2007 - Central Bank of Trinidad and Tobago

2007 ANNUAL ECONOMIC SURVEY

Central Bank of Trinidad and TobagoP.O. Box 1250Port-of-SpainRepublic of Trinidad and Tobagowww.central-bank.org.tt© Copyright 2007 Central Bank of Trinidad and TobagoISSN 1011-6311

ANNUAL ECONOMIC SURVEY 2007Review of the National Economy

TABLE OF CONTENTSReview of the National EconomyChapter One - Overview of Economic Developmentsin 2007 and Prospects for 2008Overview of Economic Developments in 2007Short Term Outlook and Prospects for 2008Chapter Two - National AccountsGross Domestic ProductGross Domestic ExpenditureChapter Three - Domestic ProductionPetroleum and PetrochemicalsNatural GasPetrochemicalsIron & SteelAgricultureChapter Four - The Labour MarketThe Labour MarketIndustrial RelationsWagesProductivityChapter Five - PricesConsumer PricesWholesale PricesChapter Six - Fiscal OperationsFiscal OperationsPublic Sector External DebtCentral Government Domestic DebtChapter Seven - Monetary and Financial DevelopmentsMoney, Credit and Interest RatesInstitutional Developments 2007Chapter Eight - The Domestic Capital MarketBondsEquitiesMutual FundsChapter Nine - International Trade and PaymentsBalance of PaymentsCurrent AccountCapital AccountEffective Exchange Rates4712141819232324262931343637424343505356565762626265

TABLE OF CONTENTS CONTINUEDCHARTSChart 1 Real GDP Growth 1997 - 2007Chart 2Natural Gas and Petroleum PricesChart 3Petrochemical PricesChart 4Gross Official Reserves and Import CoverChart 5Trends in Labour Force and UnemploymentChart 6Index Retail PricesChart 7GDP Deflator, Index of Retail Prices and Index of Producer PricesChart 8Monetary AggregatesChart 9Trinidad and Tobago Stock Price IndicesChart 10 Mutual Funds - Aggregate Fund Values1111111122BoxesBox 1Box 2Box 3Box 4Developments in the Energy SectorThe 2007 Ryder Scott Natural Gas AuditDevelopments in the Labour MarketGlobal Food Prices19232728TablesTable 1 Selected Economic Indicators, 2003-2007Table 2 Economic Contribution of the Energy Sector, 2003-2007Table 3 Growth In GDP At Constant (2000) Prices By Sector, 2003-2007Table 4 Gross Domestic Expenditure and Gross National Product, 2003-2007Table 5 Gross Domestic Expenditure, 2003-2007Table 6 Gross Domestic Expenditure and Gross National Product, 2003-2007Table 7 Savings and Investment, 2003-2007Table 8 Labour Force Statistics, 2004-2007Table 9 The Sectoral Distribution Of Employment, 2004-2007Table 10 Summary Industrial Agreements Registered in 2006 for the Period 1997-2009Table 11 Agreements Registered in 2006 by SectorTable 12 The Manufacturing Sector: Changes in Key Economic IndicatorsTable 13 Inflation, 2005-2007Table 14 Summary of Central Government Finances, 2004/05-2007/08Table 15 Summary of Central Government Finances, in per cent 2004/05-2007/08Table 16 Summary of Central Government Fiscal Operations, 2003/04-2007/08Table 17 Trinidad and Tobago: Energy-Based Government Revenues, 2003-04 - 2006/07Table 18 Central Government Fiscal Operations, in per cent of GDP, 2004/05 - 2006/07Table 19 Central Government Expenditure, A Functional Classification 2002/03 - 2006/07Table 20 Summary of Monetary Conditions 2005/07Table 21 Factors Influencing Changes in the Money Supply 2003/07Table 22 Primary Bond Market Activity, January – December 2007Table 23 Stock Market IndicesTable 24 Mutual Funds Under Management by Type of FundTable 25 Summary of Balance of Payments 2003/07Table 26 Effective Exchange Rates 2003/07Table 27 Prices of Selected Commodities8913151516162728323334374445464747485252585960646671

TABLE OF CONTENTS CONTINUEDAppendicesAppendix One - International Commodity Markets67Appendix Two - Economic StatisticsList of Tables A.1 - A.44Appendix Three - CALENDAR OF KEY ECONOMIC EVENTSJanuary - December, 200773123

SELECTED ECONOMIC INDICATORSCHART 1REAL GDP GROWTH 1997 - 2007CHART 2NATURAL GAS AND PETROLEUM PRICESCHART 3petrochemical pricesCHART 4gross official reserves and import coverCHART 5trends in labour force and unemploymentCHART 6index of retail prices(year-on-year per cent changes)CHART 7gdp deflator, index of retail prices andindex of producer prices(ANNUAL changes)CHART 8MONETARY AGGREGATES1

SELECTED ECONOMIC INDICATORS CONTINUEDCHART 9TRINIDAD AND TOBAGO STOCK PRICE INDICESCHART 10MUTUAL FUNDS - AGGREGATE FUND VALUES2

OVERVIEWOF ECONOMICDEVELOPMENTSin 2007 andProspects for 2008CHAPTER ONE

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007Overview ofEconomic Developmentsin 2007 and Prospects for 2008(a)Overview of EconomicDevelopments in 2007Financial turmoil and economic uncertainty in global markets...During 2007, the lingering effects of the sub-prime crisisprecipitated a severe credit crunch leading to turmoilin global financial markets. Total losses from the crisishave been estimated at around US$ 1 trillion by theInternational Monetary Fund. At the same time, thesharp rise in housing loan defaults and foreclosuresalong with escalating oil prices spawned a discernibleslowdown in the US economy, raising concerns aboutthe emergence of a recession. During the fourthquarter of 2007, US economic growth slowed to 0.6per cent bringing growth for 2007 as a whole to 2.2 percent down from 3.0 per cent in 2006. The US authoritiesundertook a number of measures to mitigate theimpact of the credit crunch and to avert the onsetof a recession. These measures included sharp cutsin the federal funds rate, the introduction of a termauction facility to provide short-term liquidity supportto banks in distress and a fiscal stimulus package ofrebates to tax payers and tax relief to businesses ofaround US$170 billion.but domestic economy maintains a robust pace of growth...Amid the turbulence in global financial markets andthe slower pace of global economic growth, thedomestic economy continued to grow at a relativelyrobust pace. Real GDP increased by 5.5 per cent in2007 compared with 12.2 per cent in 2006 when afull year’s production from two completed energyplants – Atlantic LNG Train IV and M5000 – resulted in asignificant rise in energy sector output. With no additionsto energy plants, the temporary closures of some energyplants in the first half of the year and the effects of thenatural maturation of oil fields, crude oil output fell by15.9 per cent to 43.6 million barrels contributing to lessrapid growth (4.4 per cent) in the energy sector in 2007relative to 2006 when the sector grew by 21.4 per cent.In contrast, the non-energy sector maintained asteady growth momentum with real value addedincreasing by 6.7 per cent, roughly the same pace asthe previous year. Of some significance though is thefact that the rate of growth of the non-energy sector,especially in an environment of relatively high energyprices, surpassed that of the energy sector for the firsttime since 1997. The main impetus to the robust nonenergysector performance came largely from relativelystrong growth performances in Finance, Insurance andReal Estate (10.5 per cent), Distribution (10.3 per cent),Manufacturing (8.0 per cent) and in the Construction(5.2 per cent) sectors. The Agricultural sector continuedto experience declining levels of activity in 2007 withreal GDP falling in 2007 by 5.9 per cent as sugar canefarmers exited the industry in light of plans to close theSugar Manufacturing Company at the end of the 2008crop season. Export Agriculture also showed a markeddecline on account of adverse weather conditions.4

Unemployment rate plummets…The rapid rate of growth over the past several yearsespecially in the non-energy sector, has led tosome further tightening in the labour market anda corresponding fall in unemployment. At the endof 2007, the unemployment rate fell sharply to anhistoric low of 4.5 per cent bringing the average ratefor 2007 to 5.5 per cent compared with 6.2 per centin 2006. Reports of labour shortages in a wide crosssectionof industries in the energy sector (includingConstruction, Distribution) became increasinglymore evident during the course of the year.while the balance of payments position remains strong…Whereas energy prices remained firm in 2007,the decline in the volume of crude oil exportscontributed to a fall-off in earnings from oil exports.Nevertheless, increased earnings from the exportsof natural gas, chemicals and manufactured goodsboosted overall exports which increased by 10.7per cent in 2007. Imports also rose by 12.1 per centreflecting the strong growth in consumer imports(19.5 per cent) and higher costs of imported crudeoil for the refineries. The external current accountsurplus increased to US$5,380.9 million (25.7 percent of GDP) from US$4,808.7 (25.1 per cent ofGDP) in 2006. The relatively significant increase inforeign direct investment (62 per cent) was offsetby increased capital outflows resulting in a deficitof US$3,505.3 million on the capital account. Muchof the capital outflows reflected increased effortsby the private sector to better diversify its portfolioand spread its risks by holding foreign assets. Grossofficial reserves amounted to US$6,673.5 million, theequivalent of about 9.4 months of import cover.but Inflation remains a challenge…High levels of private consumption reflecting rapideconomic growth, bank credit expansion andincreased levels of government spending havekept domestic demand quite buoyant. Supply–sidebottlenecks, mirrored by tight labour markets in somesectors (for example in construction) along with theunprecedented escalation in global food and energyprices, have added to inflationary pressures. Althoughthe Government’s inflation target of 7.0 per cent for end2007 was not attained, there was some progress on theinflation front. After reaching a peak of 10.0 per cent inOctober 2006, inflation declined to 7.6 per cent (yearon-year)in December 2007. Food prices, which havebeen a major catalyst to headline inflation, slowedto 16.8 per cent in the twelve months to December2007 from 20.9 per cent in January. Core inflationhovered between 4.2 and 4.7 per cent (year-on-year)during the first nine months of 2007 before slowingto 3.9 per cent in the twelve months to December2007. The moderation in inflation occurred againstthe background of a number of measures introducedby the Government and the Central Bank includingintensified open market operations, more orderlymarketing arrangements for agricultural products,subsidization of certain staple products through theNational Flour Mills (NFM) and the elimination of thecommon external tariff on a range of basic food items.Fiscal position continues to be strong…Notwithstanding a decline in revenues from the oilsector to 17.5 per cent of GDP in FY 2007 from 21.1 percent in FY 2006, the robust performance of the nonenergysector helped to maintain a sizeable surpluson the fiscal accounts. Non-energy sector revenueas a percentage of recurrent revenues increased to43.5 per cent in FY 2007 from 38.1 per cent in FY 2006owing to higher VAT collections and receipts fromnon-oil companies. Government expenditure grew by21.1 per cent to $37,765.9 million in the period underreview reflecting increased budgetary allocations forwages and salaries and for transfers and subsidies to5

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007state enterprises and statutory boards in particular.In sum, the central government posted a surplus of$2,298.5 million (1.8 per cent of GDP) in FY 2007 justabout one-third that recorded in the previous fiscalyear. With the increased expenditure, including foreducation, health, security and infrastructure the nonenergydeficit widened to 15.7 per cent of GDP in FY2007 from 11.0 per cent in FY 2005. The Governmentalso transferred $2,030.2 million into the Heritageand Stabilization Fund bringing the accumulatedbalance to $11,188 million at the end of FY 2007.and liquidity conditions tighten …The persistent liquidity overhang and underlyinginflationary pressures continue to pose challengesfor monetary policy management. The Central Banksought to tighten liquidity to permit more effectivetransmission of the repo rate signals to financialmarkets and to contain demand pressures. A total of$6,649 million was removed from the system throughthe net issue of open market treasury instruments in2007 compared to net issues of $626 million in 2006.In addition, two special liquidity bonds with a totalface value of $1692 million were issued by the centralgovernment, the proceeds of which were sterilized inthe Central Bank. In response to the tighter liquidityenvironment, commercial banks made greater useof the interbank market and the repurchase facilityat the Central Bank to meet their financing needs.Interbank activity increased by 55 per cent in 2007to an average of $245 million while the value ofthe repurchase transactions more than doubled in2007 to $15 billion. Although the policy interest ratewas kept unchanged at 8.0 per cent, the tightermonetary policy stance placed upward pressure onmarket interest rates. The discount rate on threemonthtreasury bills increased to 7.0 per cent inDecember 2007 while the six-month rate rose to 7.1per cent from 6.74 per cent over the same period.but private sector credit continues to expand…Notwithstanding the tighter liquidity environment,private sector credit by the consolidated financialsystem expanded 16.2 per cent year-on-year toDecember 2007 from 12.2 per cent in the previousyear. Much of the increase reflected an expansion inconsumer lending and in real estate mortgage loans.and stock market activity remains flat…Despite the solid economic outturn in 2007, the stockmarket remained flat in 2007, but showed signs of anincipient pick up in the second half of the year. Thislatent recovery was fuelled by bidding activity betweentwo major local conglomerates and by expectationsof the amalgamation of one of the major localbanking groups, RBTT, with the Royal Bank of Canada.In the bond market, the Government of Trinidad andTobago remained a major player, issuing mainly fixedincomesecurities for liquidity sterilization purposes.6

(b)Short-term Outlookand Prospects for 2008The widespread impact of the subprime mortgagecrisis including the associated liquidity crunch infinancial markets has increased the prospects for aslowdown in global economic growth in 2008. In theUS, economic growth is expected to remain depressedwith the distinct possibility that a recession couldemerge in the latter half of 2008. Global inflationarypressures are likely to intensify especially if energy pricescontinue to rise and if the effects of climate changeand the diversion of agricultural output towards biofuelsconstrain production levels and place furtherupward pressures on global food prices. While theeconomic prospects for Europe seem brighter in 2008,much will depend on the extent of the spillover ofthe US subprime crisis. Economic activity in emergingmarkets though is expected to remain strong despitesome slackening off in the pace of expansion inChina. Although the Latin American and Caribbeaneconomies have not been severely affected by the USeconomic slowdown, the onset of a recession in theUS could limit growth prospects for these economies.should spur a recovery in the energy sector while thenon-energy sector should maintain a steady growthmomentum given the large number of governmentand private sector projects that are still in the pipeline.Manufacturing output is expected to increase sincefirms have been improving their plants and re-tooling totake advantage of more buoyant domestic conditionsas well as opportunities that are likely to arise from therecently concluded Economic Partnership Agreement.Buoyant demand in a rapidly growing economywill continue to place additional strain onavailable capacity and labour resources andcould intensify existing wage pressures and raiseinput costs. Capital inflows from the upcomingamalgamation of the Royal Bank of Canada (RBC)and RBTT are likely to add to liquidity pressures. Themajor challenge confronting macroeconomicmanagement would be to keep inflation in check inthe face of internal and external inflationary pressures.The domestic economy is expected to maintain a robustgrowth path in 2008.Increased exploration activity7

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 1SELECTED ECONOMIC INDICATORS, 2003 – 2007ITEM 2003 2004 2005 2006 2007 PNational Income and pricesReal GDP (2000=100)EnergyNon-energyAgricultureManufacturingConstructionFinancial Services14.4 r31.46.7-15.312.023.47.37.8 r8.26.7-34.25.28.121.7(ANNUAL PERCENTAGE CHANGES)6.1 r8.45.0-9.212.613.40.412.2 r21.46.6-0.99.44.31.25.54.46.7-5.98.05.210.5Inflation Rate (%) 1(period average)(end of period )Unemployment Rate (%)3.803.0010.503.705.608.406.907.208.008.309.106.207.907.625.54Overall Central GovernmentSurplus(+)/Deficit(-) 21.41.9(IN PER CENT OF GDP)5.46.71.8External Current AccountSurplus(+)/Deficit(-)Overall External AccountSurplus(+)/Deficit(-)8.72.212.54.023.69.725.15.8.25.77.4Public Sector Debt 249.944.637.630.528.3Memorandum Items:External Public Debt (US$M)Debt Service Ratio (%) 31,567.63.51,382.14.61,360.61.81,295.22.81,264.71.1W.T.I. (US$/barrel)31.741.556.566.072.3Gross Official Reserves (US$M) (net of HSF)2,007.52,539.14,014.95,134.16,673.5Source: Central Bank of Trinidad and Tobago and Central Statistical Office.1The Index of Retail Prices (RPI) was rebased to January 2003=100.2This refers to the fiscal year which is the twelve-month period between October 1 and September 30.3This is defined as the ratio of external public sector debt service to exports of goods and non-factor services.r- revised; p – provisional.8

TABLE 2ECONOMIC CONTRIBUTION OF THE ENERGY SECTOR, 2003 - 2007/ Per cent /ITEM 2003 2004 2005 2006 2007 PShare of Total Employment3.23.63.43.53.7Share of GDPEnergy SectorExploration and ProductionRefining (including LNG)PetrochemicalsOther 136.0 r20.96.54.64.039.0 r21.96.96.24.042.6 r23.67.66.84.646.8 r27.37.27.35.143.0 r24.96.36.95.0Share of Government RevenuesEnergy SectorOil and Gas Exploration and ProductionOther Taxes 242.825.916.941.131.69.552.742.610.061.9 r54.9 r6.9 r56.546.79.8Share of Merchandise Export ReceiptsEnergy SectorExtracted 3Refined 4Processed 5Memorandum Items:Crude Oil and Condensate Production (millions of barrels)Natural Gas Production(millions of barrels of oil equivalent)83.315.550.517.249.1168.585.815.753.516.645.0190.385.910.753.521.752.7209.191.015.559.316.252.1251.986.711.354.820.643.8265.7Source: Ministry of Finance, Ministry of Energy and Central Bank of Trinidad & Tobago1Includes Service Contractors, Distribution and Asphalt Production.2Other taxes include Withholding tax, royalties, oil impost, unemployment levy, excise duties and receiptsfrom signature bonuses for the award of product sharing contracts.3Exports refer only to crude oil.4This includes refined petroleum, liquefied natural gas and natural gas liquids.5This refers to all other energy related exports e.g. petrochemicals.pprovisional.r- revised.9

NATIONALACCOUNTSCHAPTER TWO

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007NATIONAL ACCOUNTSGROSS DOMESTIC PRODUCTAfter recording exceptionally strong growth of 12.2per cent in 2006, the Trinidad and Tobago economymaintained a relatively robust pace of growth(5.5 per cent) in 2007 despite lower energy sectoroutput. In contrast, non-energy sector growthremained buoyant surpassing growth in the energysector for the first time since 1997.Real value added in the energy sector slowedto 4.4 per cent from 21.4 per cent in the previousyear, for the most part, because of lower outputassociated with maturing oil fields, as well as thetemporary shutdown of operations at one of themajor energy sector companies in late 2006 andpart of 2007. Crude oil production which averaged143 thousand barrels per day in 2006 fell to 120thousand barrels in 2007. In the Petrochemical subsector,technical difficulties at one of the majorpetrochemical plants also restricted growth in thesub-sector to a mere 3.2 per cent in 2007 comparedwith 13.9 per cent in the previous year. AlthoughLNG production expanded at a fairly robust paceof 14.4 per cent, the rate of expansion might havebeen much higher had it not been for the extendeddowntime at the Atlantic Train IV facility. Actualproduction levels of LNG were 2.9 per cent lowerthan in 2006.Economic activity in the non-energy sectormaintained a steady growth path of 6.7 per centin 2007 with the main impetus for growth comingfrom the Construction, Manufacturing, Finance,Insurance and Real Estate and Distribution sectors.Activity in the construction sector expanded by5.2 per cent reflecting continuing work on severalgovernment projects including the Port-of-SpainWaterfront, the Government Campus, government’shousing projects, the highway interchange and aswell as infrastructural work on highways, roads andbridges. In Manufacturing, the expansion of realoutput of 8.0 per cent was largely attributable to thehigher production of goods in the Food, Drink andTobacco industry, in Chemicals and Non-metallicproducts and in Miscellaneous Manufacturing.Output in the Finance, Real Estate and Insurancesector received a boost from the entry of two newfinancial sector firms as well as from an expansionin real estate activity. The growth in the Distributionsector reflected heightened activity in wholesaleand retail trading activity including the sales of motorvehicles, spare parts and household appliances.Whereas most sub-sectors of the non-energy sectorexhibited positive growth performances, real valueadded in the Agriculture sector continued to declinesharply. Output in the Agriculture sector declinedby 5.9 per cent in 2007 mainly on account of fallingsugar production associated with the impendingclosure of the Sugar Manufacturing Company anddeclining levels of domestic production.12

TABLE 3GROWTH IN GDP AT CONSTANT (2000) PRICES BY SECTOR, 2003 - 2007/ per cent /SECTOR 2003 r 2004 r 2005 r 2006 r 2007 pPetroleumOf whichPetrochemicalsExploration and ProductionRefining (incl. Atlantic LNG)31.44.530.571.18.211.38.38.28.419.410.91.721.413.916.441.04.43.20.114.4Non-PetroleumAgricultureManufacturing 1Electricity & WaterConstruction & QuarryingTransport, Storage & CommunicationDistribution & Restaurants 2Hotel & Guest HousesFinance, Insurance & Real EstateGovernmentEducation & Cultural ServicesPersonal Services6.7-15.312.05.323.45.42.0-3.37.3-1.02.320.76.7-34.25.23.28.1-0.83.28.021.70.66.8-0.45.0-9.212.66.213.45.74.5-8.60.41.90.72.16.6-0.99.4-0.44.32.421.2-20.21.2-1.53.510.36.7-5.98.00.35.20.610.38.010.53.2-0.21.8FISIM 3Value Added Tax (VAT)GDP at Constant Prices (2000)9.9-3.514.416.732.27.8-5.8-9.66.121.813.612.21.4-5.85.5SOURCE: Central Statistical Office.1Excludes oil refining and petrochemical industries.2Excludes distribution of petroleum products.3Financial Intermediation Services Indirectly Measured.r- revised;p- provisional.13

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007GROSS DOMESTIC EXPENDITUREAccording to data supplied by the CentralStatistical Office, Gross Domestic Expenditure as apercentage of GDP in Trinidad and Tobago showeda marked increase in 2007 from in the previoustwo years. At 79.5 per cent of GDP in 2007, GrossDomestic Expenditure, which is the measure of allexpenditure including on private and governmentconsumption, and for investment, increased byabout 8.4 percentage points from in 2005 and 2006when GDE averaged about 71 per cent of GDP.This sharp increase was led by private consumptionexpenditure which measured 54.6 per cent of GDPfrom 47.3 per cent a year earlier. A corollary ofthe large increase in expenditure, which occurredagainst the background of the sustained buoyancyof the Trinidad and Tobago economy, is that thecountry saved much less than in the previous twoyears. Savings in 2007 as a per cent of GDP fell to 29.6per cent compared to 39.1 per cent and 37.2 percent in 2005 and 2006, respectively. Government’sconsumption expenditure increased by 0.6 per centwhile expenditure on Gross Capital Formation, thecountry’s capital stock rose by just 0.5 per cent.After several years of decline, gross capital formationas a percentage of GDP increased to 13.4 per centfrom 12.9 per cent in 2006. Construction activity inthe energy sector received a boost in 2007 as workwhich began in late 2006 on the Methanol HoldingsTrinidad Limited ammonia-urea-melamine plantcarried over into 2007. The growth in the nation’scapital stock benefitted from government’s publicsector investment programme, which almostdoubled partly as a result of major projects suchas the Government Campus Plaza, the Port ofSpain International Waterfront Centre, the BrianLara Cricket Academy, the Port of Spain NationalAcademy of Performing Arts and the HighwayInterchange project.14

TABLE 4GROSS DOMESTIC EXPENDITURE AND GROSS NATIONAL PRODUCT, 2003 – 2007/ $Million /ITEM 2003 2004 2005 2006 p 2007 pConsumption ExpenditurePrivateGovernmentGross Capital FormationGross Domestic ExpenditureLess: Imports of goods and non-factor servicesPlus: Exports of goods and non-factor servicesGross Domestic Product at Market PricesLess: Net Factor IncomesGross National Product at Market Prices43,177.634,135.69,042.017,926.361,103.926,826.336,891.571,169.0-4,264.766,904.356,463.346,878.89,584.513,906.370,369.633,022.645,491.682,838.6-2,491.780,346.953,683.241,976.211,707.014,748.868,432.039,257.166,224.595,399.4-4,762.090,637.470,179.857,058.313,121.515,555.585,735.344,596.979,417.6120,556.0-5,877.7114,678.387,364.072,142.415,221.617,666.2105,030.249,005.176,089.7132,114.8-6,072.1126,042.7SOURCE: Central Statistical Office and Central Bank of Trinidad and Tobago.pProvisional.TABLE 5GROSS DOMESTIC EXPENDITURE, 2003 – 2007/ Percentage Change /ITEM 2003 2004 2005 2006 p 2007 pConsumption ExpenditurePrivateGovernmentGross Capital FormationGross Domestic ExpenditureLess: Imports of goods and non-factor servicesPlus: Exports of goods and non-factor servicesGross Domestic Product at Market PricesLess: Net Factor IncomesGross National Product at Market Prices6.84.118.240.814.96.530.326.46.84.130.837.36.0-22.415.223.123.316.430.837.3-4.9-10.522.16.1-2.818.945.615.2-4.9-10.530.735.912.15.525.313.619.926.430.735.924.526.416.013.622.59.9-4.29.624.526.4SOURCE: Central Statistical Office and Central Bank of Trinidad and Tobago.pProvisional.15

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 6Gross Domestic Expenditure and Gross National Product, 2003 – 2007/ Per cent of GDP /ITEM 2003 2004Consumption ExpenditurePrivateGovernmentGross Capital FormationGross Domestic ExpenditureLess: Imports of goods and non-factor servicesPlus: Exports of goods and non-factor servicesGross Domestic Product at Market Prices60.748.012.725.285.937.751.8100.068.256.611.616.884.939.954.9100.02005 2006 p 2007 p56.344.012.315.571.741.269.4100.058.247.310.912.971.137.065.9100.066.154.611.513.479.537.157.6100.02005 -2007 p60.248.611.613.974.138.464.3100.0SOURCE: Central Statistical Office and Central Bank of Trinidad and Tobago.pProvisional.TABLE 7Savings and Investment, 2003 – 2007/ $Million /ITEM 2003 2004 2005 2006 p 2007 pGross Domestic Savings27,991.4LESS: Net Factor Payments-4,264.7Net Transfers Abroad367.0Gross National Savings24,093.8Gross Capital Formation17,926.3External Savings §-6,167.5Gross National Savings33.9Gross Capital Formation25.2Use of External Savings § -8.726,375.3-2,491.7352.524,236.113,906.3-10,329.829.316.8-12.541,716.2-4,762.0313.937,268.114,748.8-22,519.3Memo Item(per cent of GDP)39.115.5-23.650,376.2-5,877.7293.944,792.515,555.5-29,237.037.212.9-24.344,750.8-6,072.1364.239,042.917,666.2-21,376.729.613.4-16.2SOURCE: Central Statistical Office and Central Bank of Trinidad and Tobago.§ Equivalent to the inverse of the Current Account of the Balance of Payments.pProvisional.16

