When Finance Minister Larry Howai presents the third budget of the People's Partnership administration, and his first, on Monday, one of the areas that will be most keenly analysed, both locally and overseas, will be the fiscal deficit that he reports for the 2012 fiscal year and the deficit estimate he provides for the 2013 fiscal year. There are indications that the fiscal deficit for the 2012 fiscal year, which ends on Sunday, will be larger than the revised figure for 2011.
According to the January 2012 Economic Bulletin, published by the Central Bank, T&T's fiscal deficit for the 2011 fiscal year (which ran from October 1, 2010 to September 30, 2011) was much less than originally estimated by Winston Dookeran, the former Minister of Finance. Ministry of Finance data, analysed and published by the Central Bank, indicate that the 2011 fiscal deficit was $1.039 billion, which was substantially less than Dookeran's original budget estimate of $7.732 billion.
The fact that the budget deficit for the 2011 was $6.7 billion lower than budgeted deficit was due to higher revenues and lower expenditure than had been foreseen in the 2011 budget. The central Government's total revenue amounted to $46.972 billion, which was nearly 14 per cent more than the $41.263 billion that it had forecast it would receive. On the other hand, actual total expenditure in 2011 was $48.011 billion compared with the budget estimate of $48.995 billion.
For the 2012 fiscal year, the Central Bank analysed the numbers for the period October 1, 2011 to May 31, 2012 and found that there was a surplus for that period amounting to $1.329 billion as actual total revenue of $30.376 billion topped $29.046 billion. A fiscal surplus for the first eight months of the 2012 fiscal year, which runs from October 1, 2011 to September 30, 12, 2012 should be good news-especially when the budgeted deficit for that period was $4.577 billion.
It would have been good news except for the supplemental appropriation bill that was passed in Parliament in June, which added $1.544 billion in expenditure to spending that Dookeran estimated at $54.6 billion in delivering the 2012 budget. The real issue is whether the Government's revenue maintained the trajectory during the last four months of the 2012 fiscal year-June to September-as during the first eight months when revenues amounted to $30.376 billion, which was 5 per cent higher than for the comparable period of the previous fiscal year.
The October 2011 to May 2012 revenue outturn of $30.376 billion was based on average West Texas Intermediate (WTI) crude prices during that period of US$98.55 per barrel, which is substantially higher than the budgeted price of US$75 a barrel.
But between June 1 and the end of August, WTI, the benchmark used for T&T's crude, averaged US$87.25 per barrel and while crude prices have recovered to between US$90 and US$99 in September, the actual revenue from the energy sector remains a black hole-especially in the context of curtailment of natural gas supplies and generally depressed natural gas prices.
The real hint that the deficit for the 2012 fiscal year is likely to be higher than the actual fiscal outturn of $1.039 billion in 2011 may come from the fact that the central Government unexpectedly went to the local capital market to raise $2.5 billion, in a bond issue that is due to price today. .
This week's bond, when added to the $1.5 billion that the Government raised to pay Clico policyholders with investments of more than $75,000, means that the central Government would have raised over $4 billion from the local capital market for the 2012 fiscal year-which was more than in 2011