Post Cabinet Briefing Summary – Thursday 16th June, 2016

The Honourable Colm Imbert, Minister of Finance, and the Honourable Shamfa Cudjoe, Minister of Tourism, addressed members of the media during the Post Cabinet Press Briefing today (Thursday 16th June, 2016) at the Office of the Prime Minister, St. Clair, Port of Spain.

Minister Imbert provided an update on the Government’s borrowing programme for fiscal 2016.

In February 2016, Cabinet approved a 3 billion dollar bond issue on the domestic market to finance the deficit in the 2016 budget. The budget deficit for this year is now estimated at 7 billion dollars and it will be financed through a combination of borrowing mechanisms.

The first billion dollars was settled in May 2016 at which time the Central Bank, on behalf of the Government, conducted an auction system. The total bids received amounted to an over subscription of 1.88 billion dollars. The Government took 1.1 billion of the 1.88 billion that was offered at an interest rate of 4.75%.

The Minister highlighted that the majority of bids were at 4.5% while the last set of bids was at 4.75%. This means the entire 1.1 billion was taken at the rate of 4.75%

In order to avoid the reoccurrence of that situation, the Minister of Finance instructed the technocrats at the Ministry of Finance to use another approach, that of a Request for Proposals, for the remaining 2 billion dollars. At the end of the evaluation procedure, Cabinet agreed to the award of a bond for 2 million dollars at a rate of 4.5% thereby concluding a total of 3 billion dollars borrowed locally for this fiscal year.

Minister Imbert also informed that additional financing will be sought on the international market. In May 2016 Cabinet approved recommendations from the Ministry of Finance to go overseas and do a Road-Show to raise 1 billion US dollars to finance the 2016 fiscal year deficit. This sum would also take the country into fiscal 2017.

The Road-Show involves a presentation to premier US banks by the Minister of Finance, senior ministry officials and representatives of the Central Bank. The presentation will be based on Trinidad and Tobago’s economy and will invite them to participate in an international bond of 1000 million or 1 billion US dollars. Visits to Boston, Chicago, New York and possibly Los Angeles are proposed. This approach was employed by the previous administration in 2014.

Minister Imbert also noted some of the benefits of this venture. The foreign currency gained will be added to the country’s foreign exchange reserves and will be repaid over a number of years. There may even be better rates available as compared to local rates. Furthermore, it will engender confidence in Trinidad and Tobago’s economy and aid in cash flow problems.

Minister Imbert explained that the borrowing of 3 billion dollars on local market has affected the country’s liquidity and that in going overseas there is no issue of liquidity.

Minister Imbert also sought to clarify any misunderstandings regarding the draw down on the Heritage and Stabilisation Fund and emphasised that a sum of 2.5 billion TTD was withdrawn from the fund.

Also present at the Post Cabinet Press Briefing was the Minister of Tourism, the Honourable Shamfa Cudjoe, who delivered an update on the Maracas Bay development project.

Minister Cudjoe stated that contracts for immediate remedial works will be issued within the next week.

The Minister also noted that the Ministry of Tourism has already engaged other government agencies, such as the Water and Sewage Authority (WASA) and the Programme for Upgrading Roads Efficiency Unit (PURE), to do immediate maintenance work on the Maracas Beach development project as of Saturday June 11th, 2016.

In addition, the Ministry of Tourism is working with the National Infrastructure Development Company Limited (NIDCO) on the project. NIDCO will supervise, coordinate and manage the project going forward.

Minister Cudjoe announced that the Maracas Bay development project will be split into three (3) packages. The first package will be carried out by PURE and consists of road and drainage works. The second and third packages, which will be handled by NIDCO, deals with the construction of vending booths and buildings such as washrooms as well as the sewer and water treatment plant respectfully.

The Honourable Stuart Young, Minister in the Office of the Prime Minister and the Office of the Attorney General and Legal Affairs, was also present to respond to questions posed by the media on additional items.