CHAPTER THREEDOMESTICPRODUCTION13

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007DOMESTIC PRODUCTIONPETROLEUM ANDPETROCHEMICALSThe performance of the energy sector weakenedin 2007 as operational difficulties especially in the oilindustry restricted overall production levels. Increasedexploration activity and natural gas production,however, helped to lessen the negative impact ofdeclining crude oil production levels.PetroleumExploration and ProductionAn intensified work programme by some of themultinationals (PetroCanada, Canadian Superior Inc.,etc.) resulted in increased exploration activity in 2007.Total depth drilled was 178.2 thousand meters, 8.5 percent higher than in the previous year while the numberof rig days averaged 283 per month – an increase of 3.7per cent from 2006. Almost 60 per cent of the drilling tookplace in marine areas while 75.2 per cent of total drillingwas of a developmental rather than exploratory nature.Maturing oilfields and operational difficulties at someof the larger producers resulted in a decline in crudeoil output. In 2007, crude oil production totalled 43.6million barrels for an average of 120 thousand barrelsper day, which represented a fall of 15.9 per cent fromthe previous year. Technical problems experiencedby BHP Billiton in late 2006, although resolved, affectedproduction levels during the first two months of 2007.Output from BPTT and Trinmar declined by 20 per centand 14 per cent, respectively, during the second halfof 2007. Production at BPTT had to be deliberatelycurtailed in order to facilitate the incorporation oftwo new platforms – the Mango and the Cashima- into the company’s offshore infrastructure.In line with the fall-off in crude oil output, crude oil exportsalso declined significantly in 2007. Exports of crude oilwere estimated at 22.4 million barrels, which representeda decline of 21 per cent from the previous year.RefiningDuring the year, the refinery experienced feweroperational disruptions than in 2006, allowing for aslight pick-up in throughput. In 2007, refinery throughputtotaled 56.1 million barrels, which was an increase of 1.0per cent from in 2006. As refining activity increased, crudeoil imports for use as a feedstock into the refining processalso increased by 10.9 per cent to 33 million barrels.Liquefied Natural Gas (LNG)Despite experiencing operational difficulties as a result ofproblems with the supply of natural gas, the Atlantic LNGTrain IV facility upped production by 56.7 per cent to 9.4million cubic meters (m 3 ) from 6.0 million m 3 a year earlier.As a result, LNG production totalled 32.1 million m 3 , whichrepresented a rise of 7.4 per cent from the previous year.Trinidad and Tobago’s export markets also expandedduring the year, with shipments going to new marketssuch as India. A larger number of spot cargoes was sold(particularly to Asia) because of depressed prices in theUnited States (US). LNG exports were an estimated 12.8million metric tonnes, an increase of 8.8 per cent from theprevious year. As compared to the previous year, therewas greater diversification in the export market for LNG.In 2007, a smaller percentage of LNG exports went to theUS (57.7 per cent) while Spain took 14.7 per cent, PuertoRico 3.9 per cent, Japan 3.0 per cent, Mexico 2.6 per cent,South Korea 2.5 per cent with the remainder going to theDominican Republic, India, Taiwan and the United Kingdom.18

natural gasIn 2007, natural gas production averaged an estimated4,041 million standard cubic feet per day (mmscf/d) or 4.2 per cent above levels in 2006. There was asimilar rise (3.6 per cent) in natural gas utilization to anestimated 3,808 mmscf/d. The marginal increase inproduction and utilization was due to an improvementin the operations of Atlantic LNG’s Train IV facility.Natural Gas Liquids (NGLs)Spurred by a substantial increase in the output ofpropane and natural gasoline, the production ofnatural gas liquids increased by 10.7 per cent in 2006to 12.5 million barrels in 2007. Despite this increase,there remained some uncertainty concerning suppliesof natural gas liquids from Atlantic LNG’s Train IVfacility. However, most of the issues pertaining tothe operations of Train IV were resolved towards theend of the year. Phoenix Park Gas Processors Limitedexported 12.1 million barrels of NGLs, which was anincrease of 4.6 per cent from 2006. The price of thevarious NGL commodities exhibited considerablebuoyancy during the year. Propane prices averagedUS$52.29/bbl, an increase of 18.8 per cent from 2006,while butane prices averaged US$57.55/bbl, whichrepresented a rise of 12.3 per cent from the previousyear. Natural gasoline fetched the highest price,averaging US$65.17/bbl. This was an increase of 18.0per cent from the prices realised in 2006.those operated by Methanol Holdings Trinidad Limited.Despite the slight fall-off in output, exports grew to6,037.0 thousand tonnes, a rise of 2.8 per cent over theprevious period.Nitrogenous FertilizersThe performance of the local fertilizer industry improvedslightly in 2007, influenced in part by increased demandin the United States. The nation’s ten ammonia plantsproduced 5,129.3 thousand tonnes of ammonia, whichrepresented an increase of 1.6 per cent from theprevious year. Exports of ammonia rose by 5.0 per centto 4,889.9 thousand tonnes over the period. Following afall-off in 2006, Urea production and exports rose by 3.1per cent and 5.0 per cent, respectively.iRON AND STEELThe local iron and steel sector was fairly stable in 2007,with a negligible change to production. DRI productiontotaled 2,062.8 thousand tonnes, a mere 0.4 per centbelow that of 2006. Exports of DRI however, totaled1,300.1 thousand tones, an increase of 6.7 per cent. Wirerod production amounted to 510.3 thousand tonnes, arise of 5.1 per cent from the previous year. However,exports of wire rods fell by 1.5 per cent for a total of441.8 thousand tonnes. Meanwhile, the production ofbillets totaled 694.6 thousand tonnes, an increase of 3.2per cent when compared to output levels in 2006.PETROCHEMICALSAGRICULTUREMethanolMethanol production in Trinidad and Tobagoamounted to 5,933.4 thousand tonnes for 2007, a fallof 1.4 per cent when compared to production levelsin 2006. The decline was on account of unexpectedshutdowns experienced by some plants, particularlySugarIn 2007 sugar cane production was affected by a latestart to the crop season, a harsh dry season whichresulted in several unplanned fires, and by labourshortages affecting harvesting. In addition the sugarcontent of much of cane harvested was below the19

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007acceptable sugar content. As a consequence, SMCLproduced 25.3 thousand tonnes of raw sugar for the2007 crop season, which represented a decline of 27.5per cent from 2006.BOX 1DEVELOPMENTS IN THE ENERGY SECTORPetroleum• In 2007, the Production Sharing Contract (PSC) applicable to the ultra-deep horizons as well as theonshore/nearshore auction was significantly revised requiring companies to pay a PetroleumProfits Tax (PPT), an Unemployment Levy, a Green Fund Levy and a Withholding Tax directly tothe Board of Inland Revenue. In the auction for the eleven onshore/nearshore blocks, twelvecompanies submitted bids. However, no bids were received for the two Herrera blocks orfor the North Coast Marine Area (NCMA). Some analysts have suggested that the changesto the Production Sharing Contract could have impacted the response to these auctions.• The Ministry of Energy intends to offer for auction the seven blocks leftover from the Trinidad DeepAtlantic Area (TDAA) sometime in 2008. Poor geological information and adverse fiscal termswere advanced for the failure of the previous bid round. As such, the Ministry may be preparedto sanction a 3D seismic survey in order to encourage companies to bid. (Energy Caribbean)• Production Sharing Contracts were signed with Tullow Oil (formerly Hardman Oiland Gas) for the Guayaguayare Shallow Horizon and the Guayaguayare DeepHorizon blocks. The blocks hold prospects for both oil and natural gas discoveries.20

BOX 1 (continued)DEVELOPMENTS IN THE ENERGY SECTOR• The Canadian Superior Energy Inc. failed to discover hydrocarbon resources in the Eastern block afterdrilling two wells (the Zaboca and the Shadon Beni). This however did not deter the company fromcontinuing drilling work on the Shandilay One well. The company plans to drill a fourth well – theTamarind, upon the completion of the Shandilay. However, the drilling of the Victory well in the IntrepidBlock 5(c), located 60 miles off the east coast of Trinidad, proved successful. The Victory well was the firstof an obligatory three well exploration programme. In January 2008, Canadian Superior announced thediscovery of natural gas and condensate after the completion of drilling activity in the first two zones ofthe Victory well. Block 5(c) is a joint venture between Canadian Superior (45 per cent), BG InternationalLimited (30 per cent) and Challenger Energy Corp. (25 per cent).• Petrotrin raised a US$750 million, 15-year, 6 per cent coupon bond to fund the construction of five plantsat Pointe-a-Pierre as part of the Gasoline Optimisation project. The bond, underwritten by Citibank(Trinidad and Tobago), was the largest investment grade issue ever undertaken by a company from theCaribbean. The project will result in more environmentally friendly fuels, increasing the finished gasolineyield of the refinery to approximately 40 per cent.Liquefied Natural Gas• Following the signing of a 17-year service agreement in 2005 between Atlantic LNG and General Electric,a US$400 million service centre was opened in Point Fortin in May 2007. This development means thatAtlantic LNG can now service its 27 turbines locally. Based on the modular concept, as much as an extrayear’s output could be gained because of reduced outages during extended maintenance periods.Natural Gas• On March 20 2007, the GOTT signed an agreement with Venezuela for the unitization of cross-bordernatural gas reserves – the first of its kind in the Western Hemisphere and the ninth worldwide. Thisrepresented the culmination of an MOU signed in 2003 between the two parties. The agreement outlinesthe determination and allocation of the gas volumes, the distribution of costs and benefits, constructionand operation installations for exploration and the construction of a cross-border pipeline. The first fieldto be operationalised under the agreement is the Loran /Manatee field which has estimated reservesof 10 trillion cubic feet (tcf), of which 2.7 tcf is within the maritime borders of Trinidad and Tobago.Production is scheduled to commence in 2009.21

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007BOX 1 (continued)DEVELOPMENTS IN THE ENERGY SECTOR• BPTT’s Mango and Cashima platforms were completed in March 2007 at a cost of US$333 million andUS$481 million, respectively. The Mango platform was completed in 28 months and Cashima, in 25months compared with 33 months for the Cannonball project. BPTT saved US$11 million on the designand fabrication phases owing to the ongoing refinement of the expertise in platform fabrication ofTrinidad Offshore Fabricators Company. The platforms, which are located off the south- east coast,each have a production capacity of 750 mmscf/d. Natural gas production from the Mango fieldcommenced on November 19, 2007. The Mango platform uses the same processing infrastructure asthe Cannonball platform (the Cassia B hub). However, the gas will be transmitted via a new 26-inch,four-mile pipeline. The gas is intended to supply Atlantic LNG’s facilities. There are plans to create asecond gas processing hub at BPTT’s Amherstia platform and a third hub in the northern section of thecompany’s acreage. Production was originally scheduled to begin in September, but adverse weatherconditions and resource constraints caused some delays. The Cashima platform, which was scheduledto commence operations in October, was also delayed and came online in December.• The Ryder Scott audit of Trinidad and Tobago’s natural gas reserves was released in August 2007and generated considerable interest within the energy industry. The report indicated a decline inproven reserves to 17.05 trillion cubic feet (tcf) from 18.77 tcf. At current utilization rates, the reservesto-productionratio suggested a 12-year horizon before proven reserves are depleted. Probable andpossible reserves were estimated at 6.23 tcf and 7.76 tcf, respectively. The report signalled the need forintensified exploration activity to bolster the country’s reserve position.• The Government of Trinidad and Tobago (GOTT) and British Gas (BG) signed a Memorandum ofUnderstanding (MOU) for a joint feasibility study of a new LNG train. The 18-month analysis will deliberateon issues such as the governance structure of a Train X as well as wider developments in the LNG industry.The MOU is in keeping with government’s strategy of expanding operations along the entire natural gasvalue chain. BG was the preferred candidate since the company has a 45 per cent share of the regasificationbusiness in the US market.• The National Gas Company of Trinidad and Tobago Limited (NGC) signed a long-term gas supplycontract with Essar Caribbean Steel Limited for 140 mmscf/d of gas to commence in 2009. This willincrease NGC’s sales volume by 8 per cent.22

BOX 1 (continued)DEVELOPMENTS IN THE ENERGY SECTOR• NGC signed three long-term contracts for the supply of a total of 550 mmscf/d of natural gas,starting in 2009/2010. The first contract is with the BHP Billiton for the supply of 220 mmscf/d of gas forapproximately eleven years. The gas will be supplied from Offshore Block 2(c). The second contract iswith EOG Resources Trinidad Limited for the supply of 110 mmscf/d of gas for a period of fifteen yearscommencing no later than January 01, 2010. The gas will be supplied from its Offshore Block 4(a) orthe Toucan natural gas field via a new pipeline system to be installed by NGC, linking the GreaterAngostura and Toucan field to the Beachfield Upstream Development (BUD). The third contract is withBG/Chevron for the supply of 220 mmscf/d of gas for a period of fifteen years, commencing 2009. Thisrepresents the commercialization of 1.2 tcf of natural gas from largely underdeveloped gas reservoirsin the East Coast Marine Area (ECMA), comprising the Dolphin, Dolphin Deep, Starfish and Manateeoffshore fields.• NGC plans to undertake US$419.4 million in projects during the period 2007-2008. Some of these projectsinclude:‣ A 56 kilometre, 36-inch North East Offshore pipeline to transport gas from BHP Billiton’s Kairi Platformlocated in the North Coast Marine Area, to NGC’s pipeline network on the east coast of Trinidad.The project is estimated to cost US$200 million, of which 80 per cent would be financed externallyand the remainder from internal funds. The project should be completed by 2009.‣ A US$91 million pipeline from Petrotrin’s Pointe-a-Pierre refinery to Caroni and to the PiarcoInternational Airport. Total project costs will be borne by the government.‣ The construction of a 65 kilometre pipeline from BHP Billiton’s Angostura field to supply the proposedCove Point Industrial Estate on the southwest coast of Tobago. The project is estimated to cost thegovernment US$58 million with a projected completion date of 2009.‣ An improvement to the pipeline infrastructure supporting the Point Lisas Industrial Estate via theinstallation of a US$13 million, 6 kilometre, 36-inch loop line.‣ A US$20 million, 11 kilometre pipeline from Point Fortin to supply the plants in Union Industrial Estate.Construction began in 2007 and should be completed in approximately one year.• According to Repsol YPF, the Onyx natural gas prospect in the Teak, Samaan and Poui block may notbe as large as originally envisaged. Once thought to have contained 500 billion cubic feet (bcf) to 1tcf of natural gas, the volume of gas as determined by the Onyx 1 appraisal well, was considerably lessbecause of the presence of a thin oil rim. The completion of a geophysical and geological study willindicate whether further development would be commercially viable.23

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007BOX 2THE 2007 RYDER SCOTT NATURAL GAS AUDITThe Ryder Scott audit of Trinidad and Tobago’s natural gas reserves was released in August 2007 andgenerated much interest within the energy industry. The audit revealed a fall in all three categories ofreserves– proven, probable and possible-since the last such exercise conducted in 2006. Further, Trinidadand Tobago’s natural gas supplies were estimated to have a lifespan of 12.17 years based on presentconsumption of 3.9 billion cubic feet per day (bcf/d) or 1.42 trillion cubic feet (tcf) a year. Within the oiland gas industry proven reserves are estimated to have an 80 to 90 per cent chance of being recoveredwhile probable and possible reserves are considered to be recoverable with 50 per cent confidence and10 per cent confidence, respectively.The Ryder Scott report put proven reserves at 17.05 (tcf) as at January 1, 2007 and probable reserves at7.76 tcf, while possible reserves stood at 6.23 tcf. Together, the three categories of reserves tallied 31.04tcf, which was 11.0 per cent lower than the previous assessment of January 2006. These reserve estimateswere all ‘un-risked’, meaning that they were not discounted for uncertainty. The decline in the nation’sestimated reserves reflected a slowdown in exploration drilling between 2004 and 2006 and the resultantnon-replacement of natural gas produced and consumed during the period. However, the fall in provenreserves was not expected to affect the development of gas-based projects already being constructedor those in an advanced stage of planning.Implications for Trinidad and TobagoThe 2007 Ryder Scott Gas Audit has highlighted the need for enhanced energy exploration anddevelopment activity in Trinidad and Tobago. Also, reserves classified as probable and possible shouldbe upgraded to proven as quickly as possible. Present developments suggest that these steps are indeedunderway. In 2008 the Government will be signing nine Production Sharing Contracts for six Onshore/Nearshore and three Offshore blocks which were offered in 2005. Further, bid rounds are scheduled forthe third quarter of 2008 and for 2009. In the context of the requirement to enhance energy explorationactivity, the adequacy of the present energy fiscal regime also comes into focus. The Government hasthus engaged an independent petroleum consultant supported by a team of local technocrats toexamine this issue.24

THE LABOURMARKETCHAPTER FOUR

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007THE LABOUR MARKETThe buoyant pace of economic activity especiallyin the non-energy sector has resulted in a significanttightening of the labour market and a sharp reductionin the number of unemployed persons. During thelast quarter of 2007, the unemployment rate fell to anhistoric low of 4.5 per cent bringing the average ratefor 2007 to 5.5 per cent compared with 6.2 per centin 2006. The fall in the unemployment rate reflectedboth a decline in the labour force of 2.8 thousandpersons and an increase in the number of personswith jobs (1.7 thousand). The contraction in thelabour force is related to the decrease in the numberof persons employed or actively seeking jobs in theAgricultural sector. With the rapid fall in unemployment,employers in a wide cross-section of industriescontinue to experience difficulty in sourcing labour.The most significant employment gains were made inthe Construction sector which employed an additional6.2 thousand persons. Activity in this sector continuedto be propelled by a broad range of public sectorresidential, commercial and infrastructural projects. Incontrast, the number of new jobs created in the servicessector, which has been the main driver of growth overthe past five years, fell by 300 persons. Although thenumber of jobs in the Wholesale, Retail, Restaurantsand Hotels sector and in the Finance, Insurance andReal Estate sector increased by 1.7 thousand and 1.5thousand persons, respectively, these were not sufficientto compensate for the decline in the numbers employedof 2.4 thousand and 1.2 thousand, respectively in theCommunity, Social and Personal Services and in theTransport, Storage and Communication sector. In theManufacturing sector where labour shortages havebeen most acute, the number of persons employedshowed an unexpected decline of 1.8 thousand. Theclosure of local sugar cane refinery operations in2007 contributed to a contraction of employmentby 3.3 thousand workers in the Agricultural sector.Going forward, labour management issues are likely toassume greater prominence as the demand for labourincreases in the context of a buoyant non-energysector. In this regard, the decline in the participationrate in 2007 to 63.5 per cent following 5 successive yearsof increase is a matter of concern since in a growingeconomy, there generally tends to be growth in thelabour force and in the number of persons seeking jobs.26

BOX 3DEVELOPMENTS IN THE LABOUR MARKETFor the past three years, labour shortages have affected several industries in the non-energy sector. TheGovernment has moved to alleviate the situation by implementing both domestic and regional initiatives.One such initiative was the revision of the immigration regulations regarding the employment of foreignnationals. The Cabinet approved amendments to the Immigration Act to simplify the processing andissuance of visas and work permits to non-nationals. Some of the amendments included:• The submission of work-permit applications electronically.• Submission of group work-permit applications for groups of ten or more persons.• Issuance of multiple entry visas when required.• Issuance of visas by immigration officers to holders of work permits when they arrive at a port of entryin Trinidad and Tobago.Further prospects for alleviating labour shortages also emerge under the CARICOM Single Market. Thecategories of workers eligible for free movement under this arrangement were expanded in 2007 toinclude nurses and teachers. Also, there was a proposal for a further expansion to include domestics andhospitality workers.TABLE 8LABOUR FORCE STATISTICS, 2004-2007/ Thousands /2004 2005 2006 2007Population (Mid Year) EstimatesNon-Institutional Population - 15 years and overLabour ForcePersons with jobsPersons without jobsParticipation Rate (%)Unemployment Rate (%)1,290.6973.6613.5562.451.263.08.41,294.5979.0623.7574.049.763.78.01,297.9978.3625.2586.239.063.96.21,303.2981.6622.4587.934.563.55.5Source: Central Statistical Office.27

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 9THE SECTORAL DISTRIBUTION OF EMPLOYMENT, 2004 - 2007/ Thousands /EMPLOYMENT2004 2005 2006 2007(000) % (000) % (000) % (000)%AgriculturePetroleum & Gas (including Mining & Quarrying)ManufacturingConstruction (including Electricity & Water)Transport, Storage & CommunicationsOther ServicesOf which Wholesale & RetailCommunity, Social & Personal ServicesFinance, Insurance & Real EstateNot Classified26.020.158.891.141.6322.9101.2175.346.41.94.63.610.516.27.457.418.031.28.30.325.019.356.6101.841.8327.1103.6178.545.02.54.43.49.917.77.357.018.131.17.80.425.720.455.5104.542.7335.6106.6181.048.11.64.43.59.517.87.357.318.230.98.20.322.423.254.1110.241.5336.5108.3178.649.60.43.84.09.218.77.157.218.430.48.40.0Total Employment*562.4100.0574.0100.0586.2100.0587.9100.0Source: Central Statistical Office.Note: Percentages may not sum to 100 due to rounding.* The figures represent the averages of the four quarters of the year.28

INDUSTRIAL RELATIONSIn 2007, the industrial relations climate was relativelyunsettled compared with previous years. In the monthsleading up to the general elections of November 5,2007, many unions representing government workerspressed for the settlement of outstanding wage issues.Consequently, industrial unrest, which was mainlyconcentrated in the public sector, climaxed in thetwo months preceding the elections. More broadly,although unsatisfactory wage offers were a significantcause for work stoppages, the majority of the industrialaction was on account of the protracted nature of thenegotiation process between the trade unions and therespective employers. Some of the work stoppagesduring the year included:Energy• Petrotrin - Petrotrin workers engaged in protestaction over a range of issues, which included: (i)the filling of vacant positions; (ii) salary increasesand (iii) demands for improvement to health andsafety standards.• Petrochemicals - The Oilfield Workers Trade Union(OWTU) and the management of Yara TrinidadLimited failed to reach an agreement for thecollective bargaining period 2007-2010. The matterwas referred to the Ministry of Labour and Smalland Micro Enterprises for arbitration, promptingprotest action from the workers.Manufacturing• Iron and Steel – The Steel Workers Union ofTrinidad and Tobago, dissatisfied with the failureof Mittal Steel and the Government to introduceprofit sharing and to address Employee ShareOwnership Plan (ESOP) and health and safetyissues, led protests against the company.• Lake Asphalt Limited – Employees protested forhigher salaries and improved working conditions.• Trinidad and Tobago Offshore FabricatorsLimited (TOFCO) – Workers were dissatisfied withmanagement’s wage offer and stopped work forseveral days.• Citrus Growers Association (CGA) – Employees ofCGA, represented by the Transport & IndustrialWorkers Union (TIWU), protested for the completionof negotiations for a new agreement.Electricity & Water• Trinidad and Tobago Electricity Commission(T&TEC)/Powergen - Led by the OWTU, T&TECworkers engaged in protest action afternegotiations with management stalled forseveral months. Powergen workers also rejectedmanagement’s wage offer and picketedPowergen’s administrative offices on severaloccasions.• Water and Sewerage Authority (WASA) - Monthlyand daily-paid WASA workers rejected a wageoffer on several occasions before settling later in2007.Storage, Communication and Transport• Port Authority of Trinidad and Tobago - Port workersrepresented by the Seamen and WaterfrontWorkers Trade Union (SWWTU) stopped work forthree days to protest the failure of the Port Authorityto conclude a new collective agreement for theperiod 2005-2008.• Airports Authority - Air traffic controllers of theAirports Authority engaged in sick-out action toprotest the slow pace of negotiations with the CivilAviation Authority and to show their disagreementwith the results of a job evaluation exercise.29

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007• Telecommunications Services of Trinidad & Tobago(TSTT) - In general, there were persistent protestsby TSTT workers during the year. Almost 250 TSTTworkers in Port of Spain and 40 in San Fernandobelonging to the Communication Workers Union(CWU) demonstrated against plans to reduceTSTT’s workforce and the company’s failure topay allowances from the previous collectiveagreement (2003-2005). To date, these issuesremain outstanding and protest action is expectedto continue in 2008.• Public Transport Service Corporation (PTSC) - PublicTransport Service Corporation (PTSC) workersengaged in sick-out action against the delay innegotiating a new agreement for the collectivebargaining period 2006-2008.Finance, Insurance and Real Estate• Trinidad & Tobago Mortgage Finance CompanyLimited (TTMF) - There was conflict between theTTMF and the Banking, Insurance and GeneralWorkers’ Union (BIGWU) because of the suspensionof workers for allegedly taking industrial action. Inaddition to protesting the failure to settle a revisedcollective agreement for the period 2006-2009the workers protested the intrusion of the PublicSector Negotiating Committee in negotiations,which the union claimed was in contravention ofInternational Labour Organisation conventions.Wholesale, Retail, Restaurants and Hotels• Hilton Hotel - The CWU represented Hilton hotelworkers in their quest for higher wages.Community, Social and Personal Services• Maintenance and Training Services (MTS) - MTSworkers, represented by the Transport and IndustrialWorkers Union (TIWU), protested on severaloccasions against the slow pace of negotiationsfor the 2005-2008 collective bargaining period.• Regional Health Authorities (RHAs) - Doctorsemployed with the Ministry of Health ceasedworking overtime and engaged in sick-out actionas they sought compensatory parity with their RHAcounterparts. This action occurred despite thefiling of an ex-parte injunction at the Industrial Courtpreventing members of the Medical Associationof Trinidad & Tobago (MPATT) and the RHAs fromtaking industrial action. The doctors threatenedmass resignations if the injunction was not liftedand subsequently yielded when the assurancewas given that the issue would be addressedin the context of negotiations for the 2005-2007bargaining period.• University of the West Indies - Approximately 450administrative and technical staff of the Universityof the West Indies, led by the OWTU, protestedthe late start and the subsequent slow pace ofnegotiations for the 2006-2008 bargaining period.They also called for the cost of living allowances tobe indexed to inflation.• Teachers – The Trinidad & Tobago Unified TeachersAssociation teachers boycotted classes in protestof the slow pace of negotiations which started atthe beginning of 2007.• College of Science, Technology and Applied Artsof Trinidad & Tobago (COSTATT) - Non-unionisedlecturers and administrative staff protested theunilateral submission by management of proposedsalary increases to the Chief Personnel Officer.• Protective Services - Fire and prison officerspicketed and engaged in sickout action againstthe non-settlement of a new wage agreement.30

