The Cen­tral Bank’s Eco­nom­ic Bul­letin for Ju­ly paints a pic­ture of T&T with mount­ing Pub­lic sec­tor debt, a mas­sive fis­cal deficit, in­creased un­em­ploy­ment and ris­ing food prices.

The re­port said Pub­lic Sec­tor debt in­creased over the first eight months of FY2020/21 (Oc­to­ber 2020 – May 2021), pri­mar­i­ly due to Cen­tral Gov­ern­ment bor­row­ing on the do­mes­tic mar­ket. At the end of May 2021, pub­lic sec­tor debt out­stand­ing amount­ed to $126.8 bil­lion , com­pared to $121.3 bil­lion at the end of Sep­tem­ber 2020.

The re­port al­so not­ed that the Cen­tral Gov­ern­ment do­mes­tic debt saw an in­crease (ex­clud­ing ster­ilised debt) amount­ing to $62.9 bil­lion (42.6 per cent of GDP) at the end of May 2021, up from the $56.5 bil­lion record­ed at the end of Sep­tem­ber 2020.

The re­port said over the eight-month pe­ri­od, ap­prox­i­mate­ly $10.8 bil­lion was bor­rowed un­der the De­vel­op­ment Loans Act, of which $7.5 bil­lion was used for bud­getary sup­port, while $3.3 bil­lion was used for re­fi­nanc­ing ma­tur­ing oblig­a­tions.

The re­port point­ed to da­ta from the Cen­tral Sta­tis­ti­cal Of­fice (CSO) the un­em­ploy­ment rate stood at 5.1 per cent in the sec­ond quar­ter of 2020 com­pared with 4.4 per cent in the cor­re­spond­ing quar­ter of 2019. The Cen­tral Bank ac­knowl­edged that the un­em­ploy­ment fig­ures are dat­ed and it was un­able to get ac­cu­rate fig­ures for 2021.

The re­port said, “Sup­ple­men­tary in­di­ca­tors used by the Bank to mon­i­tor over­all labour mar­ket con­di­tions, such as re­trench­ment no­tices and print me­dia job ad­ver­tise­ments sug­gest that con­di­tions re­main rel­a­tive­ly weak. Ac­cord­ing to the Min­istry of Labour, 534 per­sons were re­trenched dur­ing the first five months of 2021, com­pared with 475 per­sons dur­ing the sim­i­lar pe­ri­od of 2020.”

The Cen­tral Bank said while the num­ber of re­trench­ments has in­creased in 2021, this fig­ures re­port­ed may not re­flect those per­sons who lost jobs due to busi­ness clo­sures.

The ma­jor­i­ty of re­port­ed re­trench­ments dur­ing the first five months of 2021 oc­curred in the en­er­gy sec­tor with 183 per­sons fol­lowed by dis­tri­b­u­tion, restau­rants and ho­tels (156 per­sons) and man­u­fac­tur­ing (108 per­sons) in­dus­tries.

The re­port al­so recog­nised that there was a con­sid­er­able de­crease in the num­ber of job ad­ver­tise­ments pub­lished in the print me­dia dur­ing the first sev­en months of 2021, those print ad­ver­tise­ments de­clined by 28.7 per cent (year-on-year), “im­ply­ing that the de­mand for labour re­mains weak.”

T&T’s non-en­er­gy eco­nom­ic out­put, how­ev­er should see mean­ing­ful re­cov­ery in the lat­ter half of 2021, ac­cord­ing to the Cen­tral Bank.

The bank said do­mes­tic eco­nom­ic ac­tiv­i­ty de­clined in the first quar­ter of 2021 due to re­duced out­put in both the en­er­gy and non-en­er­gy sec­tors while head­line in­fla­tion re­mained mut­ed dur­ing the first six months of 2021, re­flec­tive of sub­dued do­mes­tic eco­nom­ic ac­tiv­i­ty.

The Cen­tral Bank how­ev­er ac­knowl­edge food prices con­tin­ued to rise and were ex­pect­ed to in­crease fur­ther.

