Energy to the Rescue

May 1, 2011

Trinidad & Tobago could see its budget deficit shrink thanks to rising oil and gas prices. International investors are likely to welcome the twin-island nation with open arms.

Keywords: Trinidad & Tobago oil prices T & T

by Taina Rosa

Oil and gas exporter Trinidad and Tobago (T&T) is expected to post a budget deficit this year. But soaring energy prices are likely to increase revenues for its quasi-sovereign energy companies and raise tax receipts from private energy companies, helping to reduce the deficit’s size. To cover the gap, the finance ministry has already said it might tap the international markets via a bond issue. Analysts who study the country say that raising the necessary funds should not be a difficult task for the investment grade sovereign.

According to estimates from the local central bank, the energy sector accounted for about 35.8% of T&T’s GDP in 2009 and 35.7% in 2010. It also accounts for 80% of exports.

“The government’s fiscal year 2011 (FY11) budget envisions a deficit of $1.3 billion, or 5.5% of GDP, based on conservative energy...

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