In one of the largest protests for 2007, the Federationof Independent Trade Unions (FITUN) organized a rallyagainst high food prices. The rally, which includedparticipants from T&TEC, Petrotrin, TSTT, Powergen, UWIand other private companies, also highlighted petitionsfor higher wages and the lack of efficiency in publicsector wage negotiations.With the completion of several agreements duringthe fourth quarter of 2007, government’s wage billis expected to increase significantly. With most ofthe major agreements settled in 2007, the industrialrelations climate in 2008 should return to some degreeof normalcy.WAGESAn analysis of the collective agreements registeredwith the Industrial Court of Trinidad and Tobago in 2006suggests an elevation in wage demands in Trinidadand Tobago as wages and salaries adjustmentscovering a three-year period have averaged around20 per cent, compared with approximately 15 per centin 2005. However, the median yearly wage increaserose slightly to 5.0 per cent compared with 4.2 per centin 2005. The largest salary adjustments occurred inthe Government and Personal Services sectors whereincreases ranged from 19-31 per cent. Many of theselarge increases, though, have been for collectivebargaining periods that have already expired, that is,for periods proceeding the year of registration.According to the Central Statistical Office’s Indexof Average Weekly Earnings, nominal wages in themanufacturing sector rose at a much slower pace in2007 than in 2006. During the first nine months of 2007,the index increased by 0.8 per cent, compared witha rise of 12.0 per cent for the corresponding periodof 2006. Although there were increases in nine of theeleven industries surveyed, wage increases in seven ofthese nine were below 10 per cent. The largest increasein wages occurred in the Assembly–Type and RelatedProducts industry (22.7 per cent). In contrast, weeklyearnings in the Food Processors fell by 3.9 per cent.In other developments, the Government announcedan increase in the minimum wage from $9 per hour to$10 per hour as part of its fiscal package for 2007/2008.By the end of 2007, the new minimum wage had notbeen implemented because of a delay in appointing aMinimum Wages Board.31

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 10SUMMARY OF INDUSTRIAL AGREEMENTS REGISTERED IN 2006FOR THE PERIOD, 1997 – 2009PERIOD OFAGREEMENTNUMBER OFAGREEMENTSMEDIAN YEARLY WAGEINCREASE (%)RANGE OF AVERAGEYEARLY INCREASES (%)1997-20021999-20022000-20022000-20032001-20032001-20042002-20042002-20052003-20052003-20062004-20062004-20072005-20072005-20082006-20082006-200923311291186517410519.54.53.06.06.03.55.55.04.54.05.05.05.05.04.54.00.0-10.53.0-7.60.0-5.84.5-7.64.5-7.63.8-7.02.0-20.32.0-11.03.7-19.53.6-11.33.8-11.33.0-13.33.0-11.33.8-13.34.0-13.34.0-5.5SOURCE: Industrial Court of Trinidad and Tobago.32

TABLE 11AGREEMENTS REGISTERED IN 2006 BY SECTORSECTORDURATION OFAGREEMENTSNO. OF AGREEMENTSRANGE OF YEARLYINCREASES (%)Energy1999-20022000-20022002-20052003-20062004-20072005-20082006-200821311213.00-6.253.00-5.833.60-11.003.60-11.003.60-8.754.00-8.754.00-8.75Central and Local GovernmentUtility2002-20042000-20022002-20042003-200521110.00-20.250.00-4.004.00-19.506.00-19.50Manufacturing2001-20042002-20042002-20052003-20052003-20062004-20062004-20072005-20072005-20082001-200411123262313.83-4.503.83-4.503.83-4.473.83-4.473.83-4.473.83-5.003.83-5.004.47-5.004.47-8.001.00-7.00Distribution2003-20062004-20062004-20072006-20082006-2009126117.00-11.255.45-11.254.28-11.254.00-5.454.00-5.45Construction2004-20062005-20082006-20081115.00-7.335.00-7.336.00-10.00Transport, Storage & Communications2000-20022002-20042002-20052004-20072005-2007121212.67-5.002.67-12.53.00-12.503.00-12.503.00-11.25Finance, Insurance & BusinessServices1997-20022002-20042003-20052003-20062004-20072005-20072005-200821411120.00-10.503.90-5.603.78-5.603.78-5.603.78-4.503.78-5.673.78-5.67Educational and Cultural CommunityService2002-20042002-20052003-20051112.00-7.332.00-7.333.67-7.33Personal Services1999-20022000-20032001-20032002-20042002-20052004-20072005-20082006-2008111161224.50-7.634.50-7.634.50-7.637.29-7.757.29-9.507.75-13.257.75-13.257.75-13.25SOURCE: Industrial Court of Trinidad & Tobago.33

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007PRODUCTIVITYAccording to the Index of Productivity (as measuredby the Index of Domestic Production divided by the Indexof Man Hours Worked), there was a marked gainin productivity in 2007. During the first nine months of2007, the index of productivity increased by 8.9 percent. The largest improvements in productivity wereobserved in the energy sector with increases of 92.0 percent and 47.9 per cent in the Exploration of Oil and Gasand the Petrochemicals industries, respectively. In thenon-energy sector, significant enhancements were observedin the Drink and Tobacco (37.3 per cent) andthe Printing, Publishing and Paper Convertors (26.4 percent) industries. In respect of the Drink and Tobacco,the completion of a factory upgrade by West IndianTobacco Company (WITCO) during the year wasan important contributor to productivity gains. Conversely,notable declines of 4.0 per cent and 7.6 percent occurred in the Food Processors and Chemicalsand Non-Metallic Products industries, respectively.TABLE 12THE MANUFACTURING SECTORCHANGES IN KEY ECONOMIC INDICATORS/ Per cent /EXPLORATION &PRODUCTION OF OIL &NATURAL GASSUGAR MANUFACTURINGMANUFACTURING(EXCLUDING ENERGY &SUGAR)ALL INDUSTRIESJAN - SEPTJAN - SEPT JAN - SEPT JAN - SEPT2006 2007 2006 2007 2006 200720062007ProductionHours WorkedNominal EarningsReal Earnings9.015.5(43.4)(46.9)(10.8)(53.7)(9.9)(10.7)(36.2)(35.7)(3.6)(3.9)(16.2)(15.5)12.211.317.00.213.712.713.92.70.80.710.90.99.08.49.40.50.90.9Source: Central Statistical Office.34

pricesCHAPTER Five

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007PRICESCONSUMER PRICESInflation continued to be a major challenge formacroeconomic management in 2007. The domesticeconomy was not insulated from a number of keyinternational developments which contributed toheightened inflationary awareness and expectations.The unprecedented increases in global food prices, thesharp rise in oil prices which peaked at around US$100per barrel in November 2007 and the depreciation in theUS dollar against major international currencies madethe job of containing inflation that much more difficult.On the domestic front, beside a number of supplyside factors such as falling agricultural production andinclement weather, increased net fiscal injections in anenvironment of relatively high liquidity and limited sparecapacity also contributed to inflationary pressures.Notwithstanding these challenges, inflation continuedon a downward trajectory in 2007 after having peakedat 10 per cent in October 2006. Although the implicitinflation target of 7.0 set by Government for 2007was not met, inflationary impulses were sufficientlyrestrained such that headline inflation retreated to 7.6per cent on a year-on-year basis to December 2007.Headline inflation averaged 7.9 per cent in 2007compared with an average of 8.3 per cent in 2006. Foodprices, which have been a major stimulus of the headlineinflation rate, increased at a slower pace, of around 17.5per cent in 2007 compared to an average increase of23.2 per cent in 2006. The slower pace of growth in foodprices reflected a considerable moderation in the rateof increase in the prices of vegetables, which slowedon average to 25.7 per cent in 2007 from 63 per centin 2006. There were, however, price increases in somemajor staple food categories. Prices rose on averagefor Meat (15.6 per cent), Fish (17.2 per cent), Bread (13.0per cent) and Milk, Cheese and Eggs (14.3 per cent).The rise in prices of dairy products was almost twice thatof the previous year. Higher global demand, particularlyfrom Asia, along with an increase in the cost of grains– a key intermediate input- placed upward pressureson the prices of dairy products internationally. Overall,food price increases were tempered by the expansionof the farmers’ markets which assisted in providinggreater comparison shopping and in reducing mark-ups.Core inflation, which removes the more volatilefood component from the Index of Retail Prices, isa useful gauge of whether current movements inconsumer prices are part of a broader underlyingpermanent trend. During 2007, core inflationremained relatively sticky suggesting that underlyinginflationary pressures, despite significant liquidityTABLE 13INFLATION, 2005 - 2007/ Per cent /2005 2006 2007Core InflationFood PricesRPI (All Items)2.6622.86.893.6123.28.304.3217.57.90Source: Central Statistical Office.36

absorption by the Bank, remained relatively strong.The core inflation rate averaged 4.3 per cent in 2007compared with 3.6 per cent in 2006 and measured3.9 per cent in the twelve months to December 2007.Significant increases were observed in AlcoholicBeverages and Tobacco (12.6 per cent); Education(12.0 per cent); Hotels, Cafes and Restaurants (8.9 percent) and Transport (3.9 per cent). Price increases forAlcohol and Tobacco reflected higher excise duties aswell as rising costs experienced by a major local beermanufacturer. The cost of education services roseconsiderably because of higher tuition and examinationfees at private institutions, primarily due to thedepreciation of the TT dollar against the pound sterling.The Transport sub-index was heavily influenced by anincrease of 9.4 per cent in transportation services. Taxifares along various routes also rose throughout the year.However, the pace of price increases deceleratedin the Health sub-sector, as well as in the Recreationand Culture sub-index to 5.4 per cent and 2.7 percent, respectively. The slowdown in the rate of priceincreases in the Health sub-index was due mainlyto smaller increases in the cost of pharmaceuticalproducts and in medical services, such as doctors’ fees.In the Recreation and Culture sub-index, a sharp fall inthe cost of packaged holidays led the decline in thedivision. During the last three months of 2007, increasedcompetition among airlines brought on by a highernumber of chartered carriers, resulted in a substantialdecline in airfares.Over the medium term, inflationary pressures arelikely to be sustained in light of rising global food priceinflation, government’s ongoing infrastructural anddevelopmental projects and a possible increase inwater rates alongside adjustments to electricity rates.For 2008, the government has set an implicit inflationtarget of 6.0 per cent.WHOLESALE PRICESIn 2007, underlying inflationary pressures were evidentin other areas of the supply chain as reflected bymovements in producer prices. According to theCentral Statistical Office, the Index of Producers’ Prices(PPI) rose by 6.9 per cent compared with 4.5 per centthe previous year. The rise was spurred by significantincreases in producer prices in the Food Processing(7.0 per cent), Drink and Tobacco (14.9 per cent) andChemical and Non-Metallic Products (9.0 per cent)industry groupings.The increase in the Food Processing group wasdriven in large measure by a rise of 14.6 per centin the Bakery industry and 7.6 per cent in the Meat,Poultry and Fish Processors industry. The cost offlour, a key input in bakery operations, rose on threeoccasions during 2007. The increase in the Drink andTobacco industry was the result of a combination ofa rise in the cost of production at the nation’s largestbrewery and the imposition of higher excise dutieson the sale of alcoholic beverages and tobacco.Increases of 20.8 per cent and 20.7 per cent inthe Readymix concrete and Bricks, blocks andtiles industries were mainly responsible for thehigher prices charged in the Chemical and Non-Metallic Products industry group. In 2007, therewere instances of reported shortages in the supplyof aggregate and a resultant exponential increasein the price of the product. There were negligibleincreases in the other industries, the most notableof which was a rise of 3.0 per cent in the Assembly–Type and Related Industries on account of anincrease of 7.9 per cent in the prices charged bythe manufacturers of metal building materials.37

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007BOX 4Global Food PricesDeclining global agricultural production has now been recognised not only as a major contributor toglobal food inflation but also as a major threat to global food security. Towards the end of 2007, a UnitedNations (UN) report noted that world food supplies were diminishing rapidly while prices were soaringto unprecedented heights. Global food prices are being affected by a number of environmental andeconomic factors.(a) Factors Impacting Global Food InflationEnvironmental Factors:Climate Change: Agricultural production around the world has been severely affected by climatechange which has resulted in an increase in the frequency and severity of droughts, storms and floods.For instance, in Australia, one of the major producers of wheat, persistent drought has resulted in a declinein harvest yields in excess of 40 per cent. The United Nation’s Food and Agricultural Organisation (FAO)noted that global grain inventories at the end of 2007 were at their lowest levels in 34 years.Availability of Arable Land: Dwindling arable land, caused by the expansion of housing and industrialdevelopment, combined with decades of under-investment in agricultural technology has also severelyimpacted agricultural production.Economic Factors:Population Growth and Rising Incomes: Rising per capita incomes especially in India and China, whichtogether account for just about 1/3 of the world’s population, and the rapid adoption of westernisedlifestyles and diets have resulted in a burgeoning demand for dairy and meat products. China, whichbecame a net importer of food in 2004 now accounts for 30 per cent of the world’s milk consumption.A Switch to Bio-fuels: The steady rise in oil prices has led to a switch to bio-fuels as major oil importingcountries attempt to reduce energy costs. Data from the FAO indicate that 30 per cent of US corn outputis being re-directed to the production of ethanol. The US currently accounts for 70 per cent of the world’sexports of corn.38

BOX 4 (continued)Global Food Prices(b) Consequences for Global Food PricesThe combined effects of these environmental and economic factors have resulted in sharp increases inthe prices of wheat, corn, soybean and in dairy and meat products. For instance, in March 2008, the pricesof wheat, corn and soybean increased by 129 per cent, 29 per cent and 67 per cent respectively relativeto the corresponding period in 2007.The sharp increase in the prices of many staple food commodities has been a major contributory factor torising food inflation at the global level. Food inflation rates have increased drastically in some countries likeChina, South Africa, Brazil and Venezuela. In addition, the UN estimates that poor countries will experiencea 35 per cent increase in their import bills for cereals such as rice and flour.(c) International Policy Responses to Rising Food PricesRising global food prices are threatening to undermine the gains made in global poverty reduction overthe last decade. The FAO has identified fourteen countries (half of which are in Africa) that are in dangerof facing food shortages. Also, there has been increased social unrest in countries such as Haiti, Egypt,Senegal, Ethiopia, Mexico, Indonesia and Peru as a direct result of higher food prices.Governments have been taking direct action to reduce the price of staples to the consumer and tomitigate the impact of higher food prices on their populations . Some countries such as Indonesia, Peruand Turkey have reduced and/or eliminated import duties on a range of agricultural products in order tolessen the impact of rising commodity prices on consumers. Others such as China, Russia and Venezuelahave imposed price controls on items such as bread, milk and eggs.Many governments have expanded social safety nets by widening conditional cash transfer programmmesand emergency food distribution schemes to vulnerable groups as a form of direct food subsidisation. InMalaysia, the government is creating a new agency to stockpile edible oils and other essential items.India already stockpiles food for emergencies and distribution to the poor. Higher food prices have alsoforced many net food importing countries to introduce tighter food security measures. The Philippines, forinstance, has ordered a halt to the conversion of farmland for industrial, commercial and/or residentialuse.39

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007BOX 4 (continued)Global Food PricesExport restrictions or export tariffs on key agricultural commodities, particularly grains, have been introducedin countries such as India, Russia, Egypt, Kazakhstan, China, Ukraine and Argentina. Guinea has imposeda complete ban on the export of all types of agricultural, forestry and livestock products. While thesemeasures are intended to ensure the adequacy of domestic supplies, they have inadvertently contributedto further price increases on the international market.40

FISCALOPERATIONSCHAPTER SIX

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007FISCAL OPERATIONSCentral Government Fiscal OperationsAlthough petroleum prices remained buoyant in2007, declining levels of production contributed to areduction in the surplus on the central government’sfiscal accounts. In FY 2007, the central governmentposted an overall surplus of $2,298.5 million (1.7 percent of GDP) which was smaller than the surplus of$7,713 million (6.4 per cent of GDP) recorded in theprevious fiscal year. The sum of $2,030.2 million wastransferred into the Heritage and Stabilization Fund(HSF), bringing the accumulated balance in the Fundto $11,188.3 million at the end of fiscal 2007. The nonenergyfiscal deficit amounted to 15.7 per cent of GDP,compared with 14.3 per cent in the previous year.Recurrent revenue increased by $1,127.9 million or 2.9per cent to $40,034.8 million during fiscal year 2007.Unlike in previous years, this increase resulted from thegrowth in non-oil revenues which compensated for thedecline in oil revenues. With oil production falling to 44.9million barrels in fiscal 2007 from 53.9 million barrels in fiscal2006, revenue from oil declined to $22,642.3 million (17.5per cent of GDP) from $24,069 million (21.1 per cent ofGDP) in fiscal 2006. While energy revenues continuedto be the mainstay of government earnings, their shareof recurrent revenues declined to 56.5 per cent in fiscal2007 from 61.9 per cent in the previous fiscal year.In contrast, mirroring the more robust pace of growthin the non-energy sector, non-oil revenues rose by 17.4per cent to $17,422.1 million in fiscal 2007. This sector’scontribution to recurrent revenue also increased to43.5 per cent from 38.1 per cent in the previous fiscalyear. The growth in non-oil revenues reflected anincrease in VAT collections which rose by 15.4 per centto $4,829 million and in receipts from non-oil companieswhich grew by 20.9 per cent to $4,796.9 million. Thevibrancy of activity especially in the constructionsector gave a major boost to VAT revenues.Central government expenditure maintained itsupward trend in fiscal 2007 although the rate ofincrease slowed somewhat from in previous years. Totalexpenditure grew by 21.1 per cent to $37,765.9 millionin the period under review compared with an increaseof 26.6 per cent one year earlier. The expansionaryfiscal stance was reflected in increases in most areasof expenditure. Spending on wages and salaries roseby 14 per cent to $6,221.3 million (4.7 per cent of GDP)as government settled payment obligations relating towage agreements for the period 2005-2007. Overallexpenditure on transfers and subsidies increased to$16, 780.8 million (12.7 per cent of GDP) from $14, 830.4million (12.3 per cent of GDP) with transfers and subsidiesto statutory boards and state enterprises rising by 30.7per cent to $4,916.8 million. These allocations includedthe capitalization of Caribbean Airlines ($724.9 million)and transfers to the Ministry of National Security for thepurchase of off-shore patrol vessels ($455.3 million).The acceleration in Central Government’s publicsector and construction works led to a 68.6 per centincrease in capital expenditure bringing overall capitalspending to $7,781.9 million (or 5.6 per cent of GDP).The central government amortized debt amountingto $2,378.6 million. These debt obligations were largelyfinanced through the overall surplus and externalborrowing ($1,944.7), which reflected a mix of projectrelatedfinancing ($1,015.1 million) and bond issuance($945 million). There was a sharp increase in domesticborrowing in fiscal 2007 to $2,392 million with theincreased issuance of liquidity absorption bonds.42

PUBLIC SECTOR EXTERNAL DEBT(Data in this Section are in US dollars)Central Government external debt outstandingcontinued to decline in 2007 as government madedebt service payments faster than it contracted newdebt. Central Government external debt outstandingat the end of 2007 amounted to $1264.7 million, whichrepresented a fall of 2.3 per cent from 2006. Outstandingexternal debt now amounts to 6.3 per cent of GDP,compared to 8.4 per cent in 2005. At the end of 2007,the Trinidad and Tobago debt profile remained virtuallyunchanged from in 2006, with 90 per cent of debt beingUS dollar-denominated, and the majority representingmedium and long-term debt. In respect of the creditorcomposition, 71 per cent was owed to bondholderswhile 29 per cent was owed to multilateral creditors.External flows to the central government totaled $82.4million during 2007, of which $54.3 million came fromthe government’s main multilateral creditors, the InterAmerican Development Bank (IDB) and the World Bank(IBRD). The main disbursements were for infrastructuraldevelopment projects in the areas of education ($16.5million), road and highway development ($15.7 million)and for the national settlements programme ($7.75million). In 2007, the central government receivedloans from two new creditors: the Export Import Bank ofChina which provided $27.6 million to the Centre for thePerforming Arts Project and the Bank of Nova Scotia whosesyndicate of lenders funded the National OncologyProgramme and the Oncology Centre ($.5 million).During 2007, external debt service amounted to$153.4 million and comprised amortization andinterest payments of $65.3 million and $89 millionrespectively. Of the total principal payments, 62per cent ($40.5 million) represented payments tothe IDB, while the World Bank and the CaribbeanDevelopment Bank received $14.3 million and $6.3million, respectively. Bond interest accounted for81.6 per cent of the total interest paid. The balance($9.3 million) concerned multilateral loan obligations.CENTRAL GOVERNMENT DOMESTIC DEBTIn 2007, outstanding central government domesticdebt amounted to $12449.9 million, or 9.4 percent of GDP compared to $11,055.8 million or 9.7per cent of GDP in the previous year. During theyear, the government issued bonds to the tune of$1,691 million, which were contracted through theauction system principally for liquidity managementand for the development of the capital market.Principal repayments on the government’s publicsector non-interest bearing bonds declinedfurther in 2007, to $317,500 from $444,000 in 2006.Interest payments with respect to the US$150million domestic bond issued in 1998 and duein 2008, amounted to $82 million. Other centralgovernment debt service payments rose by$156.1 million to $1118.1 million at the end of 2007,largely as a result of higher interest payments.In respect of contingent liabilities, Letters of Comforttotaling $2891.3 million were issued during the year.Statutory agencies such as the Airport Authority,the Port Authority and the Public Transport ServiceCorporation received 11 per cent of the totalcontracted for maintenance and developmentprojects. Of the $2570.5 million approved for the UrbanDevelopment Corporation of Trinidad and Tobago,$2110 million or 82 per cent was utilized to refinancepast debts. The balance ($460.5 million) was directedtoward the construction of the Ministry of Educationtower. At the end of 2007, total contingent liabilitiesoutstanding had fallen by about $588.6 million to$16.7 billion. The outstanding balance reflectedLetters of Comfort amounting to $5.5 billion andgovernment guaranteed debt totaling $11.2 billion.43

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 14SUMMARY OF CENTRAL GOVERNMENT FINANCES, 2004/05 - 2007/08/ $million /FISCAL YEARS2005 2006 2007 2008 rCurrent Revenue29,638.838,906.940,034.846,585.9Current Expenditure21,842.426,582.629,984.035,620.6Current Surplus (+)/Deficit (-)7,796.412,324.310,050.810,965.3Capital Receipts9.14.029.638.0Capital Expenditure and NetLending2,798.64,615.37,781.99,279.2Overall Surplus (+)/Deficit (-)Financing5,006.9-5,006.97,713.0-7,713.02,298.52,298.51,724.1-1,724.1External (Net)-1,273.3-300.1688.3706.5Domestic (Net)-3,733.6-7,413.0-2,986.8-2,430.6SURPLUS (+)/DEFICIT(-) AS A PER CENT OF GDP (CURRENT MARKET PRICES)Current Surplus (+)/Deficit (-)8.210.27.67.0Overall Surplus (+)/Deficit (-)5.36.41.71.1Source: Appendix Table A.16.rRevised Budget. Includes supplemental appropriation of $3,490 million.44

TABLE 15SUMMARY OF CENTRAL GOVERNMENT FINANCES, 2004/05 - 2007/08/ PER CENT /Fiscal Years2005 2006 r 2007 2008 rA. Recurrent RevenueOil RevenueNon-Oil RevenueIncome TaxesProperty TaxesTaxes on Goods and ServicesInternational Trade TaxesNon-Tax RevenueTotal Recurrent Revenue47.152.927.50.214.25.06.1100.0PER CENT OF RECURRENT REVENUE55.045.020.40.214.44.75.3100.050.249.822.20.215.75.06.7100.048.052.021.60.216.26.08.1100.0B. Recurrent ExpenditureWages and SalariesGoods and ServicesInterestTransfers and SubsidiesTotal Recurrent ExpenditureSource: Appendix Tables A.17 and A.18.rBased on Revised Budget. Includes supplemental appropriation of $3,490 million.20.614.29.455.9100.0PER CENT OF RECURRENT EXPENDITURE20.514.59.255.8100.020.714.39.056.0100.020.515.37.756.5100.045

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 16SUMMARY OF CENTRAL GOVERNMENT FISCAL OPERATIONS/ $million /2003/04 2004/2005 2005/06 2006/2007 2007/08 rRevenueEnergy 1Nonenergy20,629.78,484.012,145.729,647.915,614.014,033.938,910.924,069.014,841.940,064.422,642.317,422.146,623.925,586.921,037.0ExpenditureCurrentWages and salariesGoods and servicesInterest paymentsTransfers & subsidiesCapital expenditure & net lending19,119.617,498.54,849.22,374.52,364.37,910.51,621.124,641.021,842.45,309.23,170.12,541.510,821.62,798.631,197.926,582.65,455.63,843.32,453.314,830.44,615.337,765.929,984.06,221.34,283.82,698.116,780.87,781.944,899.835,620.67,295.55,456.22,758.120,110.89,279.2Overall non-energy balance-6,973.9-10,607.1-16,356.0-20,343.8-23,862.8Overall balance1,510.15,006.97,713.02,298.51,724.1Total financingForeign financingDomestic financingOf which: transfers to Heritage & Stabilization Fund-1,510.1-357.0-1,153.1-1,263.0-5,006.9-1,273.0-3,733.9-2,593.0-7,713.0-410.8-7,302.2-3,160.0-2,298.5688.3-2,986.82,030.2-1,724.1706.5-2,430.61,718.8(IN PER CENT OF GDP)RevenueEnergyNonenergy25.810.615.232.116.915.234.121.113.031.017.513.532.017.614.5ExpenditureCurrentWages and salariesGoods and servicesInterest paymentsTransfers & subsidiesCapital expenditure & net lending23.921.96.13.03.09.92.026.723.75.83.42.811.73.027.323.34.83.42.113.04.029.223.24.83.32.113.06.030.924.55.03.81.913.86.4Overall non-energy balance-8.7-11.5-14.3-15.7-16.4Overall balance1.95.46.71.81.2Total financingForeign financingDomestic financingOf which: transfers to Heritage & Stabilization Fund-1.9-0.4-1.4-1.6-5.4-1.4-4.0-2.8-6.7-0.4-6.4-2.8-1.80.5-2.31.6-1.20.5-1.71.2Source: Ministry of Finance.Notes:The overall balance includes funds transferred to the Heritage and Stabilization Fund.In fiscal year 2006, transfers to the Infrastructure Development Fund (IDF) were $5,750 million whilst expenditure from this fund was $3,023 million.rRevised Budget. Includes supplemental appropriation of $3,490 million.1Energy revenue data for fiscal years 2007 and 2008 are estimates.46

