Pitcher: Budget spending should reflect falling oil prices
Sun, 04/17/2016 - 7:31pm
Caribbean states which are dependent on oil and gas revenue, must produce budgets to suit falling oil prices, according to Barbadian businessman, Robert Pitcher.
At a recent conference for the media, Pitcher said that as an oil producing country, Trinidad and Tobago, particularly, needs to be extremely mindful of the impact falling oil prices will have on their local economy, and therefore tighten budget spending to reflect the drop in oil prices.
“As it stands now, fuel is under US$40 dollars a barrel and all indicators from the experts say over the next five years, it will go further down before it starts to rise again. Oil will level off at maximum US$40-50 a barrel.
“Any country that does not produce a budget on that sort of figure is heading for serious problems like Trinidad and Tobago,” he said.
According to Pitcher, “Trinidad and Tobago had their budgets at over US$100 a barrel, and that’s how they were budgeting their economy. Now that prices are down under US$40 a barrel, they are experiencing
In its 2015-2016 budget, the government of Trinidad anticipated earning US$80 a barrel, but the price per barrel on the world market has dropped below US$40 a barrel.
Falling energy prices has been a source of concern for the industry in T&T, as the oil and gas industry is the driving force of their economy and a major source of the Government’s revenue. These woes have resulted in the cutting of government spending by 7 per cent and having to tap into a $1.5 billion from a stabilisation fund for the next few years.
While other Caribbean countries welcome the drop in oil prices, places like Trinidad and Tobago where oil and gas make up 40 per cent of the Gross Domestic Product (GDP) and 80 per cent of exports, the news is not good.
Speaking at a recent meeting with the President of the Hotel and Tourism Association and the tourist board in Tobago, Pitcher, who is a Marketing Consultant and the Director of Fun “n” Sun Publishing said, the country has to now look at other avenues or suffer economic hardship.”
“They now have to look to Tourism,” he said. “They now have to look for foreign dollars. If the foreign dollar is not coming from oil, they have to look for it from Tourism.”
While dropping oil prices may have more of a negative impact on countries like T&T, the businessman believes all other Caribbean countries may be affected in one way or the other.
Pitcher stated, “Oil affects everything because it's the movement of goods.
“If the goods are costing more, because Trinidad just counted on 7.5 per cent more of the oil being used in the service industry, it means when you go into the supermarkets to buy, it is 7.5 plus. So food is going to cost you more throughout the Caribbean.” (KW)