This, from the Minister of Finance Colm Imbert as he sought to clarify some misconceptions about the drawdown of $2.5 billion from the Heritage and Stabilisation Fund.
In a statement issued on the HSF on Friday, he said: "There are strict legal rules for drawdowns and the maximum permitted drawdown for 2016 is US$675 million, of which we have drawn down US$375 million so far. At this time, we envisage no further drawdowns in fiscal 2016, but if it becomes necessary to provide the required support for Government expenditure in 2016, we will consider all options for financing the service of the Republic of Trinidad and Tobago, including the remaining available drawdown from the HSF for 2016."
Reading from a statement in the Parliament on Friday, he defended the decision to withdraw the sum of $2.5 billion, recalling that when the Government came into office in September 2015, it found that the previous Government had "burnt through over $6 billion in credit it found in 2010 and had used up virtually all of the $9 billion overdraft available to the State."
He said this represented a loss of Government funds of $15 billion and meant that the Government's account was in overdraft.
"In May 2016, because of severely depressed revenues from petroleum, the overdraft reached 100% of its limit and unless urgent action was taken, the Government would have been unable to pay salaries or pay for critical and essential goods and services. In accordance with the HSF Act therefore, the Ministry of Finance decided on a drawdown from the Fund in the amount of TT$2.5 billion, or US$375 million, out of the legally permissible TT$4.5 billion. This was the only available source of funds in May 2016. If we had not done this, the Government would have been guilty of fiscal irresponsibility and the country might have been in crisis."
Minister Imbert clarified that the Prime Minister had previously made it clear that once it was required and permissible, Government would drawdown up to US$1 billion from the HSF in 2016 for budgetary support and this drawdown, representing US$375 million, is below that amount.
He also denied claims that the $2.5 billion would be used for "all sorts of dubious purposes" such as electioneering and maintained that it was meant to keep the country afloat.
"The HSF drawdown was simply to finance the well-known budget deficit, not for any item in the budget in particular. When I used the term 'for the service to Trinidad and Tobago' in 2016, that is exactly what I meant... To put it in local parlance, this simply means to pay the country's bills."
Minister Imbert insisted that the criteria for withdrawing the sum had been met as he noted that for the period October 1st, 2014 through September 30th, 2015 the revenue from petroleum was only TT$11.6 billion, which was TT$7.5 billion below the projected petroleum revenue of TT$19.1 billion for fiscal 2015.
"This shortfall of $7.5 billion in 2015 represented a reduction in revenues of almost 40%, which was well beyond the threshold of 10% contained in Section 15(1) of the Act. Accordingly, since October 2015, the conditions for a drawdown from the HSF were met. Further, as per Section 15(1)(a), 60% of this shortfall represents TT$4.5 billion."
Minister Imbert said Rating Agencies as well as the IMF saw buffers such as the HSF as a means to contain the increase in public debt.
He said Government has intentions to bring legislation to amend the HSF Act in order to separate the Heritage from the Stabilisation element.
"The HSF Act, which was approved by Parliament in 2007, called for a five-year review, which should have been completed by March 2012. I am told that sometime in early 2012 there were discussions with a World Bank in which the then Minister Of Finance (Minister Dookeran) participated and that a draft of an amendment to the HSF had been prepared. Between March 2012 and June 2015, the previous Government had more than ample time to introduce the amendment but it did not happen. It is however, this Government's intention to undertake the necessary public consultation and bring the Amendment to Parliament before the end of this year. Incidentally, The HSF legislation does not require Parliament's approval for a withdrawal, as members opposite are well aware. It was never intended for that purpose. Parliament was required to approve the savings and withdrawal rule, i.e. the formula and conditions precedent for draw downs, and it did so in 2007. Parliament also has to ensure, at the time of the annual reporting, that the deposits into the Fund and any withdrawals are consistent with the legislation."
The Finance Minister also reminded that he mentioned the drawdown as recently as his Mid Year Budget Review in April and the Prime Minister also highlighted the possibility of this withdrawal in his contribution to the budget debate last year.