TABLE 17TRINIDAD AND TOBAGO:ENERGY-BASED GOVERNMENT REVENUES, 2003/04 - 2006/07Energy SectorCorporation TaxRoyaltiesUnemployment levyWithholding taxExcise dutyOtherOther CompaniesOil ImpostEnergy SectorCorporation TaxRoyaltiesUnemployment levyWithholding taxExcise dutyOtherOther CompaniesOil Impost2003/2004 2004/20052005/2006 r41.126.55.32.00.92.80.03.50.210.26.61.30.50.20.70.00.90.0FISCAL YEARSPER CENT OF GOVERNMENT REVENUE52.736.44.23.11.62.10.05.20.116.411.31.30.90.50.70.01.60.061.945.34.33.41.60.30.06.80.2PER CENT OF GDP20.014.61.41.10.50.10.02.20.12006/2007 e56.541.34.22.82.30.20.15.40.217.112.51.30.80.70.10.01.60.0Source: Ministry of Finance.r- Revised.eEstimateTABLE 18CENTRAL GOVERNMENT FISCAL OPERATIONS, 2004/05 - 2006/07/ IN PER CENT OF GDP /2004/2005 2005/2006 r 2006/2007Total RevenueOf whichEnergy SectorNon-Energy Sector32.116.915.234.121.113.031.017.513.5Total ExpenditureCurrent ExpenditureCapital Expenditure26.723.73.027.323.34.029.223.26.0Overall Surplus/DeficitNon-energy Deficit5.4-11.56.7-14.31.8-15.7Source: Ministry of Finance.r- Revised.47

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 19CENTRAL GOVERNMENT EXPENDITURE: A FUNCTIONAL CLASSIFICATION/ $million /2002/2003 2003/2004 2004/2005 2005/2006 a 2006/2007 rEconomic ServicesEnergyAgriculture, Land and Marine ResourcesTransport1,488.9254.5364.9869.52,132.8763.3377.7991.82,570.11,009.7362.91,197.53,836.31,755.2436.11,645.03,502.01,187.3502.81,811.9Social ServicesEducation 1HealthHousingSmall & Micro-Enterprise DevelopmentSocial Services 23,946.02,363.81,259.873.831.6217.04,690.32,861.31,435.3116.746.7230.35,967.93,355.61,995.7134.3133.8348.57,986.23,850.91,987.4157.296.31,894.49,195.14,268.32,371.4169.8127.32,258.3Public ServicesNational Security1,651.91,651.91,874.51,874.52,215.22,215.22,569.02,569.03,158.53,158.5Other 37,088.68,619.512,070.419,662.317,034.5Total Recurrent Expenditure14,175.417,317.122,823.634,053.832,890.1Source: Ministry of Finance.aActual for Fiscal Year 2005/2006r- Revised.1Includes Ministries of Education and Science, Technology and Tertiary Education.2Includes Ministries of Community Development and Culture and Gender Affairs, Social Development and Sport and Youth Affairs.3Includes Office of the President, Auditor General, Judiciary, Industrial Court, Parliament, Service Commissions, Statutory Authorities, Electionsand Boundaries Commission,Tax Appeal Board, Registration, Recognition and Certification Board,Public Service Appeal Board,Office of the PrimeMinister,Tobago House of Assembly, Central Administrative Services, Tobago and all other Ministries. Other excludes Charges on Account of the Public Debt.48

MONETARYAND FINANCIALDEVELOPMENTSCHAPTER Seven

CENTRAL BANK OF TRINIDAD & TOBAGOMONETARY ANDFINANCIAL DEVELOPMENTSMONEY, CREDIT ANDINTEREST RATESANNUAL ECONOMIC SURVEY 2007A persistent liquidity overhang and strong inflationarypressures continued to pose challenges for monetarymanagement in 2007. The rise in the non-energy fiscaldeficit between 2003 and 2007 has been a majorsource of liquidity injection in the financial system. In2007, net domestic fiscal injections increased by 20 percent adding to an already liquid financial environment.This situation of excess liquidity in a context of tightcapacity and robust domestic demand prompted theCentral Bank to continue its aggressive programme ofliquidity absorption. The Bank implemented a numberof measures to tighten liquidity while it held the repo rateat 8.0 per cent. These measures included the use of asecondary reserve requirement for commercial banks,increases in open market operations, and the auction ofliquidity absorption bonds of varying maturities. Sales offoreign exchange also helped to contain excess liquidity.The Bank achieved some measure of success inabsorbing excess liquidity in 2007. Liquidity conditions inthe domestic financial system tightened as the averagelevel of excess reserves for 2007 fell to $256 million from$406 million in the previous year. Through the net issueof open market treasury bills, the Central Bank removed$6,649 million from the financial system compared withnet issues of $626 million the year earlier. In addition, thecentral government issued two (2) special liquidity bondswith a total face value of $1,692 million, the proceedsof which were sterilized. The Bank also withdrew afurther $6,362 million through the sale of US$1,020million in the foreign exchange market, comparedwith sales of US$1,465 million or $9,130 million in 2006.As liquidity conditions tightened, commercial banksneeded to have greater recourse to the inter-bankmarket and to the repurchase window facility at theCentral Bank to meet their financing needs. Interbankactivity increased to an average of $245 millionin 2007 from $158 million in 2006 while the total value ofrepurchase transactions increased to $15,450.6 million in2007, more than double the 2006 value of $6,950.2 million.Although the ‘repo’ rate remained unchanged at8.00 per cent, the relatively tight monetary policystance impacted market interest rates. The discountrate on the three-month treasury bills increased to7.00 per cent in December 2007 from 6.74 per centin December 2006, while the discount rate on the sixmonthtreasury bills increased to 7.10 per cent from6.78 per cent over the same period. The inter-bankrate also trended upwards, from an average of 6.19per cent in 2006 to 7.23 per cent in 2007. Meanwhile,the sharp cut in the federal funds rate emanating fromthe fallout in the US sub-prime market led to a wideningin the differential between the US and TT three-monthtreasury bills rates to 387 basis points at the end ofDecember 2007 from 187 basis points in December 2006.Commercial bank lending and deposit rates havealso been trending upwards. The commercial banks’weighted average lending rate increased to 10.68 percent at the end of December 2007 from 10.21 per centat the end of 2006 while the weighted average depositrate increased by 39 basis points to 2.76 per cent inDecember 2007 from 2.37 per cent in December 2006.50

These movements in both lending and deposit ratesresulted in a slight widening of the interest rate spreadfrom 7.84 per cent in December 2006 to 7.92 per centin December 2007. The prime lending rates of thecommercial banks, which tend to respond to changes inthe ‘repo’ rate, remained at 11.75 per cent during 2007.Longer-term interest rates in the banking system, suchas real estate mortgage rates, were also affected bythe tighter liquidity environment. In the final quarter of2007, approximately 36 per cent of all new mortgagesgranted by commercial banks were priced in the 9.10-10.00 per cent band. This represented an increase of 15percentage points over the 6-month period March-June2007, when 21 per cent of all new mortgages extendedby commercial banks carried interest rates between the9.10 -10.00 per cent range. During the six-month periodending December 2007, commercial banks negotiatedhigher rates more often on commercial-type mortgagecontracts than on residential mortgage contracts.Notwithstanding the on-going efforts to tighten liquidityand dampen domestic demand, credit to the privatesector by the consolidated financial system continuedto expand at a brisk pace in 2007, growing on a yearon-yearbasis to December 2007 by 16.2 per cent from12.1 per cent, a year ago. Commercial bank lendingremained the main source of lending to the privatesector, expanding by 21.9 per cent in the twelve monthsto December 2007 compared with growth of 18.9 percent in the corresponding period of 2006. However,credit by the non-bank financial institutions contractedby 15.3 per cent, the same level as in the previous year.The faster pace of credit growth resulted mainly from anacceleration in the rates of consumer and real estatemortgage lending. Loans to consumers rose to 21.3 percent in the twelve months to December 2007 comparedwith 18.5 per cent in 2006. Real estate mortgageloans rose at a faster rate of 17.5 per cent comparedwith 15 per cent in the previous year. By contrast,demand for business loans waned somewhat, slowingto 13.6 per cent on a year-on-year basis to December2007 from 21.9 per cent at the beginning of the year.MOnetary aggregatesAgainst the background of rising short-term yields ingovernment securities and tighter liquidity conditions,the monetary aggregates generally experienceda slower rate of expansion in 2007. Total domesticdeposits in the commercial banking system grewon average by 18.3 per cent in 2007, lower than theincrease of 21.9 per cent recorded in 2006. The rateof growth of M-1A, the narrow money supply whichcomprises currency in active circulation plus demanddeposits, slowed to 7.6 per cent in 2007 compared witha relatively strong increase of 21.7 per cent in 2006.Demand deposits, the largest component of the narrowmoney supply, grew by 5.2 per cent in 2007, significantlyless than the increase (23.2 per cent) recorded theyear before. Notwithstanding the increased usage ofelectronic means of payments in 2007, especially atthe retail level, the demand for currency still remainedstrong. Currency in active circulation rose by 16.7per cent in 2007, about the same rate as in 2006.The broader measure of the money supply, M-2,defined as M-1A plus time and savings deposits,increased at a slower pace of 13.3 per cent duringthe year compared with 24.3 per cent in 2006. Therate of growth of quasi-money (savings and timedeposits) slowed to 17.0 per cent from 26.7 per centthe previous year. One possible explanation forthe slower rate of growth in M-2 is that in a bankingenvironment of relatively high liquidity and low rateson deposits, savers have been seeking higher yieldingfinancial instruments such as government securities.51

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007Foreign currency deposits, by contrast, displayed stronggrowth expanding by 36.4 per cent on average in 2007from 11.8 per cent in 2006. However, as a proportionof GDP, the growth in foreign currency deposits hasremained relatively stable over the last 3-4 years.Currency in active circulationM-0M-1AM-2M-2*M-3M-3*Domestic Credit (Net)Private SectorPublic SectorTABLE 20SUMMARY OF MONETARY CONDITIONS2005-2007 (ANNUAL AVERAGE)/ $million /2005 2006 r 20072,0775,1179,48223,54531,23826,11037,34230,25223,7186,5342,4157,24011,53629,35637,95731,52943,30534,38228,4915,8912,8178,61612,40933,25344,98335,80851,15238,73533,3485,387PERCENTAGE CHANGE (%)2006/2005 2007/200616.619.07.613.318.513.818.112.717.0-8.616.314.521.724.721.520.816.013.720.19.8Source: Central Bank of Trinidad and Tobago.r- Revised.TABLE 21FACTORS INFLUENCING CHANGES IN THE MONEY SUPPLY, 2003-2007/ $million /2003 2004 2005 2006 r 2007 pNet Domestic Budget DeficitIncrease in Credit to the Private SectorBal. of Payments Deficit of Private SectorChanges in Net Unclassified AssetsCentral BankCommercial BankChange in Money Supply (M-2)Change in Money Supply (M-1A)Change in Quasi-MoneyMemo Items:Money Supply (M-2)Annual Growth (%)Total Composition (%)MoneyQuasi-Money2,0101,5164,7352,292192,2731,083-231,1065.8100.039.360.71,1683,8375,6471,7503,150-1,4001,1086204886.2100.040.259.8-2,8834,714-1,3391,5732,290-7174,5131,8462,66723.7100.040.359.710,1252,29411,3534,7604,5991615,8262,0683,75524.3100.039.360.7-2,4983,7084,7087,9645,9252,0384,4631,6142,84913.6100.037.362.7Source: Central Bank of Trinidad and Tobagor- Revised.p- Provisional.52

INSTITUTIONAL DEVELOPMENTS 2007During 2007, the Central Bank of Trinidad and Tobagocontinued to enhance the regulatory frameworkgoverning the financial sector. In this regard, the Bankundertook industry-wide consultations on proposedlegislation covering banks, insurance companies, creditunions and pension plans. Significant progress was madein respect of the review of the Financial Institutions Act,which has been submitted to Cabinet. Work continuedon the governance and prudential regimes for creditunions, insurance companies and pension funds. Inthe coming year, legislation regarding these institutionswill be drafted. As an interim measure, however, theInsurance Act was amended to allow well-fundedpension plans to invest in additional equities above theoriginal 50 per cent limit.In a bid to foster the adoption of international bestpractices within the local banking sector, the Bankissued, in July 2007, a guideline on the Measurement,Monitoring and Control of Impaired Assets which outlinesminimum standards for the recognition, monitoring andmeasurement of impaired assets by financial institutions.In addition, the full range of capital charges applicableto financial institutions under the Basel Amendment tothe Capital Accord to Incorporate Market Risks becameeffective on January 1, 2008.During the year, there was an expansion in the numberof banks licensed to conduct business of a bankingnature. First Caribbean International Bank (Trinidad& Tobago) Limited, formerly known as First CaribbeanInternational Banking and Financial CorporationLimited, was granted a banking licence with effectfrom May 28, 2007. Another commercial bank, the Bankof Baroda, joined the system in October 2007. Withthese additions, there are now eight commercial banksoperating in Trinidad and Tobago’s banking system.In other developments, the Royal Bank of Canada (RBC)reached preliminary agreement on the acquisition of theassets of RBTT Financial Holdings Limited for $13.8 billion.The proposal involves a share price of $40 to be settledin cash (60 per cent) and in common shares (40 percent) in RBC. Approvals are pending from shareholdersas well as regulatory authorities in jurisdiction in theCaribbean and North America.Also in September 2007, the Central Bank relinquishedits control of the First Citizens Bank Limited (FCB). FCBwas formed from a merger of the National CommercialBank, Workers Bank (1989) and Cooperative Bank inSeptember 1993 and was placed under the care ofthe Central Bank. Under this arrangement, FCB wasrequired to report directly to the Bank and have all itsmajor decisions approved by it.In the insurance sector, the Bank found it necessary toinitiate intervention proceedings in one company forcontinued violation of the Insurance Act. In addition,one insurance company that had earlier been placedunder intervention by the Bank was placed intocompulsory liquidation by the High Court and had all itspolicies cancelled. As a result, an estimated $35 millionin claims were left unpaid. Another insurance companythat had also faced intervention was liquidated in Augustand claimants were urged to lodge their claims beforeAugust 3, 2007 in order to facilitate the preservation oftheir financial interest in the company’s assets.In June 2007, the second phase of the interbankpayment system was launched. The RTGS system(also known as Safe-tt) provides for real time onlinegross settlement of large value (over TT$500,000) andtime critical payments. Transactions under the RTGSsystem allow same-day access to payment values and53

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007allow instant interest accruals on deposits. During thefinancial year, the Bank completed arrangements toconduct oversight of systemically important paymentsystems. This included the publication on its website of(1) the policy document, “Payments Systems OversightPolicy”, which outlines the Bank’s objectives, scope andapproach to oversight and (2) a framework documententitled “Methodological Guidance for Evaluationof Systemically Important Payment Systems” whichexplained the assessment process.54

CAPITAL MARKETSCHAPTER EIGHT

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007CAPITAL MARKETSBONDSDuring 2007, activity in the market for TT bonds wassustained by issues of government fixed-incomesecurities made for liquidity sterilization purposes as wellas by some private bond issues to finance commercialand residential housing projects. Total face value for theyear amounted to TT$5,137.5 million, which comprisedTT$3,321.5 by domestic firms and TT$1,816 million (US$288million) by regional institutions. The market also saw anincrease of close to two-thirds – from US$220 millionto US$357 million in 2007 – in the value of US dollardenominatedissues. The issuers included a regionalsovereign (the Government of St. Vincent and theGrenadines) and quasi-government institutions as wellas two local institutions who sought to take advantageof low interest rates.The Central Government of Trinidad and Tobago issuedtwo bonds amounting to $1,692 million for the purpose ofliquidity absorption. Both issues received overwhelmingpublic support and the actual allotments of $674 millionand $1,018 million were well above the initial offerings of$300 million and $450 million, respectively. These bondshad maturities ranging from 5.5 and 7 years, at interestrates of 7.8 per cent and 8.0 per cent respectively.These issues also contributed to the maintenance of aflat yield curve.The Water and Sewerage Authority (WASA) was theonly state enterprise to participate in the primary bondmarket during 2007, issuing a US$30 million bond at afixed rate of 5.9 per cent, with a 5-year maturity. Theprivate sector accounted for TT$1,440.4 million with theperiods to maturity ranging from 2.5 to 18 years. Exceptfor the 18-year bond which has a fixed rate of 11 percent for 3 years and a variable rate of between 8–12per cent for the remainder of the period, the rates onall other private issues narrowed between 6.6 per centand 8.5 per cent.EQUITIESWhile the stock markets of many emerging marketcountries were generally buoyant, the Trinidad andTobago stock market produced overall flat results in2007. This was, however, an improvement after twoconsecutive years of decline.Both the Composite Stock Price Index (CPI) and the AllTrinidad and Tobago Index (ATI) declined consistentlyduring the fist half of 2007, meeting their lowest points of905.0 and 1138.0 respectively in July. However, marketactivity picked up during the second half of 2007. Thiswas mainly influenced by “bidding wars” betweenthe ANSA McAl Group and Neal and Massy HoldingsLimited for Barbados Shipping and Trading Companyand investors’ expectations from the RBTT takeover.During this time the indices rose by 9 per cent and 6 percent respectively.In terms of Index value, the manufacturing andconglomerate sectors took the lead, followed by theproperty sector. Activity in the conglomerate sector wasagain driven by the takeover bidding between Neal andMassy and Ansa McAl for the Barbados Shipping andTrading Company (BS&T) (Chart 9). Activity surroundingthe banking sector showed strong gains following theannouncement of the planned acquisition of RBTT56

Financial Holdings by the Royal Bank of Canada (RBC)and the increase in banks’ earnings as higher interestincome was reflected in larger profits.Market capitalization which also declined for most of2007 gained momentum during the third quarter to closethe year at $98.2 billion. This represented a modest 1.4per cent increase over its 2006 value. The total volumeof shares traded during 2007 showed a 45 per cent falloff from 220 million in 2006 to120 million in 2007. At theend of December 2007, a total of 16 stocks advancedwhile 12 stocks declined and three remained constant.MUTUAL FUNDSAt the end of 2007, total funds under managementgrew by more than 8.5 per cent when compared withthe previous year. The money market funds continuedto lead the growth in the mutual fund industry growingin excess of 10 per cent compared to the equitybasedfunds which grew by 1.1 per cent over theprevious year. The number of investment options alsoexpanded during the year as the Unit Trust Corporation(UTC) launched the UTC Energy Fund in July and theUTC International Suite of Funds in December 2007. TheInternational Suite of Funds is sub-divided into BondFunds and Equity Funds and consists of the Global BondFund, the Asia-Pacific Fund, the Latin American Fundand the European Fund.Over the 5 year period, 2003 to 2007, money marketfunds grew from $12.7 billion to $28.8 billion at anaverage growth rate of 25 per cent per annum whileequity-based funds grew from approximately $2.3 billionto $5.8 billion at an average annual rate of 31 per cent.Despite the quarterly swings in growth rates, the periodsaw an overall growth of 131.6 per cent at an averageannual rate of 26 per cent.The growth rates in TT dollar equity-based fundsappear to mirror that of the stock market indices. Therecent swings in value of equity-based funds may beassociated with the volatilities experienced in the stockmarket. With the proposed amendment to pensionplan regulation legislation in 2008, stock market activityas well as equity-based mutual funds is expected to bestimulated.57

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 22PRIMARY BOND MARKET ACTIVITYJANUARY- DECEMBER 2007PERIODISSUEDBORROWER(FACE VALUE)$MNPERIOD TOMATURITYINTEREST RATEPLACEMENTTYPEJanuaryGovernment of St. Vincent and the GrenadinesUS$11.0010 yearsFixed rate of 7.00% p.a.PrivateFebruaryClico Investment BankUS$75.005 yearsFixed rate of 8.55% p.a.PrivateGovernment of Trinidad and Tobago674.305.5 yearsFixed rate of 7.80% p.a.AuctionMarchTranscorp Development Company LimitedBarbados Investment and DevelopmentCorporation665.00US$19.0018 years15 yearsFixed rate of 11.00% for 3 yearsthereafter Floating rate - Floor 8.00%and Cap 12.00%Fixed rate of 6.955% p.a.PrivatePrivateBarbados Transport BoardUS$11.0015 yearsFixed rate of 6.996% p.a.PrivateAprilHome Mortgage Bank53.505 years7 years$20.7 M Tranche Fixed 6.375% (tax free)$32.8 M Tranche Fixed 6.75% (tax free)PrivatePrivateBarbados Agricultural Management CompanyUS$25.0015 yearsFixed rate of 7.28% p.a.PrivateGovernment of Trinidad and Tobago1017.987 yearsFixed rate of 8.00% p.a.AuctionJulySt. Maarten Harbour Holdings N.V.US$86.0015 yearsInitial rate of 7.00% p.a.PrivateJairo Holdings LimitedUS$40.0010 yearsInitial rate of 8.50% p.a.PrivateSeptemberHome Mortgage Bank71.005 years7 years10 years2 years$4.9M Tranche Fixed 6.563% (tax free)$4.3M Tranche Fixed 6.75% (tax free)$6.938 Tranche Fixed 6.938% (tax free)$59.9 Tranche Fixed 7.75% (taxable)PrivatePrivatePrivatePrivateNovemberCool Petroleum (St. Lucia) LimitedTranche A BondsCool Petroleum (St. Lucia) LimitedTranche B BondsCool Petroleum (St. Lucia) LimitedTranche C BondsUS$20.00US$20.00US$20.0010 years10 years10 years9.00% p.a.9.00% p.a.7.65% p.a.PrivatePrivatePrivateWater and Sewage Authority (WASA)US$30.005 yearsFixed rate of 5.90%PrivateDecemberHome Mortgage Bank109.8952.5 yearsFixed rate of 7.75% p.a. (taxable)PrivateSource: Central Bank of Trinidad and Tobago.58

TABLE 23STOCK MARKET INDICESMar-03Jun-03Sep-03Dec-03Mar-04Jun-04Sep-04Dec-04Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07Index Values Quarterly Change (%) Year on Year Change (%)Composite All T&T Composite All T&T Composite All T&T564.2560.4600.0694.1839.4904.7962.71074.61148.51170.31082.91067.4958.6920.3868.8969.2929.1918.8936.6982.0688.7691.1759.1912.01118.31155.51197.71290.11432.21480.01345.91323.01170.41168.41090.31205.71178.21152.41179.61200.73.4-0.77.115.720.97.86.411.66.91.9-7.5-1.4-10.2-4.0-5.611.6-4.1-1.11.94.95.30.39.820.122.63.33.77.711.03.3-9.1-1.7-11.5-0.2-6.710.6-2.3-2.22.41.823.916.522.827.248.861.560.554.836.829.412.5-0.7-16.5-21.4-19.8-9.2-3.1-0.27.81.333.527.137.939.462.467.257.841.528.128.112.42.5-18.3-21.1-19.0-8.90.7-1.48.2-0.4Source: Central Bank of Trinidad and Tobago.59

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 24MUTUAL FUNDS UNDER MANAGEMENT BY TYPE OF FUNDFunds Under Management(TT$ Million)AggregateFund ValueMoneyMarketEquityQuarterly Percentage Change(%)AggregateFund ValueMoneyMarketEquityYear-on-Year PercentageChange (%)AggregateFund ValueMoneyMarketEquityMar-03Jun-03Sep-03Dec-03Mar-04Jun-04Sep-04Dec-04Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-0714,918.1412,645.7718,041.0119,510.1922,927.7724,278.6125,213.9526,970.4028,140.6629,821.3631,110.8931,304.8231,477.5231,071.8231,039.6831,834.8832,172.2531,893.4433,284.8434,545.5612,664.1210,290.8315,082.9615,822.0318,551.2319,694.9820,089.2821,205.5021,462.2122,955.6524,554.7525,029.6225,742.1825,498.8525,627.0126,145.4426,441.2026,397.6227,556.9928,794.652,254.022,354.942,958.053,688.164,376.544,583.635,124.675,764.906,678.456,865.716,556.146,275.205,735.345,572.975,412.675,689.445,731.055,495.825,727.855,750.915.4-15.242.78.117.55.93.97.04.36.04.30.60.6-1.3-0.12.61.1-0.94.43.84.7-18.746.64.917.26.22.05.61.27.07.01.92.8-0.90.52.01.1-0.24.44.59.24.525.624.718.74.711.812.515.82.8-4.5-4.3-8.6-2.8-2.95.10.7-4.14.20.446.827.741.637.853.792.039.838.222.722.823.416.111.94.2-0.21.72.22.67.28.546.522.835.830.846.591.433.234.015.716.622.218.019.911.14.44.52.73.57.510.148.254.681.978.794.294.673.256.352.649.827.98.9-14.1-18.8-17.4-9.3-0.1-1.45.81.1Source: Central Bank of Trinidad and Tobago.60