The re­port said, “Food price in­fla­tion is ex­pect­ed to con­tin­ue its re­cent up­ward trend in the short- to medi­um-term. Giv­en pan­dem­ic-in­duced glob­al food sup­ply short­ages, in­ter­na­tion­al food prices have surged in re­cent times. “

The in­crease in food prices was led by surg­ing prices for ce­re­als, sug­ar and veg­etable oils as well as chal­lenges faced by lo­cal food im­porters whose costs have in­creased due to an in­ter­na­tion­al short­age of ship­ping con­tain­ers and high­er ship­ping costs (freight and in­sur­ance) along re­port­ed re­quests for pay­ment in US dol­lars amid forex short­ages.

Oth­er fac­tors im­pact­ed food prices, as the re­port ac­knowl­edged the in­crease in an­i­mal feed costs, which was trans­mit­ted to lo­cal food prices dur­ing March to June. The Cen­tral Bank said this is ex­pect­ed to have lin­ger­ing ef­fects in the com­ing months.

Re­cent flood­ing in sev­er­al agri­cul­tur­al com­mu­ni­ties in Ju­ly and Au­gust was al­so seen as a po­ten­tial cause for price in­creas­es as are warm-weath­er plant dis­eases that may bring sup­ply dis­rup­tions for lo­cal pro­duce.

Re­cent­ly farm­ers in Plum Mi­tan es­ti­mat­ed mil­lions in crops had been lost due to flood­ing on their farm­lands. Those crops were due to be sold to Namde­v­co.

The re­port said, “The short-term eco­nom­ic out­look for T&T will be di­rect­ly im­pact­ed by the virus’ path and the do­mes­tic re­sponse. If sus­tained, the grad­ual re­lax­ation of re­stric­tions on move­ment and busi­ness ac­tiv­i­ty from Au­gust could see, by the end of 2021, a mean­ing­ful re­cov­ery of non-en­er­gy out­put lost dur­ing the first two quar­ters of the year.”

The re­port how­ev­er said there re­mained un­cer­tain­ty con­cern­ing the “evo­lu­tion of the pan­dem­ic glob­al­ly “ and as re­sult lo­cal poli­cies with re­gard to fis­cal, mon­e­tary and struc­tur­al ap­proach­es would be cru­cial to the econ­o­my’s re­bound go­ing for­ward.

Central Bank in Port-of-Spain.

ROBERTO CODALLO

The re­port not­ed for the first nine months of the year, high­er non-en­er­gy re­ceipts cou­pled with low­er spend­ing con­tributed to a small­er deficit for fis­cal year 2020/2021 in the Cen­tral Gov­ern­ment ac­counts com­pared to the same pe­ri­od one year ear­li­er.

The Cen­tral Bank con­firmed that gross of­fi­cial re­serves stood at US$6,649.2 mil­lion, which meant the coun­try main­tained im­port cov­er of 8.1 months up the end of Ju­ly 2021. The re­port said at the end of Ju­ly 2021, gross of­fi­cial re­serves were low­er than the lev­el (US$6,953.8 mil­lion) at the end of De­cem­ber 2020. How­ev­er they ac­knowl­edged the re­cent in­ter­na­tion­al co­or­di­na­tion ef­forts spear­head­ed by the In­ter­na­tion­al Mon­e­tary Fund (IMF) to im­prove glob­al liq­uid­i­ty, es­pe­cial­ly among poor and vul­ner­a­ble economies, which saw Trinidad and To­ba­go ben­e­fit from an al­lo­ca­tion of Spe­cial Draw­ing Rights (SDR) equiv­a­lent of ap­prox­i­mate­ly US$644 mil­lion to its stock of in­ter­na­tion­al re­serves at the end of Au­gust 2021.

In­ter­est­ing­ly, the re­port said the In­dex of Pro­duc­tiv­i­ty in­creased by 12.0 per cent (year-on-year) dur­ing the first quar­ter of 2021.

