Resilience in the Face of a Global Pandemic
The last two years have certainly been some of the most challenging for the global economy as a result of the global pandemic.
As we learn to live with the Novel Coronavirus however, the Global economy is projected to grow by 6% by end of this year and 5 % in 2022, after a 3.3 % contraction in 2020.
Growth is expected to be positively correlated to climbing vaccination rates as many countries are expected to approach herd immunity.
This is a critical ingredient in returning to some form of normalcy.
The Honourable Minister Colm Imbert in his budget statement for fiscal year 2022, attempted to employ his fiscal weapons against a war set in a “Delta Economy”. It is characterized by frustrated global supply chains and ballooning transportation costs, which have led to increases in the prices of various goods including food.
These trends speak to the everchanging dynamic in consumption patterns of the COVID-19 pandemic and the impact of the emergence of more contagious variants. In the spirit of the presentation’s theme of “Resilience in the Face of a Global Pandemic”, the Honourable Minister seemed to dismiss the economic threats posed by global supply chains as a transitory phenomenon.
It can be argued that the economy stands slightly stronger compared to the previous year’s budget, albeit on fragile ground.
The 2022 budget seems to communicate the fact that T&T has come to terms that it cannot rely on oil revenue as it did historically. The motion for the diversification of the economy continues to be high on the budget agenda every year without much crystallisation into reality.
The government continues to explore opportunities in digitalization and research and development space which is a welcomed position at this time. Further, the government’s commitment as an enabler to diversification, is expressed in investments in education and health. These investments, coupled with law and order, in our view represents the key pillars of a modern economy.
Proposed Fiscal Measures for 2022
- Significant exporters of local goods
- Small and Medium Enterprises (SME) technology solutions, construction and digitisation
- Start ups in digital sector (technology solutions and digitisation)
- Research and Development (R&D) capital allowance
- Carbon capture
- Penalties for overweight trucks
- Small and Medium Enterprises (SME) on Trinidad and Tobago Stock Exchange
- First Citizens Holdings Limited sale of ordinary shares
- Manufacuring sector: development and expansion incentive (DEI)
- Investment sector: Withholding tax rate
- Tax strengthening the Board of Inland Revenue: Recruitment of 100 audit & compliance officers
- Tax allowance for first time homeowner