INTERNATIONALTRADE ANDPAYMENTSCHAPTER nine

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007INTERNATIONAL TRADEAND PAYMENTS(All values in this section are expressed in US dollars)BALANCE OF PAYMENTSFollowing an overall surplus of 5.8 per cent of GDP in 2006,Trinidad and Tobago’s external transactions produceda surplus $1,541.1 million or 7.4 per cent of GDP, whichbrought the year-end level of gross official reserves to justover $6.7 billion, equivalent to 9.4 months of prospectiveimports of goods and non-factor services. The surpluson the external current account increased significantlymainly reflecting the continued strong performance onthe merchandise trade account, which recorded netearnings of $5.7 billion. In contrast, the capital accountrecorded a deficit as outflows linked to regional bondissues reached just under $0.3 billion and allocationsamounting to $0.4 billion were made to the HeritageStabilization Fund. In addition, outflows as a result of investmentsabroad by domestic firms almost doubled.Current AccountThe external current account recorded a surplusof $5,380.9 million or 25.7 per cent of GDP in 2007,compared with $4,808.7 million or 25.1 per cent of GDPin 2006. Despite a fall off in earnings from mineral fuelsexports as a result of lower crude oil export volumes,total exports were 10.7 per cent higher than in 2006.Mineral fuels and lubricants exports earned $8,848.2million, 18.3 per cent less than the $10,833.5 millionearned in 2006. However, higher prices obtained forammonia, urea and methanol saw chemical exportsgrowing by $639.1 million to $2,762.3 million. Exports ofmanufactured goods increased from $661.4 million in2006 to $683.8 million. In the context of the buoyancyof the local economy, falling unemployment and risingincomes, imports continued to rise, reaching $7,669.9million in 2007, and exceeded the 2006 level by 12.1 percent. Consumer goods imports increased by 19.5 percent, while higher refining activity and increased pricesfor crude oil were reflected in an increase of about 17per cent in the value of crude oil imports. Capital goodsimports fell by about 4 per cent, which may have beeninfluenced by the slowdown in construction of newplant installations in the energy sector during the year.Capital AccountThe capital account recorded a deficit of $3,505.3million (-16.7 per cent of GDP), about 10 per cent higherthan in 2006. Bond issues on the local market by regionalentities, which over the years has been a sizeable sourceof outflows on the capital account, totaled $272 millioncompared with total issues of $199.9 million in 2006.Net inflows from foreign direct investment increasedto $830 million as there were no outward foreign directinvestment flows in 2007. Commercial banks reducedtheir net holdings abroad as their net foreign positionfell to $88.2 million following a substantial build-upof net foreign assets of $844.6 million in 2006. “Otherprivate” capital flows increased during the period asthe private sector continued to diversify its portfolio andspread its risk by holding assets abroad. Official capitaltransactions during 2007 registered a deficit of $375million, compared with $592 million in 2006.62

Principal repayments on existing external debt fell to$65.3 million from $247.3 million in 2006 which includedthe refinancing of a $150 million bond issue. Interestpayments amounted to $89 million resulting in a totaldebt service of $154.3 million. Consequently, the debtservice ratio for the year 2007 stood at 1.1 per centcompared with 2.8 per cent in 2006.year. The country’s net foreign reserves position as atDecember stood at $8,143 million an increase of $189.7million from the end of 2006. This comprised an increaseof $278 million in the Central Bank’s net internationalreserves and a decrease of $88.3 million in the netforeign position of commercial banks.Trinidad and Tobago’s gross foreign assets amountedto $9,013.1 million at the end of December 2007, $290.5million above the level at the end of the previous63

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 25SUMMARY BALANCE OF PAYMENTS, 2003 – 2007/ US$million /2003 r 2004 r 2005 r 2006 r 2007 pCurrent AccountMerchandiseServicesIncomeTransfers984.71,293.2313.8-680.958.61,647.11,508.7479.5-397.356.23,594.03,947.7356.2-760.050.14,808.75,257.5450.9-935.836.15,380.95,721.4565.4-963.757.8Capital AccountOfficialState EnterprisesPrivate SectorErrors and Omissions-737.2-89.9-10.2-432.0-205.1-1,115.5-389.4-10.7-575.6-139.8-2,118.1-438.4-10.7-1,147.6-521.4-3,689.9-591.7-10.7-2,587.0-500.5-3,839.8-374.4-10.5-3,120.4-334.5Overall Surplus / Deficit247.5531.61,475.91,118.81,541.1Change in ReservesIncrease (-) / decrease (+)-247.5-531.6-1,475.9-1,118.8-1,541.1Exports: Non-energyEnergyGross Official ReservesImport Cover (months)962.04,244.02,257.85.41,260.05,143.02,993.06.91,076.08,596.04,885.78.91,085.011,015.06,530.89.91,009.012,382.06,673.59.4Source: Central Bank of Trinidad and Tobagor- Revised;p- Provisional.64

EFFECTIVE EXCHANGE RATESTrade Weighted Real Effective Exchange RateThe Trade Weighted Real Effective Exchange RateIndex (TWREER) is the main indicator used by the CentralBank of Trinidad and Tobago to measure this country’sinternational price competitiveness. In 2007 this indicatorshowed that the Trinidad and Tobago economy lostcompetitiveness by 1.3 per cent, but this loss was ata slower rate than the loss of 3.8 per cent in 2006. In2007, the depreciation of the US dollar favoured animprovement in this country’s competitiveness but thehigh rate of Trinidad and Tobago’s inflation comparedwith those in the country’s major trading partners offsetthe possible gains in competitiveness from this source.Inflation EffectThough inflation in Trinidad and Tobago fell to 7.9per cent from 8.4 per cent in 2006, the gap betweendomestic inflation and trading partner inflation widened.This differential was captured by the Trade WeightedEffective Inflation Rate Index, which increased by 3.7per cent.Exchange Rate EffectThe depreciation of the US dollar against othermajor currencies accelerated notably in 2007. Thesemovements meant that the TT dollar depreciatedindirectly against these major currencies. This wasreflected in part by the 2.3 per cent fall in the TradeWeighted Nominal Effective Exchange Rate index.During the year, the US dollar depreciated againstthe Euro, Canadian dollar and the Pound by 9.1 percent, 6.1 per cent and 8.6 per cent, respectively. Thesemovements tended to assist the competitiveness ofTrinidad and Tobago.65

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 26EFFECTIVE EXCHANGE RATES2003-2007PERIODAVERAGETRADE-WEIGHTED EXPORT-WEIGHTED EFFECTIVE INFLATION RATETWREERTWNEER XWREER XWNEER TRADE-WEIGHTED EXPORT-WEIGHTEDINDEX (1990=100)20032004200520062007100.1398.11100.10103.90105.25155.06152.30151.98151.02147.4996.8695.2997.32101.42102.75117.11116.94117.61117.97115.9764.5864.4265.8668.8171.3782.7081.4982.7485.9888.61PERCENTAGE CHANGE20032004200520062007-1.32-2.012.023.791.30-0.86-1.78-0.21-0.64-2.33-0.08-1.612.134.221.311.11-0.140.570.30-1.69-0.48-0.242.234.473.73-1.18-1.471.543.923.05Source: Central Bank of Trinidad and Tobago.66

INTERNATIONALCOMMODITYMARKETSappendix one

CENTRAL BANK OF TRINIDAD & TOBAGOINTERNATIONAL COMMODITYMARKETSANNUAL ECONOMIC SURVEY 2007NATURAL GASIn 2007, the thrust towards the use of moreenvironmentally-friendly fuels by the residential,commercial and power generation sectors contributedto an increase of 5 per cent in the demand for naturalgas in the United States. However, in an unusualdevelopment, natural gas prices did not move in stepwith price changes in the petroleum market. A mild2007 Atlantic hurricane season, record levels of naturalgas inventories, a surge in the importation of liquefiednatural gas (LNG), new LNG and pipeline infrastructureand a rise in domestic production in the US allunderpinned moderate natural gas prices throughoutthe year. Consequently, natural gas prices averagedUS$6.98/mmbtu during 2007, an increase of just 3.2 percent from the previous year.Although the number of storms (15) and hurricanes(6) increased in 2007 when compared to the previousyear, the natural gas infrastructure in the Gulf of Mexicowas not significantly affected. The one hurricane thatmade landfall in the US (Hurricane Humberto), alongwith another intense weather system, forced theprecautionary shut-in of approximately 31 per cent ofnatural gas production from the Gulf of Mexico. However,the temporary curtailment of natural gas productiondid not unduly affect total supply as natural gas outputincreased by an estimated 2.1 per cent in 2007.At the end of the heating season in April 2007 some1.57 1 trillion cubic feet (tcf) of natural gas remained instorage and provided the platform for record inventorylevels at the end of the filling season in October 2007.Natural gas inventories ended the filling season at anhistoric high of 3.51 trillion cubic feet (tcf), more than10 per cent in excess of the five-year average. Partlyresponsible for the increase in storage was a rise in LNGimports. For the period January to November 2007,US LNG imports totalled 750 billion cubic feet (bcf)compared to 583.5 bcf for 2006. Trinidad and Tobagoaccounted for 57.3 per cent (430 bcf) of US total LNGimports. Other major exporters of LNG to the US wereEgypt (15.3 per cent), Nigeria (12.7 per cent) and Algeria(9.9 per cent). However, towards the end of the year,in the fourth quarter of 2007, US LNG imports slowedbecause of increased global demand, particularly fromAsia, and because of problems at some liquefactionfacilities. In Japan, the shutdown of a major nuclearpower plant increased the demand for natural gas forelectricity generation.In 2008, a moderate increase in natural gas prices isexpected because of a rise in demand associatedwith a return to more normal winter weather in thenorthern hemisphere. Nevertheless, an increase in1This was the second highest end of winter inventory on record and above the five-year average of 1.23 tcf.68

global liquefaction in 2008, barring any project delays,is expected to further boost US LNG imports.PETROLEUMThe international petroleum market displayed greatervolatility in 2007. Initial projections of an oil price in themid US$60’s per barrel were quickly dispelled after thefirst quarter when prolonged refinery maintenance,unplanned refinery outages, strong petroleum productdemand (particularly for gasoline), geopolitics, OPECproduction cuts and declining oil inventories causedprices to surge to record highs. Crude oil prices (WestTexas Intermediate) averaged US$72.25/bbl in 2007, anincrease of 9.5 per cent from the previous year. Priceshit an all-time high of US$99.29/bbl on November 21,before retreating.Oil DemandGlobal oil demand averaged an estimated 85.8 millionb/d in 2007, an increase of 1.2 per cent (1.0 million b/d) from 2006. This growth was spurred by higher non-OECD demand of 1.1 million b/d, particularly from Asia.Although oil demand fell in OECD countries by 100,000b/d, a stronger-than-expected rise in the demand fortransportation fuels in North America and Europe duringthe fourth quarter tempered the slack off in demand.The surge in global oil demand came as a surprise,especially given some forecasts of an impending USeconomic slowdown.Oil SupplyWorld oil supply remained virtually unchanged from theprevious year, averaging an estimated 85.5 million b/d.Non-OPEC supply (excluding Angola and Ecuador) wasestimated at 49.7 million b/d . Non-OPEC oil productioncontinued to be hampered by project delays andoutages throughout the year. OPEC oil production(including natural gas liquids) averaged an estimated35.9 million b/d, representing a fall of 390,000 b/d from2006. Global oil supply was affected by several factors,such as low inventory levels, refinery outages, geopolitics,and adverse weather conditions. Additionally, while nota determining factor of physical oil supply, speculativeactivity played an important role in the crude oil marketduring the year.At the beginning of 2007, crude oil prices fell belowUS$50/bbl for a short period because of the actions ofnon-commercial traders and as excess crude stocksbuilt up at the main delivery point in the United States(US) – Cushing, Oklahoma. In fact, US commercialcrude inventories rose to their highest level in nine years,but fell back later in the year to levels below that of2006, as cold weather hit the north-east coast of theUS. The initial build-up of inventory was reflected inunusually low refinery utilization rates caused by highrefinery maintenance and a spate of unforeseenrefinery outages. The frequency and protracted natureof refinery maintenance was in response to stricterenvironmental standards requiring the productionof cleaner fuels. However, utilization rates quicklyrebounded in February 2007, which was one of thecoldest Februaries in 30 years.In 2007, geopolitics continued to add a premium to oilprices. With the market seemingly factoring in unrestin Nigeria on an ongoing basis, activities in the MiddleEast captured the market’s attention. These includedthe tensions between Iran and the United States overIran’s nuclear programme and Iran’s detention of 15British naval personnel in March. This immediately sentprices to a high of US$66/bbl, as Britain froze bilateralbusiness contracts. In respect of the nuclear row, theUS and the United Nation’s Security Council imposedtougher sanctions against Iran while the US StateDepartment cautioned foreign energy companies69

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007of a possible contravention of the Iran Sanctions Actshould any company enter energy deals worth morethan US$20 million with that country. Tensions also arosebetween Turkey and Kurdish separatists of northernIraq. In Venezuela, through a Nationalization Law, thegovernment took majority control (60 per cent) of theentire value chain of the 630 thousand b/d heavy crudeoil projects in the Orinoco belt in May 2007.The 2007 Atlantic hurricane season did not undulyaffect the oil infrastructure in the Gulf of Mexico. In earlySeptember, both Hurricanes Dean and Felix forced theprecautionary shutdown of crude oil production in theGulf of Mexico (GOM), which accounts for a quarterof the world’s oil production. The shut-in of 25 per centof world normal production levels contributed to pricesexceeding US$74/bbl.Impact of the Financial MarketsVolatility in the US financial markets also affected priceformulations during the year. Though the IEA projectedthat the US sub-prime mortgage crisis may not haveunduly impacted US oil demand growth, the weakeningof the US dollar to all-time lows against other majortraded currencies and the expectation of additionalinterest rate cuts by the Federal Reserve may haveaffected the oil market. There was a significant inflowof speculative funds from non-commercial traders intoenergy markets as a hedge against the declining valueof the US dollar. The weakening of the US dollar to athirty month low in July provided short-term support todollar denominated commodity prices and facilitatedincreased imports. In fact, reports of the continuing slideof the dollar coincided with that of higher oil prices.OPECIn 2007, two new members joined OPEC – Angola andEcuador. Ecuador rejoined OPEC in December 2007after leaving the group in 1993, while Angola joined thegroup effective January 1, 2007. OPEC met on threeoccasions during 2007, skipping its customary Junemeeting. At the March 15 meeting, the ten-membercartel decided to leave the crude output target of25.8 million b/d for its ten members unchanged. Newmember, Angola, was exempt from the limits. Instead,OPEC focused on increasing compliance with the500 thousand b/d cut implemented in February 2007.Amidst forecasts of tight oil supply in the US heading intothe fourth quarter, the group agreed at its September11 meeting to increase output by 500 thousand b/deffective November 1, 2007. The increase was basedon an August output of 26.75 million b/d and not theoutput ceiling of 25.8 million b/d which had beenestablished since February. The increase in productionto 27.25 million b/d effectively legitimised 1 million b/dof overproduction and added 500 thousand b/d. Atthe December 5 meeting, OPEC left the 27.25 millionb/d oil production target unchanged. Angola andEcuador were assigned quotas of 1.9 million b/d and520,000 b/d, respectively. However, prices remainedhigh because of perceived market tightness by marketparticipants.Going forward, information from both the physicalmarket and the financial market will become necessaryin order to give an indication of the likely directionof oil prices. Given the decline in the global equitymarkets, investors may continue to channel funds intocommodities in an attempt to earn favourable returns.Should this occur at the same rate or surpass the levelof inflows into commodity funds experienced in 2007, oilprices may continue to be high in 2008.METHANOLThere was an overall upward trend in methanol pricesin 2007 and prices were exceptionally buoyant in thefirst and last quarters of the year. As a result, methanoltraded at an annual average price of $434.17 per tonne70

(fob Rotterdam), an increase of 15.4 per cent from 2006.In early 2007, global markets were tight following thesimultaneous shutdown of two major plants in Trinidadand Tobago and Equatorial Guinea in late 2006.Markets were also plagued by planned and unplannedshutdowns during the period, which contributed to theshortage of supplies. The market entered a period ofcorrection during the second quarter as demand fell,causing prices to decline. The momentum for decliningprices was sustained by the temporary shutdown of a1.25 million tonne per annum acetic acid plant in Texas,which put significant quantities of methanol back intothe market. Prices reached a floor in August beforegrowing demand and continued supply disruptions inmost regions, placed upward pressure on prices oncemore. By the fourth quarter, a tight global market gaverise to supply concerns among market participants andas a result, prices rose sharply.NITROGENOUS FERTILIZERSIn 2007, the fertilizer market was fairly stable and priceswere not as volatile as in previous years. Ammoniaprices averaged $291.02 per tonne (fob Caribbean)over the period, representing an increase of 4.5 per centover 2006. Urea prices, at an average of $297.57 pertonne (fob Caribbean) were up 31.4 per cent. Higherdemand for urea resulting from increased acreageunder corn cultivation was mainly responsible for therise in urea prices over the twelve month period.Strong demand in the United States (US) early in the yearcoupled with large scale unexpected shutdowns in theMiddle East, brought about rising global fertilizer pricesduring the first quarter. Stock build-up at receivingterminals in the US in March, as well as lower natural gascosts and the resultant restart of ammonia productionin France, were responsible for a general softening ofammonia prices thereafter. This outturn was aided byfairly low demand during the second and third quarters.Increased availability of domestic ammonia in Europeheavily compromised import demand. Apart fromthe US, where ammonia was demanded for inventoryreplenishment, international markets remained weakheading into the third quarter. The fourth quarterushered in a significant increase in fertilizer prices. Highoil prices during this period led to rising natural gas costsas well as increased shipping and transportation costs.The 30-year record high fertilizer price set in 2005 wassurpassed in December 2007, as high crude oil andagriculture prices exerted severe upward pressure onthe global fertilizer market.IRON AND STEELDespite large increases in production from China, ironand steel prices increased throughout the period due inpart, to rising raw material prices. Billet prices increasedto $494.00 per tonne (fob Latin America), representingan increase of 26.2 per cent over the average price for2006. Similarly, wire rod prices rose by 18.2 per cent toaverage $529.75 per tonne (fob Latin America).Demand was strong in most consuming areas for themajority of the year, except during the third quarterwhen global demand weakened. During this period,a number of producers curtailed production due toa lack of buying activity in the market. This situationwas quickly reversed as steady trading resumed inSeptember.The month of May saw record-breaking production levelsin China and Brazil. During this month, China produced41.3 million tonnes of crude steel while Brazil produced2.9 million tonnes. These high production levels wereresponsible for the annual rise in steel output, whichsurpassed the record of 420 million tonnes in 2006.71

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE 27PRICES OF SELECTED COMMODITIES/ US$/tonne /FOR THE PERIODAMMONIAFOB CARIBBEANUREAFOB CARIBBEANMETHANOLFOB ROTTERDAMBILLETSFOB LATIN AMERICAWIRE RODSFOB LATIN AMERICA1997199819992000200120022003200420052006200716111891146138111201252281278291136105821301141161572302322273241871391091682031642572652843764342222211771901711942453673343924942952642262212212212784533964485302007JanFebMarAprMayJunJulAugSepOctNovDec311317326314291269263258261271281331296304325325300312321302300328360415545548550336339336300298302541558557393449498523545520520480500500500500450450527550550550550522540548560560Source: Green Markets; Fertilizer Week; European Chemical News; Monthly Methanol Newsletter (TECNON); Metal Bulletin.72

appendix twoECONOMICSTATISTICSLIST OF TABLES A.1 - A.44

LIST OF TABLES a.1 - a.44A.1 Gross Domestic Product at Constant (2000) Prices by Sector of OriginA.2 Gross Domestic Product at Current Market Prices by Sector of OriginA.3 Annual Changes in G.D.P. at Current Market Prices by Sector of OrginA.4 Sectoral Composition of G.D.P. at Current Market PricesA.5 Major Agricultural CommoditiesA.6 Production of Selected Food CropsA.7 Local Production and Imports of Selected Agricultural ProductsA.8 Production and Utilization of Crude Oil and Related Products and PetrochemicalsA.9 Production of Iron and Steel Products and CementA.10 Index of Domestic Production (1995=100)A.11 Annual Changes in the Indices of Production and Hours Worked (All Employees)A.12 Annual Changes in the Indices of Average Weekly Earnings and Employment (All Employees)A.13 Annual Changes in the Indices of Real Earnings and Output per Man Hour Worked (All Employees)A.14(A) Retail Prices Index: Inflation RatesA.14(B) Retail Prices Index for Major Expenditure CategoriesA.15 Index of Producers’ PricesA.16 Central Goverment Fiscal OperationsA.17 Central Government RevenueA.18 Central Government ExpenditureA.19(A) Public Sector External DebtA.19(B) Non-Government Public Sector External DebtA.20(A) Commercial Banks: Selected DataA.20(B) Summary Accounts of the Monetary SystemA.21 Liquidity Position of Commercial BanksA.22 Commercial Banks: Distribution of Loans and Advances by SectorA.23 Commercial Banks: Percentage Distribution of Loans and Advances by SectorA.24 Commercial Banks - Interest RatesA.25 Money SupplyA.26 Changes in Money SupplyA.27 Finance Companies and Merchant Banks: Summary of Assets and LiabilitiesA.28 Finance Companies and Merchant Banks: Distribution of Loans and Advances by Sector76777879808182838485868788898990919293949596979899100101102103104105r - revised n.a. - not available p - provisional

LIST OF TABLES a.1 - a.44 (continued)A.29 Finance Companies and Merchant Banks: Percentage Distribution of Loansand Advances by SectorA.30 Trust and Mortgage Finance Companies: Summary of Assets and LiabilitiesA.31 Development Banks: Summary of Assets and LiabilitiesA.32 Thrift Institutions: Summary of Assets and LiabilitiesA.33 Non-Bank Financial Institutions Interest RatesA.34 Money and Capital Market ActivityA.35 Selected Interest RatesA.36(A) Balance of PaymentsA.36(B) Summary Balance of PaymentsA.37 Value of Exports and Imports by Sections of the S.I.T.C. (R2)A.38 Exports by Economic FunctionA.39 Imports by Economic FunctionA.40 Direction of Trade - ExportsA.41 Direction of Trade - ImportsA.42 Weighted Average TT Dollar Exchange Rates for Selected CurrenciesA.43 Trinidad and Tobago - International ReservesA.44 Summary Accounts of the Central Bank106107108109110111112113114115116117118119120121122

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.1GROSS DOMESTIC PRODUCT AT CONSTANT (2000) PRICESBY SECTOR OF ORIGIN, 2003 - 2007 1/ PER CENT /SECTOR 2003 r 2004 r 2005 r 2006 r 2007 pAgriculture -15.3 -34.2 -9.2 -0.9 -5.9Petroleum 31.4 8.2 8.4 21.4 4.4Manufacturing 12.0 5.2 12.6 9.4 8.0Electricity and Water 5.3 3.2 6.2 -0.4 0.3Construction 23.4 8.1 13.4 4.3 5.2Transport, Storage and Communication 5.4 -0.8 5.7 2.4 0.6Distribution 2.0 3.2 4.5 21.2 10.3Finance, Insurance and Real Estate 7.3 21.7 0.4 1.2 10.5Government -1.0 0.6 1.9 -1.5 3.2Other Services 2 7.8 4.2 0.4 4.0 1.1FISIM 3 9.9 16.7 -5.8 21.8 1.4Value Added Tax -3.5 32.2 -9.6 13.6 -5.8TOTAL 14.4 7.8 6.1 12.2 5.5SOURCE: Central Statistical Office.1In 2004 the GDP was rebased to a base year of 2000 = 100 from 1985 = 100 and the statistical methodology amended.2Includes Hotels and Guest Houses, Education and Community Services and Personal Services.3Financial Intermediation Services Indirectly Measured.76

TABLE A.2GROSS DOMESTIC PRODUCT AT CURRENT MARKET PRICESBY SECTOR OF ORIGIN, 2003 - 2007/ $MILLION /SECTOR 2003 r 2004 r 2005 r 2006 r 2007 pAgriculture 674.6 637.0 471.0 449.3 472.6Petroleum 25,610.7 32,344.7 40,682.4 56,470.6 56,828.9Manufacturing 4,945.5 5,436.2 5,936.4 6,427.8 7,317.1Electricity and Water 896.3 946.8 889.9 981.5 898.0Construction 5,197.0 5,938.8 7,278.7 8,224.2 10,653.2Transport, Storage and Communication 5,668.7 5,432.8 6,347.6 6,831.5 8,281.6Distribution 9,901.9 10,623.5 11,970.5 15,878.5 19,101.9Finance, Insurance and Real Estate 9,182.2 11,695.2 10,965.7 13,561.0 15,243.9Government 5,560.0 5,963.8 6,675.3 7,458.4 8,818.5Other Services 1 3,660.8 3,667.4 4,143.5 4,474.9 4,924.6FISIM 2 (2,493.0) (3,018.5) (3,040.7) (4,010.4) (4,430.9)PLUS: Value Added Tax 2,364.3 3,170.9 3,079.1 3,808.7 4,005.4GROSS DOMESTIC PRODUCTAT MARKET PRICES 71,169.0 82,838.6 95,399.4 120,556.0 132,114.8SOURCE: Central Statistical Office.1Includes Hotels and Guest Houses, Education and Community Services and Personal Services.2Financial Intermediation Services Indirectly Measured.77

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.3ANNUAL CHANGES IN G.D.P. AT CURRENT MARKET PRICESBY SECTOR OF ORIGIN, 2003 - 2007/ PER CENT /SECTOR 2003 r 2004 r 2005 r 2006 r 2007 pAgriculture -14.3 -5.6 -26.1 -4.6 5.2Petroleum 73.5 26.3 25.8 38.8 0.6Manufacturing 10.0 9.9 9.2 8.3 13.8Electricity and Water 11.7 5.6 -6.0 10.3 -8.5Construction 27.0 14.3 22.6 13.0 29.5Transport, Storage and Communication 0.2 -4.2 16.8 7.6 21.2Distribution 6.6 7.3 12.7 32.6 20.3Finance, Insurance and Real Estate 3.3 27.4 -6.2 23.7 12.4Government 28.3 7.3 11.9 11.7 18.2Other Services 1 23.4 0.2 13.0 8.0 10.0FISIM 2 -14.0 -21.1 -0.7 -31.9 -10.5PLUS: Value Added Tax -1.5 34.1 -2.9 23.7 5.2TOTAL 26.4 16.4 15.2 26.4 9.6SOURCE: Table A.2.1Includes Hotels and Guest Houses, Education and Community Services and Personal Services.2Financial Intermediation Services Indirectly Measured.78

TABLE A.4SECTORAL COMPOSITION OF G.D.P.AT CURRENT MARKET PRICES, 2003 - 2007/ PER CENT /SECTOR 2003 r 2004 r 2005 r 2006 r 2007 pAgriculture 0.9 0.8 0.5 0.4 0.4Petroleum 36.0 39.0 42.6 46.8 43.0Manufacturing 6.9 6.6 6.2 5.3 5.5Electricity and Water 1.3 1.1 0.9 0.8 0.7Construction 7.3 7.2 7.6 6.8 8.1Transport, Storage and Communication 8.0 6.6 6.7 5.7 6.3Distribution 13.9 12.8 12.5 13.2 14.5Finance, Insurance and Real Estate 12.9 14.1 11.5 11.2 11.5Government 7.8 7.2 7.0 6.2 6.7Other Services 1 5.1 4.4 4.3 3.7 3.7FISIM 2 -3.5 -3.6 -3.2 -3.3 -3.4PLUS: Value Added Tax 3.3 3.8 3.2 3.2 3.0TOTAL 100.0 100.0 100.0 100.0 100.0SOURCE: Table A.2.1Includes Hotels and Guest Houses, Education and Community Services and Personal Services.2Financial Intermediation Services Indirectly Measured.79

