. “There was a substantial fall-off in transfers and subsidies, as petroleum subsidy payments amounted to $700.3 million in the first half of the 2014 compared with $4,230.6 million in the same period one year earlier.
“Nevertheless, these payments are expected to increase in the second half of the fiscal year as the Government seeks to reduce the petroleum subsidy arrears. The report indicated that total government revenue in the period October 2013 to March 2014 “was up marginally from a year earlier as higher non-energy receipts compensated for a drop in energy revenues.”
The Government’s coffers experienced a boost from non-energy revenues, with receipts from the First Citizens Bank Ltd IPO and a large one-off dividend payment from an unnamed state enterprise.
“Consistent with higher non-energy revenues, the non-energy fiscal deficit fell to roughly 11 per cent of GDP from 18 per cent in the first six months of the previous fiscal year. While the resulting net domestic fiscal injection of $6,221.3 million (October 2013 to March 2014) was roughly 40 per cent lower than a year ago, when added to an already liquid banking system, it placed considerable upward pressure on commercial banks’ excess reserves.”
The Central Bank also said that it expected the pace of spending to increase during the second half of the 2014 fiscal year (April to September) “in line with the Central Government’s expansionary fiscal stance.” Such an expansion, the bank said, would have “implications for monetary policy as the rise in spending will lead to an increase in net domestic fiscal injections and add to the liquidity in the financial system.”
Positive external account
“The movement in international reserves suggests that the external accounts registered an overall surplus of US$786.4 million in 2013. Strengthened by inflows from an external bond issued by the Government in December 2013, the level of gross official reserves climbed to US$9,987.1 million or 12 months of prospective imports of goods and non-factor services at the end of 2013.
“The current account is estimated to have recorded a surplus of US$2,571.5 million, while the capital and financial account remained in deficit, posting a deficit of US$1,785.1 million.
Based on the change in international reserves, the external account is expected to realise a surplus of US$26.2 million in the first quarter of 2014. The major contributor to foreign exchange inflows were oil and gas receipts which rose by 25.8 per cent (year-on-year), while partial outflows data show a slight decline in Government payments to international agencies. Central Bank sales of foreign exchange for the first quarter of 2014 were recorded at US$360 million, an increase of US$55 million over the first quarter of 2013.