TT Chamber underscores need for fiscal and monetary incentives to stimulate growth of non-energy sectors 

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TT Chamber underscores need for fiscal and monetary incentives to stimulate growth of non-energy sectors 

The T&T Chamber of Industry and Commerce is expressing concern about the expansion of the fiscal deficit, as stated by Finance Minister Colm Imbert in the mid-year review budget yesterday.  

In a statement, it said that given the shortfall between the budgeted versus actual hydrocarbon prices, it wanted to underscore the need for fiscal and monetary incentives that will stimulate the growth of the non-energy sectors of the economy.  

“We also stress the need for Private Public Partnership (PPP) to further advance our economic agenda. The foreign exchange shortage has undoubtedly created challenges for the business sector as the inability to access forex has led to delays in payments to foreign suppliers, undoubtedly straining relationships with these suppliers,” the chamber said.  

“Delays in payments for shipments have also slowed down business operations, leading to increased costs that are ultimately passed on to consumers. While the forex challenge impacts everyone, it has been significantly disruptive for micro-enterprises and SMEs, who may be forced to use private credit cards or resort to the black market to access forex,” it explained.

As such, the T&T Chamber noted solutions such as the foreign exchange facility proposed for SMEs in the last budget should be implemented soon to address these issues.  

However, the T&T Chamber did recognise that the proposed increase, with significant allocations to critical sectors such as healthcare, education, infrastructure, and social services, is a positive step towards fostering sustainable economic growth.

It also pointed out that the allocation of funds to support small and medium-sized businesses (SMEs) through the SME Development Fund and the focus on digital transformation and renewable energy projects are particularly welcomed by the business community.  

It stated that these initiatives align closely with the T&T Chamber’s strategic direction.

Regarding VAT Refunds, the chamber said it continues to advocate for affirmative measures being taken to clear the backlog that affects many companies that are in a receivable position for extended periods.  

“We note the minister’s efforts to assure that this will be fully addressed and will continue to monitor the progress on this critical cash flow issue,” the statement read.

The T&T Chamber added that it also recognises the Government’s efforts in addressing youth unemployment through new programmes aimed at skills training and entrepreneurship support.  

“This investment in human capital is essential for future economic development and is targeted at addressing gaps within the labour market,” it stated.

As it pertains to the recent International Monetary Fund (IMF) report, with T&T having experienced decades of deficit budgets, the Chamber outlined that the projected economic growth in the report is quite positive news that could inspire confidence in the T&T economy and potentially lead to further investments. While being cautiously optimistic, it added the reality is that oil and gas prices for the first six months of fiscal year 2024 have been below the prices on which the budget was based (US$85 per barrel of oil and US$5.00 per MMBtu for natural gas).  

“These lower prices, coupled with the fact that oil and gas production for the first half of FY 2024 has been 15 per cent and 5 per cent respectively lower than budgeted, highlight the stark reality that unless prudent fiscal measures are undertaken to improve economic conditions, such projected growth may be tempered,” it said.

Managing the inflation rate, the Chamber stressed, is crucial as it directly impacts the purchasing power of consumers and the financial pressures placed particularly on the more vulnerable members of society.  

The chamber added the minister’s indication that the value of the Heritage and Stabilisation Fund remains stable is a promising sign and it is optimistic that the initiatives outlined in the Mid-Year Review have the potential to positively impact the business community and the overall economic landscape.  

“As the country’s largest business organisation, we continue to make recommendations to address the challenges to the ease of doing business,” the Chamber added.