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.5MAJOR AGRICULTURAL COMMODITIES, 2003 - 2007PRODUCTS 2003 2004 2005 r 2006 r 2007SUGARCane Production (000 tonnes)EstatesFarmersProduction of raw sugar (000 tonnes)*Production of refined sugar (000 tonnes)Sales (000 tonnes)ExportsLocal**Estate Canes Reaped (hectare/acre)Estate Canes Yield (tonnes/acre)Conversion Factor (tonnes cane/tonnes sugar)COCOA (000 kgs)ProductionExports* * *Local Sales* * *COFFEE (000 kgs)ProductionExports* * *Local Sales* * *CITRUS (000 kgs)* * *ProductionExports364542685559608,2344413912855815862321284-83528434244542,23237151,3217286510923203,148-92454333633508,425271589673827n.a2205112-78427354535487,074181654077966513934237639-n.a35825412539n.an.a146397105372502215413-SOURCE: Central Statistical Office.* Includes production of wash grey sugar.** Data for 2003 to 2007 include the sale of imported sugar.*** Includes data to 3rd Quarter 2007.80

TABLE A.6PRODUCTION OF SELECTED FOOD CROPS, 2003 - 2007/ 000 KGS /CROP 2003 2004 2005 2006 2007 *Tomato 1,811 1,748 1,645 1,358 1,558Cabbage 2,225 1,575 991 1,063 363Cucumber 1,889 1,889 4,590 2,297 667Dasheen 3,931 4,814 4,239 3,165 990Rice 1,720 1,720 2,082 2,259 n.a.Pigeon Peas 1,487 1,487 954 976 576Pumpkin 3,718 4,862 2,172 2,047 1,273Melongene 2,976 2,976 2,232 1,949 1,561SOURCE: Central Statistical Office.* Includes data for January to August 2007.81

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.7LOCAL PRODUCTION AND IMPORTS OF SELECTEDAGRICULTURAL PRODUCTS, 2003 - 2007PRODUCTS 2003 2004 2005 2006 r 2007Total Meat Supply (000 kgs)(excluding poultry)ProductionImportsBeef and Veal (000 kgs)ProductionImportsPork (000 kgs)ProductionImportsMutton (000 kgs)ProductionImportsBroilers (000 birds) 1ProductionTable Eggs (000 doz) 1ProductionMilk (000 litres)ProductionImports4,4121,8032,6091,5164261,0902,6281,3701,258268726114,3672,3905,4515,451n.a.12,4613,2369,2255,0937074,3866,1912,5133,6781,177161,16132,0575,5827,4387,438n.a.12,3182,9829,3364,6486064,0426,5632,3624,2011,107141,09329,5507,0189,1889,188n.a.13,7682,58411,1844,7753994,3766,7112,1714,5402,282142,26831,9185,7487,4157,415n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.32,6526,6427,2857,285n.a.SOURCE: Central Statistical Office.1Imports of broilers and table eggs are negligible.82

TABLE A.8PRODUCTION AND UTILIZATION OF CRUDE OIL ANDRELATED PRODUCTS AND PETROCHEMICALS, 2003 - 2007COMMODITY GROUP 2003 2004 2005 2006 2007 pCrude OilExploration (meters)Depth Drilledof which: ExplorationProduction (000 barrels)Crude Oil and Condensatesof which: CondensatesDaily Average (b/d)Imports (000 barrels)Crude Oil Importsof which: u.p.a.Refining (000 barrels)Refinery ThroughputRefinery OutputCapacity Utilization (%) 1Exports (000 barrels)Crude Oil ExportsPetroleum ProductsNatural Gas (Mn cubic feet/day)ProductionUtilization 2of which: PetrochemicalsElectricity GenerationLNGNatural Gas Liquids (000 barrels)ProductionExportsLocal SalesClosing StockFertilizers (000 tonnes)ProductionExportsLocal SalesStock ChangeMethanol (000 tonnes)ProductionExportsLocal SalesStock Change149,99128,94149,1176,100134,08933,18634554,51252,8768526,00239,0572,5942,5207312301,36410,50510,23602694,9654,595113602,8462,86817-39154,61323,96844,9855,677122,93322,77229847,83846,3497920,46748,0952,9292,8508182391,56710,68710,18405035,3364,91984093,4183,3442252117,31117,86852,740n.a.144,44234,20034660,08855,2199427,48847,0303,2193,0339442461,5859,88910,413552235,9365,44584834,6954,6181957164,19938,36352,105n.a.142,77729,72827555,60257,5859228,39147,5213,8783,6741,1012512,09311,25111,609811805,7995,35374386,0165,87218125178,17544,18743,807n.a.120,02834,315369 e56,13256,5869322,20448,0024,0573,7441,0932782,15612,45012,138883035,9025,61783215,9336,03716-166SOURCE: Ministry of Energy; Central Bank of Trinidad and Tobago.1Refinery capacity is estimated at 165,000 barrels per day from 1995.2Utilization refers to gas sales, and does not include natural gas used in own consumption.83

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.9PRODUCTION OF IRON AND STEEL PRODUCTS AND CEMENT, 2003 - 2007COMMODITY 2003 2004 2005 2006 2007Steel Products (000 tonnes)(i) Direct Reduced IronProduction 2,275.0 2,336.5 2,055.0 2,071.5 2,062.8Exports 1,268.3 1,358.8 1,267.9 1,218.8 1,300.1Local Sales 0.0 0.0 0.0 0.0 0.0Own Consumption 978.9 888.0 785.1 731.1 721.4(ii) BilletsProduction 896.0 789.8 712.0 673.0 694.6Exports 0.0 0.0 0.0 0.0 0.0Local Sales 237.8 125.2 237.1 198.9 142.4Own Consumption 667.1 642.7 497.0 507.2 544.8(iii) Wire RodsProduction 640.9 616.2 472.1 485.7 510.3Exports 635.3 548.0 443.5 448.4 441.8Local Sales 35.5 39.3 40.5 46.6 51.9Own Consumption 1.3 1.5 1.0 0.9 1.6Cement (000 tonnes)Production 765.6 768.5 686.4 883.0 901.8Imports 0.0 0.0 12.5 0.0 0.0Local Sales 509.7 525.2 564.8 648.4 673.1Exports 257.6 244.8 136.5 260.8 229.6SOURCE: Central Bank of Trinidad and Tobago.84

TABLE A.10INDEX OF DOMESTIC PRODUCTION (1995=100), 2004 - 2007 1INDUSTRY WEIGHT 2004 2005 2006JAN – SEPT JAN – SEPT2006 r 2007Food Processing 58 294.7 358.9 320.1 334.7 330.9Drink and Tobacco 63 350.9 423.9 548.5 528.2 718.8Textiles, Garments and Footwear 6 1,427.7 1,687.9 1,802.9 1,839.1 1,856.9Printing, Publishing and Paper Converters 27 233.3 233.4 304.3 284.1 374.3Wood and Related Products 7 644.5 655.8 651.6 641.5 730.0Chemicals and Non-Metallic Minerals 43 320.7 365.5 378.0 385.5 380.3Assembly-Type and Related Industries 61 478.0 480.7 636.9 616.0 686.1Miscellaneous Manufacturing Industries 10 214.4 211.3 186.0 194.7 158.2Electricity 40 119.5 125.3 127.2 125.8 135.6Water 6 145.4 146.5 150.6 151.9 145.3Sugar -1 66.6 60.8 41.6 47.3 39.7All Industry Index(excluding petrochem, oil & natural gas,explor. product & refining) 320 337.2 374.7 430.9 425.4 484.6Explor. & product of oil, natural gas, etc. 445 149.2 157.1 164.7 168.9 150.6Petrochemicals 182 150.4 167.7 166.2 163.2 238.0Oil & natural gas refining 53 318.2 375.9 388.1 381.6 385.6All Industry Index(including petrochem, oil & natural gas,explor. product & refining) 1,000 218.8 240.2 261.9 261.1 285.8SOURCE: Central Statistical Office.1Indices are computed as quarterly averages for the relevant period.85

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.11ANNUAL CHANGES IN THE INDICES OF PRODUCTION ANDHOURS WORKED (ALL EMPLOYEES), 2005 - 2007 1/ PER CENT /INDUSTRYINDEX OF DOMESTIC PRODUCTION 2 INDEX OF HOURS WORKED 22005 2006JAN–SEPT JAN–SEPT2006 r 20072005 2006JAN–SEPT2006JAN–SEPT2007Food Processing 21.8 -10.8 -7.1 -1.1 -3.7 3.1 3.4 2.9Drink and Tobacco 20.8 29.4 26.4 36.1 -1.8 -3.0 -3.5 -0.9Textiles, Garments and Footwear 18.2 6.8 6.6 1.0 10.4 -0.3 -0.7 -0.1Printing, Publishing and Paper Converters 0.0 30.4 28.5 31.8 0.7 3.6 4.2 4.3Wood and Related Products 1.8 -0.7 -3.2 13.8 20.3 3.8 -1.3 14.5Chemicals and Non-Metallic Minerals 14.0 3.4 5.1 -1.4 4.8 10.3 9.0 6.8Assembly-Type and Related Industries 0.6 32.5 37.5 11.4 4.9 4.8 4.5 11.2Miscellaneous Manufacturing Industries -1.5 -12.0 -7.9 -18.8 10.6 0.3 -3.9 -8.1Electricity 4.9 1.5 1.9 7.7 5.3 0.21 3.7 -0.9Water 0.8 2.8 4.4 -4.4 5.0 1.3 1.9 1.5Sugar -8.7 -31.7 -36.2 -16.2 19.6 -31.0 -35.7 -15.5All Industry Index(excluding petrochem, oil, natural gas,explor. product & refining etc.) 11.1 15.0 15.9 13.9 3.6 1.4 0.2 2.7Explor. & product of oil, natural gas, etc. 5.3 4.8 9.0 -10.8 -18.6 -1.1 15.5 -53.7Petrochemicals 11.5 -0.9 -1.8 45.9 -5.1 -3.5 -3.7 -1.4Oil & natural gas refining 18.2 3.2 1.2 1.1 1.4 2.0 2.0 2.0All Industry Index(including petrochem, oil & natural gas,explor. product & refining etc. 9.8 9.0 10.4 9.4 2.0 1.3 0.9 0.5SOURCE: Central Statistical Office.1Indices are computed as quarterly averages for the relevant period.2Percentage changes over the corresponding period.86

TABLE A.12ANNUAL CHANGES IN THE INDICES OF AVERAGEWEEKLY EARNINGS AND EMPLOYMENT(ALL EMPLOYEES), 2005 - 2007 1/ PER CENT /AVERAGE WEEKLY EARNINGS 2 EMPLOYMENT 2INDUSTRY2005 r 2006 rJAN–SEPT JAN–SEPT2006 r 20072005 2006JAN–SEPT JAN–SEPT2006 r 2007Food Processing 5.9 2.1 3.1 -3.9 21.0 -0.9 1.6 -7.6Drink and Tobacco 14.4 1.3 0.6 7.6 27.7 -15.0 -18.4 -0.2Textiles, Garments and Footwear 15.4 -5.2 -4.7 1.2 -8.1 -4.2 -4.6 -2.3Printing, Publishing and Paper Converters -1.4 3.7 2.6 8.1 0.4 10.4 15.0 0.5Wood and Related Products -2.0 6.8 4.2 6.5 -4.4 0.9 -1.2 7.8Chemicals and Non-Metallic Minerals 4.3 4.9 5.3 7.1 -4.1 -1.3 -1.2 2.2Assembly-Type and Related Industries 15.4 29.5 31.0 22.7 10.0 2.8 2.6 0.1Miscellaneous Manufacturing Industries 4.2 6.0 7.4 1.9 -13.9 -1.6 -2.5 -3.6Electricity 2.6 10.9 16.0 -24.5 -75.8 2.0 2.6 2.1Water -2.0 21.8 24.5 6.0 -1.4 1.5 1.4 4.1Sugar 0.0 -39.7 -53.4 12.2 -1.4 -32.4 -36.9 -16.2All Industry Index(excluding petrochem, oil, natural gas,explor. product & refining etc.) 4.2 10.3 12.0 0.8 0.1 -3.2 -3.8 -2.0Explor. & product of oil, natural gas, etc. -10.0 -37.9 -43.0 -10.0 47.8 12.1 11.8 13.6Petrochemicals 7.7 9.2 10.0 3.5 4.2 2.9 4.8 -2.0Oil & natural gas refining -0.4 17.1 17.0 2.5 10.2 3.7 4.2 2.2All Industry Index(including petrochem, oil & natural gas,explor. product & refining etc.) 1.6 8.1 5.0 3.2 -0.0 -1.5 -1.9 -0.7SOURCE: Central Statistical Office.1Indices are computed as quarterly averages for the relevant period.2Percentage changes over the corresponding period.87

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.13ANNUAL CHANGES IN THE INDICES OF REAL EARNINGS ANDOUTPUT PER MAN HOUR WORKED (ALL EMPLOYEES), 2005 - 2007 1/ PER CENT /INDUSTRY2005 2006 rREAL EARNINGS 2JAN–SEPT JAN–SEPT2006 r 2007INDEX OF OUTPUTPER MAN HOUR WORKED 22005 2006 rJAN–SEPT JAN–SEPT2006 r 2007Food Processing -0.9 -5.7 -4.3 -11.0 26.5 -13.5 -9.9 -4.0Drink and Tobacco 7.1 -6.4 -6.7 -0.5 23.0 33.4 31.1 37.3Textiles, Garments and Footwear 4.4 -7.5 -4.4 -3.8 10.4 8.0 8.2 2.7Printing, Publishing and Paper Converters -7.8 -4.3 -4.9 0.1 -0.6 25.8 23.1 26.4Wood and Related Products -8.4 -1.5 -3.4 -1.4 -15.4 -4.3 -2.0 -0.6Chemical and Non-Metallic Minerals -2.4 -3.2 -2.4 -0.8 8.7 -6.2 -3.5 -7.6Assembly-Type and Related Industries 7.8 19.6 21.4 13.6 -4.1 26.5 31.6 0.4Miscellaneous Manufacturing Industries -2.5 -2.1 -0.5 -5.6 -10.9 -12.2 -4.0 -11.7Electricity -4.1 2.5 -7.4 -30.3 -0.4 1.3 -1.8 8.7Water -8.4 12.4 -15.2 -1.7 -4.0 1.5 2.4 -5.6Sugar -6.4 -44.7 -56.7 3.7 -23.7 -1.0 -0.8 -0.8All Industry Index(excluding petrochem, oil, nautral gas,explor. product & refining) -2.6 1.9 3.8 -6.7 7.3 13.4 15.7 10.9Explor. & product of oil, natural gas, etc. -15.6 -42.9 47.3 -16.7 29.4 6.0 -5.1 92.0Petrochemicals 0.8 1.0 2.2 -4.3 17.4 2.7 2.1 48.0Oil & natural gas refining -6.7 7.9 8.1 -5.0 16.6 1.2 -0.6 -1.0All Industry Index(including petrochem, oil & natural gas,explor. product & refining) -5.0 -0.3 0.1 -6.5 7.6 7.6 9.4 8.9SOURCE: Central Statistical Office.1Indices are computed as quarterly averages for the relevant period.2Percentage changes over the corresponding period.88

TABLE A.14(a)RETAIL PRICES INDEX: INFLATION RATES, 2003 - 2007 1(ANNUAL AVERAGE)/ JANUARY 2003=100 /ITEM WEIGHT 2003 2004 2005 2006 2007All Items 1000 101.9 105.7 112.9 122.3 132.0Inflation Rate (%) 3.8 3.7 6.9 8.3 7.9SOURCE: Central Statistical Office.1Retail Prices Index was revised and rebased to January 2003 = 100.TABLE A.14(b)RETAIL PRICES INDEX FOR MAJOR EXPENDITURE CATEGORIES, 2004-2007/ JANUARY 2003=100 /2 0 0 7SECTIONS WEIGHTS 2004 2005 2006 2007 I II III IVAll Items 1 1000 105.7 112.9 122.3 132.0 127.6 130.3 133.7 136.53.7 6.9 8.3 7.9 0.6 1.9 2.8 2.1(i) Food 180 122.4 150.5 185.4 217.7 203.1 209.6 222.2 235.412.8 23.0 23.2 17.4 1.2 3.2 6.0 5.9(ii) Clothing 53 93.4 91.8 91.3 93.3 92.6 92.7 93.5 94.3-5.4 -1.7 -0.5 2.2 2.0 0.2 0.8 0.9(iii) Transport 167 105.3 108.3 110.1 114.4 112.2 113.6 115.8 115.84.3 2.9 1.7 3.9 0.0 1.2 1.9 0.0(iv) Housing 262 103.2 105.8 108.9 113.3 111.7 113.7 113.8 114.92.7 2.5 2.9 4.3 0.8 1.8 0.1 1.0(v) Others 2 338 100.9 104.1 110.1 115.5 112.8 114.3 117.2 117.50.5 3.1 5.8 4.8 0.0 1.3 2.6 0.2Per Cent ContributionTo Change In Index(i) Food 180 70.6 68.5 60.9 60.8 47.1 52.6 60.8 82.9(ii) Clothing 53 -4.0 -0.1 -0.1 4.3 12.4 2.4 0.2 2.3(iii) Transportation 167 9.5 3.5 5.8 4.8 0.0 8.8 10.4 0.0(iv) Housing 262 20.6 4.0 11.4 17.4 39.7 17.7 0.7 11.6(v) Others 2 338 3.3 24.1 22.0 12.6 0.8 18.6 27.9 3.1Memorandum:All Items(Sept. 1993=100) 159.4 170.4 184.6 199.1 192.5 196.2 201.8 206.0SOURCE: Central Statistical Office.1The figures in bold italics represent the percentage change over the average for the previous year/quarter.2Includes Hotels, Cafés and Restaurants (30), Alcohol, Beverages and Tobacco (25), Furnishings, Household Equipment and Routine Maintenance (54),Health (51), Recreation and Culture (85), Education (16), Communication (41) and Miscellaneous goods and services (36). Figures in parentheses in thisfootnote are section weights.89

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.15INDEX OF PRODUCERS’ PRICES, 2004 - 2007/ OCT. 1978=100 /2 0 0 7INDUSTRY WEIGHTS 2004 2005 2006 2007 I II III IVFood Processing 191 453.8 459.3 473.2 506.4 490.1 495.7 503.6 535.02.2 1.2 3.0 7.0 1.2 1.1 1.6 6.4Drink and Tobacco 121 544.1 573.9 627.1 720.6 693.3 715.3 728.0 745.25.5 5.5 9.3 14.9 4.7 3.2 1.8 2.4Textiles, Garmentsand Footwear 101 294.9 295.9 298.0 298.4 298.4 298.4 298.4 298.40.2 0.3 0.7 0.1 0.0 0.0 0.0 0.0Printing, Publishing& Paper Converters 93 323.9 325.5 329.0 333.1 332.7 332.7 333.5 333.50.1 0.5 1.1 1.2 0.4 0.0 0.2 0.0Wood & Related Products 89 293.3 299.9 309.0 332.3 313.1 316.6 329.0 329.45.4 2.2 3.0 4.3 0.0 1.1 4.2 -0.1Chemicals andNon-Metallic Minerals 148 424.9 435.3 479.4 522.7 518.5 521.7 523.3 527.20.6 2.4 10.2 9.0 3.7 0.6 0.3 0.8Assembly-Type andRelated Industries 257 314.9 321.4 325.5 335.1 330.4 334.2 337.2 338.64.8 2.1 1.3 3.0 0.6 1.2 0.9 0.4All Industry 1000 382.3 391.0 409.1 437.2 428.1 433.6 438.9 448.03.5 2.3 4.6 6.9 2.0 1.3 1.2 2.1SOURCE: Central Statistical Office.The figures in bold represent the percentage change over the average for the previous year/quarter.90

TABLE A.16CENTRAL GOVERNMENT FISCAL OPERATIONS, 2003 - 2007 1/ $MILLION /EXPENDITURE FISCAL YEARS 22003 2004 2005 2006 r 2007 pCurrent Revenue 16,754.2 20,625.6 29,638.8 38,906.9 40,034.8Current Expenditure 3 15,007.4 17,498.5 21,842.4 26,582.6 29,984.0Current Account Surplus(+)/Deficit(-) 1,746.8 3,127.1 7,796.4 12,324.3 10,050.8Capital Revenue 7.1 4.1 9.1 4.0 29.6Capital Expenditure and Net lending 4 795.5 1,621.1 2,798.6 4,615.3 7,781.9Overall Surplus(+)/Deficit(-) 958.4 1,510.1 5,006.9 7,713.0 2,298.5Total Financing (net) -958.4 -1,510.1 -5,006.9 -7,713.0 -2,298.5External Financing (Net) -182.8 -278.8 -1,273.3 -300.1 688.3Net External Borrowing -182.8 -278.8 -1,273.3 -300.1 688.3Disbursements 151.3 211.0 285.4 305.9 1,944.7Repayments 5 334.1 489.7 1,558.7 606.0 1,256.4Divestment Proceeds 0.0 0.0 0.0 0.0 0.0Domestic Financing (Net) -775.6 -1,231.4 -3,733.6 -7,413.0 -2986.8Treasury Bills(Net) 0.0 0.0 0.0 0.0 0.0Bonds(Net) -889.9 907.0 -955.9 -1,041.8 1,281.4Disbursements 2,000.0 1,756.0 808.0 0.0 2,403.6Repayments 2,889.9 849.0 1,763.9 1,041.8 1,122.2Divestment Proceeds 0.0 0.0 0.0 0.0 0.0Uncashed Balances (Net) 6 114.3 -2,138.4 -2,777.7 -6,371.2 -4,268.2Memo ItemsPrimary Balance 7 3,452.2 3,874.3 7,548.4 10,166.3 4,996.6Surplus(+)/Deficit(-) as aPercentage of GDP (currentmarket prices)Current Account Surplus(+)/Deficit(-) 2.5 3.9 8.2 10.2 7.6Overall Surplus(+)/Deficit(-) 1.4 1.9 5.3 6.4 1.7Primary Surplus(+)/Deficit(-) 4.9 4.9 7.9 8.4 3.8SOURCE: Ministry of Finance: Review of Fiscal Measures, various years. Review of the Economy, 2007.Central Bank of Trinidad and Tobago: Monthly Statistical Digest, various issues.1Refers to accounts of Consolidated Fund, Unemployment Fund, Road Improvement Fund and the InfrastructureDevelopment Fund.2Represents the period October 01 - September 30.3Includes an adjustment for transfers to the Heritage and Stabilization Fund and the Infrastructure Development Fund.4Includes an adjustment for Repayment of Past Lending and acquisition of physical capital assets.5Figures do not include repayments of loans from the IDB and the EIB received by the Central Government foronlending to the energy sector.6Includes errors and omissions, advances from the Central Bank and drawdowns from the treasury depositaccounts. Negative numbers represent an increase in deposits at the Central Bank.7The primary balance, also known as the non-interest balance, is equal to the overall balance exclusive of interestpayments.91

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.17CENTRAL GOVERNMENT REVENUE, 2003 - 2007 1/ $MILLION /FISCAL YEARS 2REVENUE 2003 2004 2005 2006 r 2007 pA. Oil Sector 6,182.5 7,641.7 13,961.3 21,416.0 20,079.2Corporation 4,079.4 5,428.3 10,805.6 17,614.8 16,206.2Withholding Tax 172.4 200.7 429.2 614.3 928.7Royalties 1,011.1 1,094.5 1,228.5 1,679.3 1,681.0Oil impost 33.9 36.8 42.7 65.9 63.9Unemployment levy 290.5 294.2 820.4 1,311.3 1,111.0Excise duties 562.8 587.2 634.8 130.4 88.4Other 3 32.4 0.0 0.0 0.0 0.0B. Non Oil Sector 10,571.7 12,983.9 15,677.4 17,490.9 19,955.6Taxes on Income 5,359.6 6,304.5 8,141.2 7,922.5 8,888.1Companies 2,083.8 2,308.3 3,166.2 3,965.6 4,796.9Individuals 2,793.0 3,280.8 4,250.1 3,153.3 3,239.2Unemployment Levy 0.3 115.9 84.6 0.0 0.1Health Surcharge 133.3 164.8 187.0 168.4 170.2Other 349.2 434.7 453.3 635.2 681.7Taxes on Property 77.6 85.4 62.7 64.4 83.7Lands and Buildings Taxes 77.6 85.4 62.7 64.4 83.7Taxes on Goods and Services 3,087.6 4,103.0 4,200.8 5,591.1 6,288.5Purchase Tax 0.2 0.1 0.1 0.1 0.1Excise Duties 406.8 403.2 436.4 444.9 525.1Motor Vehicles 211.6 173.2 217.0 248.8 338.5Value Added Tax 2,028.3 3,021.2 2,962.5 4,184.2 4,829.0Other 4 440.7 505.3 584.8 713.1 595.7Taxes on International Trade 994.1 1,242.7 1,473.5 1,836.3 2,006.5Import Duties 994.1 1,242.7 1,473.5 1,836.2 2,004.4Other 0.0 0.0 0.0 0.1 2.1Non-Tax Revenue 1,052.9 1,248.2 1,799.1 2,076.6 2,688.8National Lottery 109.3 127.0 127.0 95.5 75.5Interest 111.0 86.2 137.4 303.4 283.4Central Bank 80.7 96.2 161.5 161.9 749.7Other 751.9 938.8 1,373.2 1,515.8 1,580.2TOTAL CURRENT REVENUE 16,754.2 20,625.6 29,638.8 38,906.9 40,034.8Capital Revenue 7.1 4.1 9.1 4.0 29.6TOTAL REVENUE 4 16,761.3 20,629.7 29,647.9 38,910.9 40,064.4SOURCE: Ministry of Finance. Review of Fiscal Measures, various issues.Estimates of Revenue, various issues.1Refers to accounts of Consolidated Fund, Unemployment Fund, Road Improvement Fund and the InfrastructureDevelopment Fund.2Represents the period October 01 – September 30.3Includes receipts of $31.2 million from signature bonuses for the award of production sharing contracts in 2003.4Includes Road Improvement Tax.92

