The Bankers Association of Trinidad and Tobago (BATT) found the 2020/2021 national budget to be responsive towards the challenges facing Trinidad and Tobago, tabled as it was against extraordinarily challenging times – a projected 6.8% contraction this year arising from the fallout from the Covid-19 pandemic in addition to severely depressed energy prices and revenue and widening fiscal imbalances. The focus on regulatory reforms, e-governance and support for business growth, encapsulates the 2020/2021 fiscal package of “Resetting the Economy for Growth and Innovation”. With a projected deficit of $16.8bn for fiscal 2020, the Finance Minister announced balanced measures to help broad segments affected by a contracting economy and uncertainties brought about by Covid-19.
Against this background, BATT supports the new initiatives and focus areas to help business revive, survive and adapt through this period of uncertainty. On a sectoral level, Government’s intention to spend more on agriculture, as an immediate priority strategy, is constructive. Targeted aid in respect of a $500m agriculture stimulus package is a step in the right direction, particularly as farmers need help to safeguard numerous livelihoods and galvanize local food production. The support announced for developing downstream agriculture industries and creating a robust agri-business eco-system is well received, particularly in the context of reducing our $4bn annual food import bill, improving the balance of trade, securing supply chains and ensuring food security in these uncertain times. BATT believes that the development of agribusiness and agro-processing industries will enable growth and employment, especially in rural areas. As part of the government’s plan to strengthen the agricultural sector, BATT reiterates that agriculture must be promoted as a viable career option in the school curriculum with dedicated courses in both theory and practical elements.
Tax and Tax administration
The support announced for more efficient administration of tax revenues through the operationalization of the Revenue Authority is well-received, enhancing as it will, government’s revenue generation efforts. Addressing this issue, in conjunction with the creation of an electronic funds transfer window to facilitate the payment of taxes and simplify the VAT refund process for the business sector, would be a welcome development to maximize revenue collection while reducing the cost of doing business. In addition, given that the Trinidad and Tobago Revenue Authority Bill was laid in Parliament in 2018, we expect its passage to be a priority of the legislative agenda early in FY 2020/2021, as too, the broad intention in relation to the property tax which has been held in abeyance for too long.
The ongoing foray into a digitalized public sector is a welcomed measure which could lead to costs and time savings. We are encouraged that the government is committed to “an e-Governance eco-system” to accelerate already ongoing reforms in the public sector. There is now need for various government departments to do their part in facilitating all aspects of commercial activity, from registering business and property to providing data to support decisions. Without efficient services, it will be extremely difficult to improve the global competitiveness of our global business indicators, in which the country continues to perform below potential.
National Statistics Institute
With respect to an enhanced environment for investment and trade, the Minister has certainly considered industry feedback. The formulation of a National Statistics Institute is long outstanding and the impact of data deficiencies, for far too long, in respect of availability and timeliness place effective decision-making at risk. This is so across the board for both effective policy decisions, as well as in the private sector where up-to-date economic indicators inform decisions made by policy makers, business leaders and investors.
Business Sectors (Energy, Manufacturing and Construction)
While the diversification of the economy away from oil and gas has, for too long, been an elusive target, the adjustment to the SPT regime was a clear recognition of the valued contribution the sector will continue to make while policy focuses on developments in other sectors of the economy. There was therefore a clear focus in the budget on support schemes which were non-tax related to support the manufacturing, construction, creative and cultural sectors. Notably, these included public-private partnerships in housing, hospitals and highway to provide immediate stimulus to the economy, as well as technology adoption, the establishment of a new National Special Economic Zone Regime, EXIMBANK foreign exchange facilitation and expedited VAT refunds, which collectively are expected to catalyze competitiveness of the non-energy sector and as well as create much needed employment opportunities. In the midst of this, we look forward to clarity on the ‘when and how’ of the application of the property tax which will inform private sector investment going forward.
We are encouraged by the Minister’s pragmatism regarding the state of the economy. Appreciating the immediate critical economic constraints, and the climate of Covid-19 uncertainty, key to the success of the 2020/2021 Budget, and a modicum of economic turn-around, is a commitment to fiscal prudence, as according to the Central Bank’s latest economic bulletin, “the impact of the pandemic has heightened the imperative for coordinated fiscal, monetary and structural policies for assuring macroeconomic stability”.
BATT will in various platforms continue to support growth-enhancing initiatives and policy, in line with strengthening Trinidad and Tobago’s competitiveness, especially in this time of increasing uncertainty.