Prime Minister Patrick Manning told the nation Thursday night in a television address that government is reassessing expenditure, deferring a number of projects and eliminating various expenses in order to deal with the challenges of the global financial crisis. And he called for the everyone to "tighten their belts".Manning also announced that based on the current economic situation government expects a $6-billion shortfall in revenue this year with a rise in unemployment.
“I would urge restraint at all levels since this is a period when we must all tighten our belts,” Manning said as he called for dialogue among government, business and labour to confront the imminent challenges.
He said his government is reviewing its 2009 budget with a view to making adjustments because of the serious change in the international economy. “It all points to a global economic slump which, in the view of experts, could be deep and prolonged— some even talk of a depression,” Manning said.
He said the local economy is already feeling the effect, having already seen a drop in its revenue from exports. “The prices of our major exports—oil and petroleum products, ammonia, methanol, urea and steel—have all been reduced,” he said.
Manning explained that when the budget was presented there was no indication of any serious impending international economic problems and that the projected oil price was realistic.
“The budget prices for oil and gas, at $70 per barrel and $4/mmbtu respectively, were therefore based on the best global advice from expert agencies, including the IMF,” he said as he acknowledged that things are turning out "quite differently".
The price of oil had been well below US$70 a barrel for several weeks and industry experts say it would stay below US$60 well into 2009. On Thursday it was around US$49 a barrel and has recovered slightly since then.
(Click here for a live minute-by-minute update on the price of oil)
The prime minister noted that falling prices of oil, natural gas, ammonia, urea and methanol would reduce anticipate revenue by about TT$6 billion for the fiscal year beased on the present situation with commodities.
However he warned that “Things could get more challenging. It is clearly a very serious situation requiring immediate action.”
He said based on a reassessment of government's planned expenditure he has decided on "a reordering of our developmental priorities and the deferral of some of the projects we consider essential to the realization of developed country status.”
He said Thursday's cabinet meeting considered recommendations from Finance Minister Karen Nunez-Tesheira for changes and adjustments to budgetary allocations. He said all ministers are doing a review of their respective ministries and various government departments and pledged to advise the public of proposed adjustments to the 2009 budget when the exercise is completed.
Manning said some of the anticipated cuts would include promotion, publicity and printing; materials and supplies; and goods and services and minor equipment.
Some development projects are also under review, he said, and pointed out some projects identified for review. These include:
- new projects other than those of an urgent or critical nature
- those projects for which there were no firm contractual obligations
- ongoing projects for which the pace of implementation could be reduced without legal penalties ongoing projects for which some components could be deferred
He said ministers are reviewing their budgets along these lines and promised that by next week cabinet would decide on the actual adjustments to keep expenditure in line with revenue.
Read the full text of Manning's address in the Trinidad Express
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