TABLE A.18CENTRAL GOVERNMENT EXPENDITURE 1 2003 - 2007/ $MILLION /EXPENDITUREFISCAL YEARS 22003 2004 2005 r 2006 r 2007 pCurrent Expenditure 2 15,007.4 17,498.5 21,842.4 26,582.6 29,984.0Wages and Salaries 4,537.8 4,849.2 5,309.2 5,455.6 6,221.3Goods and Services 2,012.4 2,374.5 3,170.1 3,843.2 4,283.8Interest 2,493.8 2,364.2 2,541.5 2,453.3 2,698.1External 726.3 726.1 666.0 600.8 2,094.0Domestic 1,767.5 1,638.2 1,875.5 1,852.5 604.1Transfers and Subsidies 5,963.4 7,910.6 10,821.6 14,830.4 16,780.8of which:Loans & Grants to Statutory Boards 1,571.7 2,448.7 2,481.6 3,760.9 4,916.8and State EnterprisesHouseholds 2,055.3 2,173.0 2,601.2 4,341.2 8,455.9Capital Expenditure and Net-Lending 3 795.5 1,621.1 2,798.6 4,615.3 7,781.9TOTAL EXPENDITURE 15,802.9 19,119.6 24,641.0 31,197.9 37,765.9(as a % of GDP at current market prices) 22.3 24.0 25.9 25.9 28.6Memo Items (%)Current Expenditure 95.0 91.5 88.6 85.2 77.6Capital Expenditure and Net-Lending 5.0 8.5 11.4 14.8 20.6Total Expenditure 100.0 100.0 100.0 100.0 100.0SOURCE: Ministry of Finance. Review of Fiscal Measures, various issues.Estimates of Revenue, various issues.1Refers to accounts of Consolidated Fund, Unemployment Fund, Road Improvement Fund and theInfrastructure Development Fund.2Represents the period October 01 – September 30.3See footnotes to Table A.16.93

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.19(a)PUBLIC SECTOR EXTERNAL DEBT, 2003 - 2007/ US$MILLION /SECTOR 2003 2004 2005 2006 2007CENTRAL GOVERNMENTReceipts 86.6 40.3 70.8 181.9 82.4of which: Leases 0.0 0.0 0.0 0.0 0.0Amortization 89.7 226.1 92.3 247.3 65.3of which: Leases 0.0 0.0 0.0 0.0 0.0Debt Conversion 0.0 0.0 0.0 0.0 0.0Rescheduling 0.0 0.0 0.0 0.0 0.0Valuation Adjustment 0.0 0.0 0.0 0.0 0.0Balance Outstanding 1 1,516.9 1,331.1 1,309.6 1,244.2 1,264.7of which: Leases 0.0 0.0 0.0 0.0 0.0Interest 116.7 109.9 93.6 103.8 89.0NON-GOVERNMENT PUBLIC SECTOR 2Receipts 0.0 0.0 0.0 0.0 0.0Amortization 0.0 0.0 0.0 0.0 0.0Rescheduling 3 0.0 0.0 0.0 0.0 0.0Valuation Adjustment 0.0 0.0 0.0 0.0 0.0Balance Outstanding 4 50.7 51.0 51.0 51.0 0.0Interest 0.0 0.0 0.0 0.0 0.0TOTALReceipts 86.6 40.3 70.8 181.9 82.4Amortization 89.7 226.1 92.3 247.3 65.3of which: Debt Conversion 0.0 0.0 0.0 0.0 0.0Rescheduling 0.0 0.0 0.0 0.0 0.0Valuation Adjustment 1.1 0.3 0.0 0.0 0.0Balance Outstanding 1,567.6 1,382.1 1,360.6 1,295.2 1,264.7Interest 116.7 109.9 93.6 103.8 89.0SOURCE: Central Bank of Trinidad and Tobago.1Excludes a short-term US dollar denominated bond of US$150 million provided by resident financial institutions in 1998.2Comprises state enterprises and Central Bank external debt. See Table A.19(b).3Once rescheduled, the external debt of the state enterprises becomes the external liability of the central government.4A portion of this debt is no longer defined as government-guaranteed debt.94

TABLE A.19(b)NON-GOVERNMENT PUBLIC SECTOR EXTERNAL DEBT 2003 - 2007/ US$MILLION /END OF PERIODSECTOR 2003 2004 2005 2006 2007GOVERNMENT-GUARANTEED 1Receipts 0.0 0.0 0.0 0.0 0.0Amortization 0.0 0.0 0.0 0.0 0.0Rescheduling 0.0 0.0 0.0 0.0 0.0Balance Outstanding 46.9 47.0 47.0 47.0 0.0Interest 0.0 0.0 0.0 0.0 0.0NON-GOVERNMENT GUARANTEED 2Receipts 0.0 0.0 0.0 0.0 0.0Amortization 0.0 0.0 0.0 0.0 0.0Balance Outstanding 3.8 4.0 4.0 4.0 0.0Interest 0.0 0.0 0.0 0.0 0.0CENTRAL BANKReceipts 0.0 0.0 0.0 0.0 0.0Amortization 0.0 0.0 0.0 0.0 0.0Balance Outstanding 0.0 0.0 0.0 0.0 0.0Interest 0.0 0.0 0.0 0.0 0.0TOTALReceipts 0.0 0.0 0.0 0.0 0.0Amortization 0.0 0.0 0.0 0.0 0.0Rescheduling 0.0 0.0 0.0 0.0 0.0Valuation Adjustments 1.1 0.0 0.0 0.0 0.0Balance Outstanding 50.7 51.0 51.0 51.0 0.0Interest 0.0 0.0 0.0 0.0 0.0SOURCE: Central Bank of Trinidad and Tobago.1External debt of state enterprises and public utilities guaranteed by the government of the Republic of Trinidad and Tobago.2Non-guaranteed debt of state enterprises and public utilities.95

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.20(a)COMMERCIAL BANKS*: SELECTED DATA, 2003 - 2007/ $MILLION /END OF PERIOD2003 2004 2005 r 2006 r 2007A. Outstanding1. Aggregate Deposits (adj.) 21,153.7 25,871.5 32,949.3 40,711.1 46,063.8Demand Deposits (adj.) 1 5,600.8 6,420.2 9,890.7 10,853.5 11,939.3Time Deposits (adj.) 2 3,019.6 3,511.1 5,729.0 7,828.4 9,199.3Savings Deposits (adj.) 3 8,264.2 8,952.4 9,967.3 11,523.7 13,001.7Foreign Currency Deposits (adj) 4 4,296.1 6,987.8 7,362.3 10,505.5 11,923.52. Gross Bank Credit 5 16,348.1 20,545.3 27,143.3 31,515.7 37,556.6of which:Business purposes 7,931.4 10,178.6 11,699.5 14,749.6 17,797.7Corporate 7,070.1 9,149.4 10,244.7 13,447.4 16,511.2Non-corporate 861.3 1,029.2 1,454.8 1,302.2 1,286.53. Investments 9,890.3 10,243.9 11,543.2 11,668.1 13,163.2Government Securities 3,320.4 3,415.4 4,029.7 3,326.5 3,607.2Other Investments 6 6,569.9 6,828.5 7,513.5 8,341.6 9,556.0of which:Special Deposits 7 621.5 660.9 - - -Interest-bearing Special Deposit Facility 7 n.a. n.a. 1,000.0 1,500.0 1,500.0B. Annual Change1. Aggregate Deposits (adj.) -367.8 4,717.8 7,077.8 7,761.8 5,352.7Demand Deposits (adj.) -229.0 819.4 3,470.5 926.8 1,085.8Time Deposits (adj.) -380.3 491.5 2,217.9 2,099.4 1,370.9Savings Deposits (adj.) 1,485.5 688.2 1,014.9 1,556.4 1,478.0Foreign Currency Deposits (adj.) -1,244.0 2,691.7 374.5 3,143.2 1,418.02. Gross Bank Credit 1,559.0 4,197.2 6,598.0 4,372.4 6,040.9of which:Business purposes 520.0 2,247.2 1,520.9 3,050.1 3,048.2Corporate 436.1 2,079.3 1,095.3 3,202.7 3,063.8Non-Corporate 84.8 167.9 425.6 -152.6 -15.73. Investments 1,669.4 353.6 219.9 124.9 1,495.1Government Securities 551.8 95.0 614.3 -703.2 280.7Other Investments 1,117.6 258.6 685.0 828.1 1,214.4of which:Special Deposits 340.2 39.4 -660.9 - -Interest-bearing Special Deposit Facility n.a. n.a. 1,000.0 500.0 -SOURCE: Central Bank of Trinidad and Tobago.1Total demand deposits minus non-residents’ and Central Government’s demand deposits, cash items in process ofcollection on other banks, and branch clearings, plus cashiers and branch clearings.2Total time deposits minus Central Government’s deposits and deposits of non-residents.3Total savings deposits minus Central Government’s deposits and deposits of non-residents.4Total demand, savings and time deposits in foreign currency minus those of non-residents.5Total loans excluding loans to non-residents and central government.6Special deposits, other interest-bearing deposits at the Central bank, other local and foreign securities, and equity in subsidiaries and affiliates.7In December 2005, the interest rate paid on special deposits was reduced to zero and the commercial banks were required to place in aggregate a totalof TT$1.0 billion in a special interest-bearing deposit account at the Central Bank for a minimum of one year. In June 2006, an additional TT$500 million wasplaced by the commercial banks into the account.* During 2007 the number of commercial banks increased from 6 to 8 as First Caribbean International Bank (Trinidad and Tobago) Limited and Bank of Barodawere granted licenses to conduct business of a financial nature with effect from May 28 and October 3, 2007, respectively.96

TABLE A.20(b)SUMMARY ACCOUNTS OF THE MONETARY SYSTEM, 2003 - 2007/ $MILLION /END OF PERIOD2003 2004 2005 r 2006 r 2007Net Foreign AssetsMonetary Authorities 1Commercial Banks14,06514,315-25022,20918,9293,28033,68731,3262,36148,92540,7768,14948,33141,7976,534Net Domestic AssetsNet claims on public sectorCentral Government (net)Treasury billsOther government securitiesOther credit (net)Local government (net)Statutory bodies (net)Public enterprises (net)Official capital and surplusCredit to Other Financial Institutions (net)Credit to private sectorInterbank floatOther assets (net)13,438-4,925-5,0411,1172,203-8,362-55525-354-2,2071,98415,234753,27710,330-10,244-10,1151,8281,588-13,530-166432-395-2,2074419,8054572,4744,271-16,295-16,9391,8832,147-20,969-238517366-2,351-1,86524,6621,589-1,470-4,737-26,545-24,6031,9351,392-27,930-385-650-907-1,530-3,59929,330658-3,052236-23,742-20,9712,3201,478-24,769-318-298-2,155-3,634-3,36935,753-72-4,699Liabilities to private sector (M3)Money and quasi-moneyMoneyCurrency in circulationDemand depositsQuasi-MoneyTime depositsSavings depositsSecuritized InstrumentsPrivate capital and surplus27,50220,4157,3041,7095,59513,1113,4109,7011,1365,95232,54023,7928,8231,9576,86614,9693,85811,1111,8006,94837,95828,94311,4952,4259,06917,4494,72212,7271,6747,34144,18833,64912,5972,6549,94321,0525,83215,2202,3958,14348,56737,02113,8053,18310,62223,2166,36016,8561,6809,867Net Foreign AssetsChanges as a percent of beginning-of-period M34.6 29.6 35.3 40.1 -1.3Net Domestic AssetsNet Claims on public SectorOf which: Central GovernmentCredit to private sectorOther assets (net)-0.8-7.9-4.72.0-1.6-11.3-19.3-18.416.6-2.9-18.6-18.6-21.014.9-12.1-23.7-27.0-20.212.3-4.211.36.38.214.5-4.0Liabilities to private sector (M3)3.718.316.716.49.9Memorandum items:Net Domestic Assets (Net of HSF)Net claims on public sector (Net of HSF)Central Government (Net of HSF)Credit to the private sector (12-month increase)M3 Velocity15,005-3,358-3,4743.72.613,176-7,398-7,26930.02.59,756-10,810-11,45524.52.54,055-17,752-15,81118.92.7236-23,742-20,97121.92.7SOURCE: Central Bank of Trinidad and Tobago.1On March 15, 2007 the Heritage and Stabilization Fund Act (Act No. 6 of 2007) was assented to by the President. The Fund will now be managedby an independent Board of Directors and as a result, will no longer be included in the Central Bank’s assets.rRevised.97

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.21LIQUIDITY POSITION OF COMMERCIAL BANKS, 2005:IV - 2007:IV/ $MILLION /2005END OF PERIOD2006 2007IV I II III IV I II III IVLegal Reserves PositionRequired Reserves 1 2,601.9 2,711.7 2,846.3 2,944.6 3,649.2 3,701.0 3,806.3 4,110.5 4,284.0Cash Reserves 3,672.5 3,853.4 3,543.9 4,215.4 4,188.0 4,285.7 4,667.7 4,881.3 4,586.6Excess (+) or Shortage (-) 2 1,070.6 1,141.7 697.6 1,270.8 538.8 584.7 861.4 770.8 302.6Average Excess(+) or Shortage( -) 3 181.5 147.2 588.3 505.1 359.6 276.4 393.1 210.4 226.5Liquid AssetsCash Reserves 3,672.5 3,853.4 3,543.9 4,215.4 4,188.0 4,285.7 4,667.7 4,881.3 4,586.6Special Deposits 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Deposits at Central Bank 4 3,672.5 3,853.4 3,543.9 4,215.4 4,188.0 4,285.7 4,667.7 4,881.3 4,586.6Local Cash in Hand 566.0 464.1 507.1 486.3 906.0 522.5 503.8 505.3 1,022.5Treasury Bills 415.1 520.2 359.9 345.7 561.5 265.6 86.4 588.1 567.4TOTAL LIQUID ASSETS 4,653.6 4,837.7 4,410.9 5,047.4 5,655.5 5,073.8 5,257.9 5,974.7 6,176.5Total Deposit/Liabilities (adj.) 23,653.6 24,651.8 25,875.5 26,769.1 28,070.9 28,469.1 29,294.5 31,619.1 32,958.2As a percentage of Total Deposit Liabilities (adj.)Legal Reserves PositionRequired Reserves 11.0 11.0 11.0 11.0 13.0 13.0 13.0 13.0 13.0Actual Reserves 15.5 15.6 13.7 15.7 14.9 15.1 15.9 15.4 13.9Excess (+) or Shortage (-) 4.5 4.6 2.7 4.7 1.9 2.1 2.9 2.4 0.9Average Excess(+) or Shortage(-) 0.8 0.6 2.3 1.9 1.3 1.0 1.3 0.7 0.7Liquid AssetsCash Reserves 15.5 15.6 13.7 15.7 14.9 13.1 13.9 13.4 11.9Special Deposits 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Deposits at Central Bank 15.5 15.6 13.7 15.7 14.9 15.1 15.9 15.4 13.9Local Cash in Hand 2.4 1.9 2.0 1.8 3.2 1.8 1.7 1.6 3.1Treasury Bills 1.8 2.1 1.4 1.3 2.0 0.9 0.3 1.9 1.7TOTAL LIQUID ASSETS 19.6 19.6 17.0 18.9 20.1 17.8 17.9 18.9 18.7SOURCE: Central Bank of Trinidad and Tobago.1Required reserves comprise the statutory cash reserves requirement which was reduced from 14 per cent in 2003 to 11 per cent effectiveSeptember 15, 2004 and a secondary reserve requirement of 2 per cent which was introduced on a temporary basis effective October 4, 2006.2Represents the excess/shortage for the end of the month.3Represents the excess/shortage as an average through the month.4Central Bank of Trinidad and Tobago.98

TABLE A.22COMMERCIAL BANKS:DISTRIBUTION OF LOANS AND ADVANCES BY SECTOR, 2003 - 2007/ $MILLION /END OF PERIODSECTORS 2003 2004 2005 2006 2007Central & Local Government 22.2 10.1 11.5 64.7 1.7Agriculture 145.9 115.8 92.1 66.2 83.9Petroleum 764.7 632.0 808.9 1,274.9 1,126.0Manufacturing 1,794.6 1,912.0 2,020.2 2,575.8 2,463.5Construction 1,238.7 1,381.5 1,685.7 2,164.6 2,433.4Distributive Trades 1,235.9 1,312.9 2,068.2 2,177.0 2,743.7Hotels and Guest Houses 296.9 442.3 483.7 650.8 478.4Transport, Storage andCommunication 611.4 773.1 775.2 953.8 1,111.8Finance, Insurance andReal Estate 2,940.5 3,825.6 4,853.4 5,296.7 8,979.1Education, Cultural andCommunity Services 155.1 75.1 41.9 98.1 108.2Personal Services 642.8 994.7 1,001.8 1,328.0 402.9Electricity and Water 88.6 552.5 1,869.7 1,463.9 1,464.2Consumers 6,000.4 6,842.3 8,585.9 10,088.4 12,240.0TOTAL (excludingReal Estate MortgageLoans) 15,937.7 18,869.9 24,298.2 28,202.9 33,636.8Real Estate Mortgage Loans& Lease Financing 819.6 2,359.9 4,450.8 5,400.2 6,774.0TOTAL LOANS 16,757.3 21,229.8 28,749.0 33,603.1 40,410.8SOURCE: Central Bank of Trinidad and Tobago.99

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.23COMMERCIAL BANKS:PERCENTAGE DISTRIBUTION OF LOANS AND ADVANCES BY SECTOR, 2002 - 2007 1/ PER CENT /END OF PERIODSECTOR 2003 2004 2005 2006 2007Central Government 0.1 0.1 0.1 0.2 0.0Agriculture 0.9 0.5 0.3 0.2 0.2Petroleum 4.5 3.0 2.7 3.8 2.8Manufacturing 10.5 9.0 7.0 7.7 6.0Construction 7.3 6.5 5.9 6.4 6.0Distributive Trades 7.2 6.2 7.2 6.5 6.8Hotels and Guest Houses 1.7 2.1 1.7 1.9 1.2Transport, Storage andCommunication 3.6 3.6 2.7 2.8 2.8Finance, Insurance andReal Estate 17.2 18.0 16.9 15.8 22.2Education, Cultural andCommunity Services 0.9 0.4 0.1 0.3 0.3Personal Services 3.8 4.7 3.5 4.0 1.0Electricity and Water 0.5 2.6 6.5 4.4 3.6Consumers 35.1 32.2 29.9 30.0 30.3TOTAL (excluding RealEstate Mortgage Loans) 93.3 88.9 84.5 84.0 83.2Real Estate Mortgage Loansand Lease Financing 6.7 11.1 15.5 16.0 16.8TOTAL LOANS 100.0 100.0 100.0 100.0 100.0SOURCE: Table A.22.1Figures may not sum to 100 due to rounding.100

TABLE A.24COMMERCIAL BANKS - INTEREST RATES, 2005 - 2007/ PER CENT /INTEREST RATES 12005 2006 20072007I II III IVA. Loan Rates (Prime)(i) Term - Range 4.00– 26.75 4.00-25.98 4.00-30.00 4.00-29.03 4.00-30.00 4.00-25.98 4.00-25.98- Median 9.00 10.25 10.63 10.63 10.63 10.63 10.63(ii) Demand - Range 3.50-25.75 5.00-26.75 3.50-26.46 4.00-26.46 3.50-24.68 5.00-24.68 5.00-24.68- Median 9.13 10.75 11.75 11.75 11.75 11.75 11.75(iii) Overdraft - Range 4.75 – 31.75 4.75-45.00 4.75-36.50 4.75-36.50 4.74-36.50 4.75-36.50 4.75-33.75- Median 9.13 10.94 11.75 11.75 11.75 11.75 11.75(iv) Basic Prime Rate - Range 8.00 – 9.75 9.50-11.75 11.75-11.75 11.75-11.75 11.75-11.75 11.75-11-75 11.75-11.75- Median 9.13 10.94 11.75 11.75 11.75 11.75 11.75(v) Real Estate Mortgage - Range 3.00 – 18.50 6.00-24.00 5.00-23.50 5.00-18.04 5.00-18.04 5.00-23.50 5.00-23.50-Median 9.32 10.38 11.75 11.75 11.75 11.75 11.75B. Deposit Rates(Announced)(i) Ordinary Savings - Range 0.50–5.20 0.50-5.50 0.50-5.80 0.50-5.50 0.50-5.50 0.50-5.70 0.50-5.80- Median 1.45 1.46 1.46 1.46 1.46 1.78 1.78(ii) Special Savings - Range 0.50 – 4.00 0.50-4.00 0.50-5.80 0.50-4.00 0.50-4.00 0.50-4.00 0.50-5.80- Median 2.39 2.39 2.39 2.39 2.39 2.39 2.39(iii) 3-Month Time - Range 1.00 – 4.80 1.00-6.75 1.00-7.50 1.00-7.25 1.00-7.32 1.00-7.40 1.00-7.50- Median 2.65 2.72 2.90 2.86 3.05 2.90 3.35(iv) 6-Month Time - Range 1.25 – 5.05 1.25-3.70 1.25-4.40 1.25-4.15 1.25-4.15 1.25-4.15 1.25-4.40- Median 3.06 2.11 2.23 2.23 2.23 2.23 2.23(v) 1-Year Time - Range 1.00 – 7.50 1.00-11.00 1.00-9.00 1.25-9.00 1.25-8.00 1.00-8.25 1.00-8.25- Median 3.51 3.69 3.88 4.10 3.85 3.88 4.00SOURCE: Central Bank of Trinidad and Tobago.1Annual data represent the rates for the twelve (12) months of the year and quarterly data represent the rates for the three (3) months of the quarter.101

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.25MONEY SUPPLY, 2003 - 2007/ $MILLION /END OF PERIOD2003 2004 2005 2006 2007A. Narrow Money Supply (M-1A) 7,309.4 8,377.6 12,316.1 13,507.9 15,122.1Currency in Active Circulation 1,708.6 1,957.4 2,425.4 2,654.4 3,182.8Demand Deposits (adj.) 5,600.8 6,420.2 9,890.7 10,853.5 11,939.3B. Factors Affecting Changesin Money Supply1. Net Bank Credit to CentralGovernment -5,040.8 -10,114.5 -16,939.0 -24,602.9 -20,970.8(a) Central Bank -8,155.5 -12,871.1 -20,585.9 -27,230.3 -23,805.5(b) Commercial Banks 3,114.7 2,756.6 3,646.9 2,627.4 2,834.72. Bank Credit 20,447.1 24,386.6 30,841.3 34,722.0 42,636.7(a) Public Sector l 2,041.3 2,143.7 3,884.7 3,283.3 4,822.9(b) Private Sector 2 18,405.8 22,242.9 26,956.6 31,438.7 37,813.83. External Assets (net) 13,981.0 21,928.0 32,456.0 48,528.3 49,249.64. Quasi-Money 3 -11,283.8 -12,463.5 -15,696.3 -19,352.1 -22,187.85. Foreign CurrencyDeposits (Adj) -4,296.1 -6,987.8 -7,362.3 -10,505.5 -11,923.56. NFIs Foreign CurrencyDeposit (Adj) -1,827.0 -3,621.4 -3,307.1 -3,684.8 -3,516.97. Other Items (Net) -6,498.0 -8,371.0 -10,983.6 -15,281.9 -21,682.0C. Broad Money Supply (M-2) 18,593.3 20,841.2 28,012.4 32,859.9 37,309.9D. Broad Money Supply (M-2*) 4 22,889.4 27,829.0 35,374.7 43,365.4 49,233.3Memo: 5Money Supply M-3 22,619.2 23,908.5 29,941.2 35,269.4 40,034.3Money Supply M-3* 28,738.0 34,498.2 40,610.4 49,459.3 55,463.4SOURCE: Central Bank of Trinidad and Tobago.1Includes Central Bank’s and commercial banks’ loans and holdings of public sector securities.2Includes commercial banks’ loans and holdings of private sector securities.3Excludes foreign currency deposits of residents which are shown separately below.4Includes foreign currency deposits of residents.5In addition to M-2, M-3 includes the time deposits of non-bank financial institutions (NFIs), while in addition to M-2*,M-3* includes foreign currency deposits of residents at NFIs.102

TABLE A.26CHANGES IN MONEY SUPPLY, 2003 - 2007/ $MILLION /2003 2004 2005 2006 2007A. Narrow Money Supply (M-lA) -22.2 1,068.2 3,938.5 1,191.8 1,614.2-0.3 14.6 47.0 9.7 12.0Currency in Active Circulation 206.8 248.8 468.0 229.0 528.413.8 14.6 23.9 9.4 19.9Demand Deposits (adj.) -229.0 819.4 3,470.5 962.8 1,085.8-3.9 14.6 54.1 9.7 10.0B. Factors Affecting Changes inMoney Supply1. Net Bank Credit to Government -1,244.0 -5,073.7 -6,824.5 -7,663.9 3,632.1-32.8 -100.7 67.5 45.2 -14.8(a) Central Bank -1,653.2 -4,715.6 -7,714.8 -6,644.4 3,424.8-25.4 57.8 60.0 32.3 -12.6(b) Commercial Banks 409.2 -358.1 890.3 -1,019.5 207.315.1 -11.5 32.3 27.9 7.92. Bank Credit 715.2 3,939.5 6,454.7 3,880.7 7,914.73.6 19.3 26.5 12.6 22.8(a) Public Sector 1 -800.6 102.4 1,741.0 -601.4 1,539.6-28.2 5.0 81.2 -15.5 46.9(b) Private Sector 2 1,515.8 3,837.1 4,713.7 4,482.1 6,375.19.0 20.8 21.2 16.6 20.33. External Assest (net) 1,190.5 7,947.0 10,528.0 16,072.3 721.39.3 56.8 48.0 49.5 1.54. Quasi-Money 3 -1,105.2 -1,179.7 -3,232.8 -3,655.8 -2,835.7-10.9 -10.5 -25.9 -23.3 -14.75. Foreign Currency Deposits (adj.) 1,217.0 -2,691.7 -374.5 -3,143.2 -1,418.022.1 -62.7 -5.4 -42.7 13.56. NFIs Foreign Currency Deposits (adj.) -306.3 -1,794.4 -314.3 -377.7 167.9-20.1 -98.2 -8.7 -11.4 4.67. Other Items (net) -795.5 -1,873.0 -2,612.6 -4,298.3 -6,400.0Increase (-), Decrease (+) -14.0 -28.8 -31.2 -39.1 -41.8C. Broad Money Supply (M-2) 1,083.2 2,247.9 7,171.2 4,847.5 4,450.06.2 12.1 34.4 17.3 13.5D. Broad Money Supply (M-2*) 4 -133.8 4,939.6 7,545.7 7,990.7 5,867.9-0.6 21.6 27.1 22.6 13.5Memo: 5Money Supply M-3 1,123.6 1,289.3 6,032.6 5,328.2 4,764.95.2 5.7 25.2 17.8 13.5Money Supply M-3* 210.6 5,760.2 6,112.2 8,848.9 6,004.10.7 20.0 17.7 21.8 12.1SOURCE: Table A.25.1Includes Central Bank’s and commercial banks’ loans and holdings of public sector securities.2Includes commercial banks’ loans to the private sector and holdings of private sector securities.3See footnote (3) of Table A.25.4See Note (4) of Table A.25.5See Note (5) of Table A.25Figures in italics represent percentage changes.103

