FY2023/2024 Budget Highlights

“Building Capacity for Diversification and Growth”

Commentary

First Citizens Logo

Estimates of Revenue & Expenditure for 2023/2024

Major Fiscal Allocations for FY2024 (TTD billion)

Economic Updates

Steady Economic Growth: The domestic economy grew by 1.5% in 2022. In the first quarter of 2023, growth increased to 3%, led by a buoyant non-energy sector.  The economic recovery is expected to continue, estimating a growth rate of 2.7% in 2023 and similar rates in 2024 and 2025. Both energy and non-energy sectors are now driving balanced growth, with the non-energy sector projected to expand by 2.6% in 2024 and 2% in 2025.

Unemployment Rate Improves: Unemployment rate dropped from 4.9% (January to March 2023) to 3.7% (April to June 2023) based on CSO’s latest data, indicating a positive trend in employment.

Decreasing Inflation Trend: After peaking at 8.7% year-on-year in December 2022, headline inflation significantly decreased to 4.0% in August 2023. This reduction was driven by softer pricing in both food and core components of the All Items Retail Price Index (RPI). Lower shipping costs, eased transportation bottlenecks, and reduced international food commodity prices contributed to the alleviation of input price pressures.

Fiscal Turnaround: Following a record 9.1% of GDP fiscal deficit during the pandemic in FY 2020, fiscal consolidation efforts resulted in a 0.6% GDP surplus in FY 2022. The estimated deficit for FY 2023 is expected to be less than 1.8% of GDP.

General Government Debt Increase: Adjusted General Government Debt is expected to rise to $137,209.6 million by the end of FY 2023. As a percentage of GDP, Adjusted General Government Debt will increase by 4.3 percentage points to 70.9%, up from 66.6% at the end of FY 2022. Central Government Domestic Debt, representing 51.3% of Adjusted General Government Debt, is projected to increase by 6.4% from $66,201.8 million in fiscal 2022 to $70,433.5 million in fiscal 2023, reaching 36.4% of GDP by the end of fiscal 2023.

Improved External Sector: Trinidad and Tobago’s Balance of Payments showed a reduced deficit of USD47.8 Mn in the first quarter of 2023, compared to a USD227.6 Mn deficit in the same period the previous year. This improvement was attributed to reduced outflows from the Financial Account and modest growth in the Current Account balance. As of September 22, 2023, gross official reserves reached USD6,358.6 million, providing 8.0 months of import cover.

Heritage and Stabilisation Fund Growth: The HSF’s Net Asset Value (NAV) increased by USD781.9 Mn, reaching USD5.5 Bn by September 15, 2023, from USD4.7 Bn at the end of FY2022, driven by positive investment returns and a USD182.2 Mn deposit in December 2022.

Favorable Investment Climate: Moody’s improved the outlook for Trinidad and Tobago’s rating to positive, affirming it at ‘Ba2’ in July 2023. S&P maintained the ratings of ‘BBB-’ with a stable outlook. In November 2022, CariCRIS reaffirmed a ‘CariAA’ rating with a stable outlook.

Proposed Fiscal and Other Measures (all measures w.e.f. 1 January 2024 unless stated otherwise)

DISCLAIMER

First Citizens Bank Limited (hereinafter “the Bank”) has prepared this report which is provided for informational purposes only and without any obligation, whether contractual or otherwise. The content of the report is subject to change without any prior notice.  All opinions and estimates in the report constitute the author’s own judgment as at the date of the report.  All information contained in the report that has been obtained or arrived at from sources which the Bank believes to be reliable in good faith but the Bank disclaims any warranty, express or implied, as to the accuracy, timeliness, completeness of the information given or the assessments made in the report and opinions expressed in the report may change without notice. The Bank disclaims any and all warranties, express or implied, including without limitation warranties of satisfactory quality and fitness for a particular purpose with respect to the information contained in the report. This report does not constitute nor is it intended as a solicitation, an offer, a recommendation to buy, hold, or sell any securities, products, service, investment, or a recommendation to participate in any particular trading scheme discussed herein. The securities discussed in this report may not be suitable to all investors, therefore Investors wishing to purchase any of the securities mentioned should consult an investment adviser. The information in this report is not intended, in part or in whole, as financial advice. The information in this report shall not be used as part of any prospectus, offering memorandum or other disclosure ascribable to any issuer of securities. The use of the information in this report for the purpose of or with the effect of incorporating any such information into any disclosure intended for any investor or potential investor is not authorized.

DISCLOSURE

We, First Citizens Bank Limited hereby state that (1) the views expressed in this Research report reflect our personal view about any or all of the subject securities or issuers referred to in this Research report, (2) we are a beneficial owner of securities of the issuer (3) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report (4) we have acted as underwriter in the distribution of securities referred to in this Research report in the three years immediately preceding and (5) we do have a direct or indirect financial or other interest in the subject securities or issuers referred to in this Research report.

Chat Here!