6 Government should not be directly involved in activities that can be handled

6 government should not be directly involved in

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6. Government should not be directly involved in activities that can be handled by the private sector or Non-Governmental Organisations. 1. The average annual oil price rose from US$41.4/bbl (WTI) in 2004 to US$99.6 in 2008. Subsequently, oil prices increased from US$61.7/bbl in 2009 to US$97.9 in 2013 and declined to US$93.1 and US$48.0 in 2014 and 2015, respectively. Over the period 2004 to 2011 the annual average LNG price was at least US$3.9/mmbtu in 2009 after peaking at US$8.9 in 2008 and averaged US$6.2 over the period. Subsequently, LNG prices increased from US$2.8/mmbtu in 2012 to US$4.4 in 2014 and declined thereafter to US$2.6 in 2015. Over the period, the budgeted price for oil and LNG tended to be exaggerated. 2. The current arrangement is that a maximum of 40 percent of excess energy revenue above estimated revenues finance the budget and the balance is transferred to the HSF. 3. In 2006, a flat personal income tax rate of 25 percent was introduced for persons earning more than $60,000 p.a. While corporation tax was reduced from 30 percent in 2004 to 25% in 2006. Since then both rates have remained unchanged. 4. Total expenditures to GDP rose from 26.2 percent in 2008 to 37.2 percent in 2009. The rate has been above 30 percent for the period 2010‒2015. 5. Total debt to GDP declined from 40.4 percent in 2002 to 23.8% in 2008. Thereafter the rate has increased from 36.3% in 2009 to 47.2 percent in 2015 and is projected to be 51.6% in 2016. 6. One can cite as an example the state’s housing programme as an area where there should be a significantly greater level of private sector involvement. Monetary Policy 1. The rate of inflation, the principal target of monetary policy, should be managed so as to remain at less than 5%, or in any event, no more than 2 percent higher than inflation in our main trading partner countries. 2. Real exchange rate appreciation should be monitored for its effects on the non-energy sector. 3. Foreign direct and portfolio investment by Trinidad and Tobago companies must be viewed in part as a desirable way of managing domestic absorption and liquidity conditions. 1. The rate of inflation rose from 3.7 percent in 2004 to 12% in 2008. For the period 2009 to 2015 the rate of inflation moved from 10.5 percent in 2010 to 9.3 percent in 2012 and trended down to 4.7 percent in 2015. In comparison, the inflation rate of the USA fluctuated from 2.7 percent in 2004 to 3.8 in 2008. It subsequently decline to -0.4 in 2009, peaked at 3.2 percent in 2011 and declined to 0.1 percent in 2015 (World Bank, World Development Indicators). 2. Unsure as to whether or not the actions related to item 2 were adopted. 3. Unable to verify the extent to which item 3 has been achieved. Incomes Policy 1. Wage and salary increases must continue to be determined by the collective bargaining process. 2. Government must eschew wage and price controls while promoting competitiveness in all sectors of the economy by the removal of bottlenecks and the use of market instruments. Essentially items 1 and 2 have been followed. However, there is an urgent need to ensure that merchants are not overcharging customers. In addition, there are still bottlenecks in key areas such as port operations and infrastructure and the price of fuel is still not being determined by the market.
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