BATT: 2021 budget confronts challenges, proposes solutions
The Bankers Association of Trinidad and Tobago (BATT) believes the 2020/2021 national budget was responsive to the challenges facing the country.
That is, considering the projected 6.8% contraction of the economy arising out of the fallout from the COVID-19 pandemic, in addition to severely depressed energy prices, revenue and widening fiscal imbalances.
According to the association, Finance Minister Colm Imbert’s focus on regulatory reforms, e-governance and support for business growth, encapsulates his budget theme “Resetting the Economy for Growth and Innovation”.
With a projected deficit of $16.8 billion for fiscal 2020, Imbert had announced balanced measures to help broad segments affected by a contracting economy and uncertainties brought about by COVID-19.
As it relates to planned investment for Agriculture, BATT said it supports the new initiatives and focus areas to help businesses 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 $500 million agriculture stimulus package is a step in the right direction, particularly as farmers need help to safeguard numerous livelihoods and galvanise local food production.”
“The support announced for developing downstream agriculture industries and creating a robust agri-business ecosystem is well-received, particularly in the context of reducing our $4 billion annual food import bill, improving the balance of trade, securing supply chains and ensuring food security in these uncertain times.”
BATT said the development of agribusiness and agro-processing industries will enable growth and employment, especially in rural areas. As such, the association said agriculture must be promoted as a viable career option in the school curriculum with dedicated courses in both theory and practical elements.
Furthermore, the group addressed proposed taxes and the efficient administration of tax revenues.
BATT said the operationalisation of the Revenue Authority is well-received as it will enhance government’s income-earning 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 maximise 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.”
Meanwhile, the group noted that the ongoing foray into a digitalised 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.”
With respect to an enhanced environment for investment and trade, BATT praised the Minister for considering industry feedback.
The administration said the formulation of a National Statistics Institute is long outstanding as the impact of data deficiencies place effective decision-making at risk.
Ending on the topic of business sectors - namely energy, manufacturing and construction - BATT stated that while the diversification of the economy away from oil and gas has 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.
This, as it applauded the proposed support schemes which were non-tax related to support the manufacturing, construction, creative and cultural sectors.
The release noted that these include public-private partnerships in housing, hospitals and highways 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 catalyse competitiveness of the non-energy sector and create much needed employment opportunities.
However, BATT said it looks forward to clarity on when and how property tax will be applied 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’.
The association ended by pledging to continue to support growth-enhancing initiatives and policy, in line with strengthening Trinidad and Tobago’s competitiveness, especially in this time of increasing uncertainty.