GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­lessar@guardian.co.tt

For­mer fi­nance min­is­ter and Op­po­si­tion Sen­a­tor Vish­nu Dhan­paul has warned that a pro­ject­ed bud­get deficit of close to $10 bil­lion could con­front the Gov­ern­ment as it pre­pares the 2027 na­tion­al fis­cal pack­age, not­ing that low­er en­er­gy prices and un­der­per­form­ing rev­enue mea­sures may cre­ate sig­nif­i­cant fis­cal chal­lenges in the year ahead.

Speak­ing at a PNM news con­fer­ence yes­ter­day, Dhan­paul, who served as per­ma­nent sec­re­tary in the Min­istry of Fi­nance, said if cur­rent trends in oil and gas mar­kets con­tin­ue and all oth­er fac­tors re­main equal, the coun­try’s fis­cal po­si­tion could de­te­ri­o­rate be­yond the $7 bil­lion deficit pro­ject­ed in the mid-year re­view.

“We are pro­ject­ing that this year, based on oil prices, gas prices, what’s go­ing on in Iran and all the events tak­ing place in that re­gion, we are pro­ject­ing a deficit of close to $10 bil­lion,” he ex­plained.

He not­ed that while the deficit is ex­pect­ed to widen, the Gov­ern­ment would like­ly seek to man­age ex­pen­di­ture care­ful­ly rather than present such a large deficit to in­ter­na­tion­al fi­nan­cial in­sti­tu­tions and cred­it rat­ing agen­cies.

Dhan­paul sug­gest­ed that spend­ing could be ad­just­ed to keep the deficit clos­er to $3 bil­lion, or be­low five per cent of GDP.

He al­so ques­tioned the sta­tus of sev­er­al rev­enue ini­tia­tives an­nounced in the cur­rent bud­get.

He not­ed that pro­pos­als in­clud­ing an on­line sales tax, a Re­al Es­tate In­vest­ment Trust and a trans­fer pric­ing regime have yet to be im­ple­ment­ed, adding that lit­tle has been heard about plans linked to the Re­vi­tal­i­sa­tion Blue­print and oth­er mea­sures in­tend­ed to gen­er­ate new rev­enue streams.

At the same time, Dhan­paul ar­gued that the Gov­ern­ment’s rev­enue po­si­tion has been af­fect­ed by the re­moval of VAT from nu­mer­ous items, while tax­es such as the as­set levy, land­lord sur­charge and elec­tric­i­ty sur­charge have not yet gen­er­at­ed their full ex­pect­ed im­pact.

Analysing the coun­try’s fis­cal po­si­tion, Dhan­paul em­pha­sised that two pri­ma­ry met­rics re­quire ur­gent, crit­i­cal scruti­ny.

“Eyes will be kept on debt sit­u­a­tion in the up­com­ing bud­get and sec­ond­ly, run­ning con­tin­u­ous fis­cal deficits is dri­ving cash bal­ances at cen­tral bank through the roof. We keep­ing an eye on those two crit­i­cal things,” he stat­ed.

Ad­dress­ing how state plan­ners might at­tempt to nav­i­gate these struc­tur­al gaps on pa­per, Dhan­paul pro­ject­ed that the ad­min­is­tra­tion would try to man­age tech­ni­cal tar­gets by ad­just­ing rev­enue base­lines.

How­ev­er, Dhan­paul stressed that ar­ti­fi­cial­ly set­ting high­er bench­mark en­er­gy prices of­fers on­ly tem­po­rary ac­count­ing lee­way, es­pe­cial­ly giv­en T&T’s ex­po­sure to glob­al com­mod­i­ty mar­kets be­yond lo­cal con­trol.

“It’s a tough sit­u­a­tion be­cause your ma­jor re­source, the ma­jor in­put in­to the bud­get, oil and gas prices, ex­oge­nous fac­tors to the bud­get which you have no con­trol over. The hard de­ci­sions will have to be tak­en, ei­ther rev­enue in­creas­ing or ex­pen­di­ture re­duc­ing. The Gov­ern­ment is fac­ing a bill, an ex­pen­di­ture bill of $500 mil­lion a month be­fore $1 is earned,” he added.

High­light­ing the com­pound­ing com­mit­ments on the state’s bal­ance sheet, Dhan­paul point­ed to re­cent pub­lic sec­tor wage set­tle­ments that have per­ma­nent­ly ex­pand­ed base­line re­cur­rent spend­ing.

“Are you go­ing to ad­just old age pen­sion? Are you go­ing to ad­just dis­abil­i­ty grant? You just in­crease wages and salaries by 10 per cent,” he said.