While the Opposition UNC has not yet decided how it will represent the myriad concerns of constituents on the property tax, a legal challenge has not been ruled out.
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IDB expects $6.4b deficit
The Government of T&T is expected to close the country’s 2013/2014 fiscal year with a $6.4 billion deficit, the Inter-American Development Bank (IDB) said in its second quarter Caribbean bulletin released August 7. “A fall in transfers and subsidies and higher than expected revenue inflows led to a budget surplus in the first half of fiscal year 2013/14.
“The Government is expected to generate $55 billion in revenues and expend $61.3 billion, resulting in a deficit of $6.4 billion or 3.6 per cent of gross domestic product (GDP), one per cent less than in fiscal year 2012/13,” IDB economists said in the bulletin.
Despite a projected budget deficit in the first six months of the fiscal year (October to March 2014), a surplus was recorded, the IDB said. Higher than expected budgeted revenues came from the inflow of receipts from the First Citizens Bank Ltd initial public offering (IPO) and some extraordinary dividends from a state enterprise, the bulletin said. In addition, a falloff in transfers and subsidies contributed to expenditures being lower than anticipated for the first half of the fiscal year, the IDB said.
“This trend may not persist as capital expenditure (which is budgeted at $8 billion, the largest on record) is expected to rise if the budget target is to be met,” the bulletin said. At 2.5 per cent, the IDB’s growth projection in the bulletin was inline with that of other institutions, as was the 2.0 per cent growth it said the country had in 2013. The IDB said the “growth momentum” picked up in the energy sector in 2014 “should carry over into 2015.
“In the energy sector, exploration activity is expected to pick up as drilling in shallow water blocks and new development wells are ongoing in addition to the awarding of further onshore bids, while in the non-energy sector, several large public and private sector projects are being implemented.” On commercial bank credit to the private sector, the IDB said that consistent with improvements in the non-energy sector, lending improved in the first quarter of 2014.
Twelve-month private sector credit expanded by 6.0 per cent in March 2014, up from an increase of 2.5 per cent the previous 12 months. “One notable aspect of the expansion in private sector credit is that of business loans, which were on the decline for the past 14 months, but have increased by 3.5 per cent in March 2014.
“Other components of private sector credit, such as consumer loans (6.0 per cent) and real estate mortgages (11.8 per cent), also continued growing robustly in the 12 months to February and March this year,” the bulletin said. Turning to the local stock market, the IDB said it has shown “improvements despite a contraction in the banking sector, but more has to be done to encourage small companies to list on the stock exchange.”
The local stock market showed a strong performance in 2013, but that did not carry over into the in first four months of 2014, the multilateral said. The sharpest contraction was recorded in the banking sector as share prices of both First Citizens Bank Ltd and First Caribbean International Bank Ltd fell on a year-to-date basis.
The bulletin said: “While the Government introduced the small and medium enterprise (SME) market (on the stock exchange) in 2012 to provide small companies with an avenue to further raise capital, it has not been successful thus far. “This is partly due to regulations on the ownership of shares after listing, relatively low interest rates, and excess liquidity in commercial banks.”