PORT OF SPAIN, Trinidad — In his first address to the nation since taking office in September, Trinidad and Tobago Prime Minister Dr Keith Rowley announced a number of economic belt tightening measures, including a seven percent across the board cut in government expenditure, made necessary by the continuing fall in oil and gas prices.
Oil revenues amount to about TT$20 billion, or one third of total national revenue, and in June 2014, the price of West Texas Intermediate (WTI), Trinidad’s benchmark crude oil, was US$106 per barrel. In December 2014, it had declined to US$59 and it is now in the region of US$36 per barrel, Rowley noted.
“You may recall that the 2015 budget was prepared on an anticipated oil price of $80/barrel. As the oil price continued its relentless downward slide we were told early in the year that there was a new budgetary horizon based on downward adjustment to $45/ barrel. This never happened but expenditure remained as if the revenue flows were coming in as originally planned,” he said.
“You will also recall that the incoming new government based the current 2016 Budget on an oil price of US$45 per barrel, in October. Today the price of oil is hovering around $36.00/barrel,” he added.
Rowley failed to mention, however, that his People’s National Movement (PNM) manifesto promises ahead of the September 7 general election were also based on an oil price of $80 per barrel, despite clear signs that this was never going to be realised in practice.
Similarly, the price of liquefied natural gas (LNG) in the Japanese market declined from US$16.40/ mmbtu in June 2014 to US$15.70/mmbtu in December 2014 and is now around US$9.00/mmbtu.
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