Ac­cord­ing the re­port apart from the en­er­gy sec­tor the In­dex of Pro­duc­tiv­i­ty in­creased by a more ro­bust 19.6 per cent (year-on-year) dur­ing the first quar­ter of 2021, re­flect­ing high­er lev­els of do­mes­tic pro­duc­tion in the non-en­er­gy man­u­fac­tur­ing sec­tor.

The re­port said, “Sim­i­lar to most of 2020, high­er lev­els of pro­duc­tion (18.3 per cent) along­side a si­mul­ta­ne­ous re­duc­tion in hours worked (1.1 per cent) were re­spon­si­ble for this pos­i­tive out-turn in non-en­er­gy pro­duc­tiv­i­ty dur­ing the first three months of 2021.

The re­port said that as­sem­bly-type and re­lat­ed prod­ucts and food pro­cess­ing in­dus­tries had the largest in­creas­es in pro­duc­tion (51.7 per cent and 29.6 per cent, re­spec­tive­ly), whilst the re­duc­tion in hours-worked was con­cen­trat­ed in the drink and to­bac­co (15.8 per cent) and mis­cel­la­neous man­u­fac­tur­ing (9.6 per cent) in­dus­tries.

The re­port recog­nised that many busi­ness in a bid to cope with the fi­nan­cial strained placed on their op­er­a­tions as a re­sult of pub­lic health re­stric­tions con­tin­ued to stream­line their busi­ness process­es.

The re­port how­ev­er not­ed that de­spite some stream­lin­ing with­in the en­er­gy sec­tor, low­er pro­duc­tiv­i­ty was main­ly due to de­clines in do­mes­tic pro­duc­tion in the nat­ur­al gas ex­plo­ration and pro­duc­tion (8.0 per cent) and nat­ur­al gas re­fin­ing (21.0 per cent) in­dus­tries.

The Cen­tral Gov­ern­ment’s to­tal rev­enue in­creased by $916.2 mil­lion as a re­sult high­er non-en­er­gy re­ceipts. Non-en­er­gy rev­enues in­creased by $1.3 bil­lion on ac­count of high­er tax col­lec­tions from in­come and prof­its, goods and ser­vices and in­ter­na­tion­al trade and cap­i­tal rev­enue.

The gov­ern­ment’s de­ci­sion to re­move con­ces­sions on Hy­brid and Com­pressed Nat­ur­al Gas (CNG) ve­hi­cles proved help­ful in push­ing up rev­enues as the re­port recog­nised “col­lec­tions from tax­es on goods and ser­vices were high­er on ac­count of the twin ef­fect of a fall in the pay­out of VAT re­funds and the re­moval of tax con­ces­sions on Hy­brid and Com­pressed Nat­ur­al Gas (CNG) ve­hi­cles.”

The ad­just­ment in con­ces­sions, the re­port said caused net VAT re­ceipts and mo­tor ve­hi­cle tax­es and du­ties to in­crease.

“De­spite a more favourable than bud­get­ed out-turn up to June 2021, the Cen­tral Gov­ern­ment an­tic­i­pates a high­er fis­cal deficit for FY2020/21. In the 2021 Mid-Year Bud­get Re­view of June 2021, the Cen­tral Gov­ern­ment re­vised down­wards its ini­tial rev­enue pro­jec­tions on ac­count of low­er rev­enue col­lec­tions, par­tic­u­lar­ly from the en­er­gy sec­tor. Ad­di­tion­al­ly, to­tal ex­pen­di­ture was in­creased by $2.4 bil­lion to pro­vide sup­port amid the COVID-19 pan­dem­ic.

The Cen­tral Bank pro­ject­ed the re­vised bud­get­ed deficit at $16.3 bil­lion (11.0 per cent of GDP). How­ev­er, the Cen­tral Bank said the Tax Amnesty which was start­ed on Ju­ly 5 and is set to run to Sep­tem­ber 30, may re­duce that pro­ject­ed deficit based on rev­enue gen­er­at­ed from the ex­er­cise.