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.27FINANCE COMPANIES AND MERCHANT BANKS:SUMMARY OF ASSETS AND LIABILITIES, 2003 - 2007/ $THOUSAND /END OF PERIODEXTERNALASSETS (NET)CASH ANDDEPOSITSAT CENTRALBANKBALANCESDUEFROM BANKS(NET)DOMESTIC CREDITINVESTMENTS LOANS TOTAL(1) (2) (3) (4) (5) (6)2003 532,506 487,275 31,505 4,635,933 1,795,626 6,431,5592004 103,640 255,507 -22,522 8,858,229 2,200,020 11,058,2492005 -245,114 305,704 -142,279 9,361,364 3,307,121 12,668,4852006 -273,419 299,954 54,878 11,816,264 3,681,682 15,497,9462007 226,827 1,241,694 -231,093 11,013,963 3,705,175 14,719,1382006I -208,870 379,224 -105,328 10,349,601 3,111,967 13,461,568II -219,959 312,988 -139,010 10,172,514 3,248,732 13,421,246II r 123,386 321,787 81,971 10,802,283 3,422,945 14,225,228IV -273,419 299,954 54,878 11,816,264 3,681,682 15,497,9462007I -534,582 270,457 39,230 11,832,739 4,077,603 15,910,342II 242,667 278,250 -144,999 11,357,702 3,312,839 14,670,541III -24,526 386,030 -154,827 11,250,274 3,467,721 14,717,995IV 226,827 1,241,694 -231,093 11,013,963 3,705,175 14,719,138END OFPERIODTOTALASSETS/LIABILITIESDEPOSITS BORROWINGS 1 PROVISIONSCAPITAL ANDRESERVESOTHER ITEMS(NET)(7) (8) (9) (10) (11) (12)2003 7,482,845 3,431,185 1,820,729 76,864 981,416 1,172,6512004 11,394,874 5,317,646 1,624,088 67,851 2,182,769 2,202,5202005 12,586,796 5,157,129 2,425,179 118,746 2,331,064 2,554,6782006 15,579,359 6,147,060 2,206,954 134,898 2,666,362 4,424,0852007 15,956,566 6,127,168 3,578,508 109,694 2,504,816 3,636,3802006I 13,526,594 5,234,615 2,106,353 120,896 2,166,770 3,897,960II 13,375,265 5,207,039 2,239,755 127,737 2,383,756 3,416,978III r 14,752,372 5,381,651 2,923,724 127,007 2,450,317 3,869,673IV 15,579,359 6,147,060 2,206,954 134,898 2,666,362 4,424,0852007I 15,685,447 6,319,314 2,755,616 117,495 3,011,854 3,481,168II 15,046,459 6,079,877 3,730,197 108,238 2,701,994 2,426,153III 14,924,672 6,056,740 3,077,238 116,652 2,930,633 2,743,409IV 15,956,566 6,127,168 3,578,508 109,694 2,504,816 3,636,380SOURCE: Central Bank of Trinidad and Tobago.1Borrowings from all sources other than commercial banks. Borrowings from commercial banks are reflected in column 3.104

TABLE A.28FINANCE COMPANIES AND MERCHANT BANKS:DISTRIBUTION OF LOANS AND ADVANCES BY SECTOR, 2004 - 2007/ $MILLION /END OF PERIOD20072004 2005 2006SECTORS I II III IVPublic Sector 3.9 201.6 384.3 542.3 168.8 176.7 184.0Private Sector 1,551.5 2,608.1 2,711.5 2,880.2 2,668.9 2,804.8 2,989.3Agriculture 7.5 17.9 5.3 21.6 21.6 23.2 22.2Petroleum 38.2 464.3 523.3 276.4 154.9 151.3 148.0Manufacturing 193.6 245.0 239.1 377.5 256.1 256.5 325.9Construction 147.1 204.9 228.3 236.4 222.3 241.5 265.4Distributive Trades 73.4 112.5 130.8 118.7 83.3 85.1 94.7Hotels and Guest Houses 143.2 151.2 55.9 56.7 57.1 60.2 71.8Transport, Storage andCommunication 88.3 128.0 154.5 162.5 167.2 179.3 191.1Finance, Insurance, Real Estateand Services 708.6 964.9 954.2 1,231.9 1,231.3 1,293.6 1,339.4Education, Cultural andCommunity Services 3.4 6.6 6.2 6.3 6.6 6.0 7.3Personal Services 4.1 50.1 34.6 29.0 8.4 27.1 5.9Consumers 144.1 262.7 379.3 363.2 460.1 481.0 517.6TOTAL (excluding RealEstate Mortgage Loans & Leases) 1,555.4 2,809.7 3,095.8 3,422.5 2,837.7 2,981.5 3,173.3Real Estate Mortgage Loans 28.5 74.2 90.5 84.8 52.9 51.4 50.2Leases 176.5 224.3 262.3 267.5 182.0 188.7 198.5TOTAL LOANS 1,760.4 3,108.2 3,448.6 3,774.8 3,072.6 3,221.6 3,422.0SOURCE: Central Bank of Trinidad and Tobago.105

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.29FINANCE COMPANIES AND MERCHANT BANKS:percentage DISTRIBUTION OF LOANS AND ADVANCES BY SECTOR, 2004 - 2007/ PER CENT /END OF PERIOD20072004 2005 2006SECTORS I II III IVPublic Sector 0.2 6.5 11.1 14.4 5.5 5.5 5.4Private Sector 88.2 83.9 78.7 76.3 86.9 87.1 87.4Agriculture 0.4 0.6 0.2 0.6 0.7 0.7 0.6Petroleum 2.3 14.9 15.2 7.3 5.0 4.7 4.3Manufacturing 11.0 7.9 6.9 10.0 8.3 8.0 9.5Construction 8.4 6.6 6.6 6.3 7.2 7.5 7.8Distributive Trades 4.2 3.6 3.8 3.1 2.7 2.6 2.8Hotels and Guest Houses 8.1 4.9 1.6 1.5 1.9 1.9 2.1Transport, Storage andCommunication 5.0 4.1 4.5 4.3 5.4 5.6 5.6Finance, Insurance, Real Estateand Business Services 40.3 31.0 27.7 32.6 40.1 40.2 39.1Education, Cultural andCommunity Services 0.2 0.2 0.2 0.2 0.2 0.2 0.2Personal Services 0.2 1.6 1.0 0.8 0.3 0.8 0.2Consumers 8.1 8.5 11.0 9.6 15.0 4.9 15.1TOTAL (excluding RealEstate Mortgage Loans & Leases) 88.4 90.4 89.8 90.7 92.4 92.5 92.7Real Estate Mortgage Loans 1.6 2.4 2.6 2.2 1.7 1.6 1.5Leases 10.0 7.2 7.6 7.1 5.9 5.9 5.8TOTAL LOANS 100.0 100.0 100.0 100.0 100.0 100.0 100.0SOURCE: Table A.28.106

TABLE A.30TRUST AND MORTGAGE FINANCE COMPANIES:SUMMARY OF ASSETS AND LIABILITIES, 2003 - 2007/ $THOUSAND /END OF PERIODCASH ANDDEPOSITSAT CENTRALBANKBALANCESDUEFROM BANKS(NET)DOMESTIC CREDITINVESTMENTS LOANS TOTALTOTALASSETS/LIABILITIES(1) (2) (3) (4) (5) (6)2003 466,290 773,987 4,224,501 4,879,617 9,104,118 10,344,3952004 358,671 1,069,101 4,328,651 3,790,994 8,119,645 9,547,4172005 181,488 1,297,386 5,040,321 2,756,925 7,797,246 9,276,1202006 146,002 823,047 3,062,735 3,011,569 6,074,304 7,043,3532007 123,153 2,110,159 3,421,831 2,472,043 5,893,874 8,127,1862006I 134,605 1,199,742 3,927,508 2,788,979 6,716,487 8,050,834II 126,862 668,922 3,229,491 2,634,299 5,863,790 6,659,574III 134,301 1,306,926 3,051,752 2,935,574 5,987,326 7,428,553IV 146,002 823,047 3,062,735 3,011,569 6,074,304 7,043,3532007I 130,097 1,672,618 3,596,806 2,777,256 6,374,062 8,176,777II 142,308 2,150,887 3,280,512 2,623,604 5,904,116 8,197,311III 135,227 1,634,791 3,694,762 2,553,520 6,248,282 8,018,300IV 123,153 2,110,159 3,421,831 2,472,043 5,893,874 8,127,186END OFPERIODDEPOSITSBORROWINGSPROVISIONSCAPITAL ANDRESERVESOTHER ITEMS(NET)(7) (8) (9) (10) (11)2003 2,631,503 138,710 125,073 2,112,653 5,336,4562004 1,514,478 246,110 69,420 1,946,124 5,771,2852005 502,845 460,131 98,495 2,062,353 6,152,2962006 440,019 428,631 88,182 2,164,499 3,922,0222007 334,510 647,293 62,726 2,190,686 4,891,9712006I 462,471 443,918 115,311 2,227,543 4,801,591II 421,027 40,334 87,445 2,063,262 4,047,506III 479,284 428,122 87,014 2,207,218 4,226,915IV 440,019 428,631 88,182 2,164,499 3,922,0222007I 402,851 993,444 105,774 2,244,461 4,430,247II 382,027 748,231 100,252 2,160,987 4,805,814III 378,865 450,596 65,823 2,261,056 4,861,960IV 334,510 647,293 62,726 2,190,686 4,891,971SOURCE: Central Bank of Trinidad and Tobago.107

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.31DEVELOPMENT BANKS: SUMMARY OF ASSETS AND LIABILITIES, 2003 - 2007/ $THOUSAND /END OFPERIODEXTERNALASSETS (NET)DEPOSITSIN LOCALBANKSNET DOMESTIC ASSETSPUBLICSECTORCREDITPRIVATESECTORCREDITTOTALTOTALASSETS/LIABILITIESPROVISIONS*CAPITAL ANDRESERVESOTHERITEMS(NET)2003200420052006 r2007-12,600-8,399-6,2811190(1)2006IIIIII rIV r2007I0II0III pIV p-3,084-2,013-94211900(2)-34,488-11,023-41,253-40,205-3,437-26,705-17,863-53,109-40,205-36,045-35,288-33,067-3,437(3)-500,656-476,132-855,684-449,400-449,401-923,934-678,366-455,116-449,400-449,401-449,401-449,401-449,401(4)1,786,9022,027,9742,132,7112,430,9712,051,9512,237,3472,294,8582,409,1242,430,9712,483,4802,484,7022,498,8742,503,951(5)1,251,7581,540,8191,235,7741,941,3362,051,1131,286,7081,598,6291,900,8991,941,3661,997,6722,000,0132,016,4062,051,113(6)1,239,1581,532,4201,229,4931,941,4852,051,1131,283,6241,596,6161,899,9571,941,4851,997,6722,000,0132,016,4062,051,113(7)0000000000000(8)402,568444,685464,068523,611498,235479,906474,649463,198523,611523,566503,893502,589498,235(9)836,5901,087,735765,4251,417,8741,552,878803,7181,121,9671,436,7591,417,8741,474,1061,496,1201,513,8171,552,878SOURCE: Central Bank of Trinidad and Tobago.* From 2001 provisions for loan losses have been reported on the asset side where it is subtracted from loans.108

TABLE A.32THRIFT INSTITUTIONS: SUMMARY OF ASSETS AND LIABILITIES, 2003 - 2007/ $THOUSAND /END OFPERIODEXTERNALASSETS(NET)NETDEPOSITSIN LOCALBANKSNET DOMESTIC CREDITPUBLICSECTORCREDITPRIVATESECTORCREDITTOTALTOTALASSETS/LIABILITIESTIMEDEPOSITSSAVINGS TOTAL SHARESOTHERITEMS(NET)(1)2003 02004 02005 02006 02007 02005I0II0III0IV02006I0II0III0IV02007I0II0III p0IV p 0(2)7,26810,5579,25210,0639,5265,8596,0726,5969,2528,1939,27010,60110,0638,9809,7259,3879,526(3)10,3919,3968,0657,4476,4139,3489,5399,2388,0658,0457,8087,7877,4476,4836,4136,4136,413(4)42,86341,50641,16041,03047,18141,24442,03242,85841,16042,83042,01441,38341,03047,69146,67547,18047,181(5)60,52261,45958,47758,54063,12056,45157,64358,69258,47759,06859,09259,77158,54063,15462,81362,98063,120(6)60,52261,45958,47758,54063,12056,45157,64358,69258,47759,06859,09259,77158,54063,15462,81362,98063,120(7)10,48310,77610,3148,7228,54510,71510,84710,78210,3149,0688,5798,5718,7229,8938,4908,4218,545(8)4,5124,3764,9155,2117,1144,4604,6244,6074,9154,8204,8575,0465,2115,4637,1817,1547,114(9)14,99515,15215,22913,93315,65915,17515,47115,38915,22913,88813,43613,61713,93315,05615,67115,57515,659(10)16,16213,3356,7446,2476,5397,2997,3366,8726,7446,6676,6826,3866,2476,3736,4996,4826,539(11)29,36532,97236,50438,36040,92233,97734,83636,43136,50438,51338,97439,76838,36041,72540,64340,92340,922SOURCE: Central Bank of Trinidad and Tobago.109

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.33NON-BANK FINANCIAL INSTITUTIONS INTEREST RATES, 2005 - 2007/ PER CENT /FOR THE PERIOD20072005 2006 2007INTEREST RATES 1 I II III V1. Thrift Institutions(a) Savings DepositsRangeMedian(b) Time Deposits(i) l - 3 yearsRangeMedian(c) Mortgage Loans(Residential)RangeMedian2. Trust & MortgageFinance Companies(a) Time Deposits(i) 1 - 3 yearsRangeMedian(ii) Over 3 yearsRangeMedian(b) Mortgage Loans(i) ResidentialRangeMedian(ii) CommercialRangeMedian3. Finance Companiesand Merchant Banks(a) Time Deposits(i) 1 - 3 yearsRangeMedian(b) Instalment LoansRangeMedian3.00 – 4.003.503.00 – 8.505.758.00 – 11.009.502.90 – 7.004.722.90 – 11.507.206.00 – 16.0012.139.75 – 14.5012.132.00 – 9.006.063.00 – 28.0010.843.00 - 4.003.503.00 - 8.005.138.00 - 11.009.252.90 – 7.004.682.90 - 11.506.416.00 - 16.0011.889.75 - 14.5011.632.00 - 8.506.065.75 - 44.0411.253.00 - 4.003.503.00 - 8.005.138.00 - 11.009.252.00 - 6.354.733.00-7.005.006.00 - 16.0011.884.00 -13.508.002.00 - 8.505.634.00 - 43.5811.223.00 – 4.003.503.00 – 8.005.138.00 – 11.009.252.00 – 6.354.733.00 – 7.005.006.00 – 16.0011.7510.00 – 13.5011.752.00 – 8.505.634.00 - 43.5811.313.00 – 4.003.503.00 – 8.005.138.00 – 11.009.252.00 - 6.354.733.00 - 7.005.006.00 – 16.0011.884.00 - 12.008.002.00 – 8.505.634.00 - 42.3410.753.00 – 4.003.503.00 – 8.005.138.00 – 11.009.252.00 – 6.354.683.00 - 7.005.006.00 – 16.0011.884.00 - 12.008.002.00 - 8.505.634.00 - 42.5010.753.00 – 4.003.503.00 – 8.005.138.00 – 11.009.252.00 – 6.354.683.00 – 7.005.006.00 – 16.0011.884.00 - 12.508.002.00 – 8.504.816.00 - 42.7912.35SOURCE: Central Bank of Trinidad and Tobago.1Annual and quarterly data represent the rates for the twelve (12) months of the year and the three (3) months of the quarter respectively.110

TABLE A.34MONEY AND CAPITAL MARKET ACTIVITY, 2004 - 2007END OFPERIODGOVERNMENTSECURITIESNEW ISSUES($MN)TREASURYBILLSOTHER 3GOVERNMENTSECURITIES 2FACEVALUE($MN)NO. OFTRANSACTIONSSECONDARY MARKET TURNOVER 1FACEVALUE($MN)TREASURYBILLSNO. OFTRANSACTIONSMARKETVALUE ($MN)PUBLIC COMPANYSHARESNO. OFTRANSACTIONSVOLUME OFSHARESTRADED(MN)2004IIIIIIIV1,116.00.00.01,116.00.00.00.00.00.00.01,447.40.0331.0276.0840.40.00.00.00.00.000000701.1174.7115.7238.3172.468151924103,033.4518.0784.6753.0977.936,0579,0489,9088,4398,662312.591.661.977.381.62005IIIIIIIV800.0400.0202.8197.20.00.00.00.00.00.0432.20.0125.0192.2115.00.00.00.00.00.000000748.3165.9271.8250.859.789173426123,918.11,026.71,272.81,008.0610.632,3169,95910,1906,1745,993193.654.457.242.339.72006IIIIIIIV700.00.00.00.0700.00.00.00.00.00.01,299.0464.2360.00.0475.00.00.00.00.00.0000001,192.8409.7196.9586.00.210625334712,463.2715.1701.9259.5786.720,7726,2845,3853,9615,142219.141.134.926.3116.82007IIIIIIIV1,691.3674.31,018.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.0000001,039.6134.1291.3221.1393.13182871811382,138.1779.4275.0622.8461.117,7425,4184,0544,3843,887119.235.515.237.131.5SOURCES: Central Bank of Trinidad and Tobago; Stock Exchange of Trinidad and Tobago.1Data refer to the double transactions of buying and selling.2Trading in Government Securities and Treasury Bills was conducted under the aegis of the Investment Division,Central Bank of Trinidad and Tobago. From 1993 trading in government securities has been conducted by theStock Exchange of Trinidad and Tobago.3Data include new issues by state corporations and other private organizations.111

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.35SELECTED INTEREST RATES, 2005 - 2007/ PER CENT /FOR THE PERIOD 120072005 2006 2007I II III IVA. Central Bank(i) Bank Rate(ii) Special Deposits Rate(iii) Repo Rate 2(iv) Reverse Repo Rate 28.000.006.005.5010.000.008.007.5010.000.008.007.5010.000.008.007.5010.000.008.007.5010.000.008.007.5010.000.008.007.50B. Government(i) Treasury Bills 34.866.016.876.806.856.876.98C. Commercial Banks -Local Currency(i) Weighted AverageRate on Loans(ii) Weighted AverageRate on Deposits(iii) Interest Spread (i - ii)8.981.847.139.672.217.4610.572.677.8910.522.468.0610.522.667.8510.562.817.7510.682.767.92D. Non-Bank FinancialInstitutions 4(i) Weighted AverageRate on Loans(ii) Weighted AverageRate on Deposits(iii) Interest Spread (i - ii)8.386.052.338.466.182.289.096.422.668.436.272.169.186.362.829.276.442.839.466.632.83SOURCE: Central Bank of Trinidad and Tobago.1Annual data refer to the average of the quarterly averages for the respective years, except for the Bank Rate, Repo Rate and ReverseRepo Rate which reflect the end of quarter/year position.2In May 2002, the Central Bank introduced a system of announced overnight repurchase or ‘repo’ rates for short-term government paper.3Data are weighted averages of the monthly discount rates for issues occurring during the period.4Includes Finance Houses and Trust and Mortgage Finance Companies and represents rates for licensed institutions only.112\

TABLE A.36 (a)BALANCE OF PAYMENTS, 2003 - 2007/ US$MILLION /ITEM 2003 r 2004 r 2005 r 2006 r 2007(1) Merchandise (Net)ExportsImports(2) Services (Net)TransportationTravelCommunicationInsuranceOther GovernmentOther Services(3) IncomeInvestment Income(4) Unrequited Transfers (Net)(5) Current Account (1+2+3+4)(6) Net Capital Movement (Net)Portfolio InvestmentDirect InvestmentRegional bond issuesOther Private 1Commercial BanksOfficial BorrowingOfficial LoansHeritage Stabilization FundState Enterprises 2Other Assets(7) Net Errors & Omissions(8) Overall Surplus or Deficit 3(9) Official FinancingGovernmentCentral Bank (Net) 4(10) Exceptional FinancingOf which:Debt ReschedulingMemoranda ItemsCurrent Account/GDP (per cent)Gross Official Reserves (US$Mn)Import CoverDebt Service Ratio1,293.25,204.93,911.7313.885.2141.736.0108.1-23.1-34.1-680.9-680.958.6984.7-532.1-14.9583.1-509.2-584.993.9-3.10.0-86.8-10.20.0-205.1247.5-247.50.0-247.50.00.08.92,257.85.43.51,508.76,402.94,894.2479.5132.4245.639.5113.0-44.0-7.0-397.3-397.356.21,647.1-975.7-11.5972.7-690.1-322.4-524.3-185.80.0-203.6-10.70.0-139.8531.6-531.60.0-531.60.00.013.42,993.06.94.63,947.79,672.35,724.6356.223.8273.021.2104.7-55.9-10.6-760.0-760.050.13,594.0-1,596.7-26.4598.7-258.2-1,559.597.8-21.50.0-416.9-10.70.0-521.41,475.9-1,475.90.0-1,475.90.00.023.74,885.78.91.85,257.512,100.26,842.7450.941.8289.428.3133.0-38.8-2.8-935.8-935.836.14,808.7-3,189.4-28.1512.7-199.9-2,027.1-844.6-65.40.0-526.3-10.70.0-500.51,118.8-1,118.80.0-1,118.80.00.025.16,530.89.92.85,721.413,391.37,669.9565.4117.5369.432.5139.6-73.5-20.1-963.7-963.757.85,380.9-3,505.3-25.7830.0-272.0-3,740.988.217.10.0-391.5-10.50.0-334.51,541.1-1,541.10.0-1,541.10.00.025.76,673.59.41.1SOURCE: Central Bank of Trinidad and Tobago.1Represents estimated short-term foreign capital.2Changes in Foreign Currency Balances of those Enterprises are included here.3Balances in the Heritage and Stabilization Fund are no longer included in Central Bank’s assets (see Act No. 6 of 2007). the Balance ofPayments tables will now reflect this.4Includes Central Bank holdings, IMF Reserve Tranche and SDR holdings, and use of Fund (IMF) Credit.rRevised.113

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.36 (b)SUMMARY BALANCE OF PAYMENTS, 2003 - 2007/ US$MILLION /End of PeriodITEM 2003 r 2004 r 2004 r 2006 r 2007Current Account BalanceTrade BalanceExportsPetroleum crude and refinedGasPetrochemicalsOther9851,2935,2052,3869519079621,6471,5096,4031,6431,9781,5221,2603,5943,9489,6724,4182,3711,8071,0764,8095,25712,1005,8913,1621,9621,0855,3815,72113,3915,4984,1222,7621,009ImportsFuel importsCapitalOther3,9121,0641,2571,5914,8941,1811,7961,9175,7251,9921,1252,6086,8432,2811,9212,6417,6702,6741,8403,156Services and transfer (net)Nonfactor services (net)Factor income (net)Current transfers (net)-309314-68159139480-39756-354356-76050-449451-93636-341565-96458Capital and financial account (net) 1-737-1,115-2,118-3,690-3,840Official, medium and long-term (net)DisbursementsAmortizationsHeritage and Stabilization FundDirect Investment (net)InwardOutwardCommercial banks (net)Regional Bond IssuesOther private sector capital (net) 1Of which: net errors and omissions-9087-90-8758380822594-509-815-205-38940-226-2049731,00129-524-690-484-140-43871-92-41759994034198-258-2,118-521-592182-247-526513883370-845-200-2,566-501-37582-65-392830830088-272-4,111-335Overall balance2485321,4761,1191,541Change in gross official reserves(increase-/decrease+)-248 -532 -1,476 -1,119 -1,541In percent of GDP, unless otherwise specifiedMemorandum items:Current AccountExportsImportsGross international reserves (millions ofUS$, end of period)Oil prices (WTI, spot crude).8.948.236.23,016.528.913.452.039.73,755.337.823.763.737.85,245.056.525.166.437.57,427.566.025.763.936.68,740.572.3SOURCE: Central Bank of Trinidad and Tobago, Central Statistical Office.1Balances in the Heritage and Stabilization Fund are no longer included in Central Bank’s assets (see Act No. 6 of 2007). The Balanceof Payments tables will not reflect this.rRevised.114

TABLE A.37VALUE OF EXPORTS 1 AND IMPORTS BY SECTIONS OF THE S.I.T.C. (R2), 2005 - 2007/ $MILLION /2005 2006 2007*SectionEXPORTS IMPORTS Exports Imports Exports ImportsTotal 260,548.535,869.189,298.040,934.255,859.034,616.50. Food and Live Animals1,048.92,723.81,170.12,759.5919.82,384.01. Beverages and Tobacco800.7264.5868.0252.3688.8141.42. Crude Materials Except Fuels255.61,665.5287.11,877.31,828.32,794.03. Mineral Fuel Lubricants42,503.212,482.666,255.214,329.738,276.911,443.04. Animal and Vegetable Oils and Fats49.3112.815.2132.812.2132.45. Chemicals11,518.32,633.913,456.23,321.19,360.12,772.56. Manufactured Goods2,980.34,502.34,152.65,025.63,362.54,636.77. Machinery & Transport Equipment875.89,484.4944.210,936.71,033.18,471.38. Misc. Manufactured Articles514.61,958.3498.62,246.0374.01,797.69. Misc. Transactions and Commodities1.841.02.238.83.030.9Memorandum item: Ships’ Stores/Bunkers686.9-1,022.7-391.5-SOURCE: Central Statistical Office.1Domestic Exports.2Unadjusted for Balance of Payments.* Reflects data for January – September 2007 only.115

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.38EXPORTS BY ECONOMIC FUNCTION, 2003 - 2007/ $MILLION /Commodity Groups 2003 2004 2005 2006 r 2007 *1. Consumer GoodsNon-durablesFoodOther1,906.31,582.6715.1867.51,924.91,582.0832.2749.82,473.82,049.6994.91,054.72,681.52,267.41,148.01,119.42,100.21,797.0902.9894.1Durables323.7342.9424.2414.1303.22. Raw Materials and Inter. GoodsFuelsConstruction MaterialsChemicalsOther Raw Materials29,827.421,735.42,157.35,679.6255.136,960.224,209.52,940.89,543.2266.756,651.042,503.22,202.711,518.3426.885,094.368,025.73,282.213,337.5448.952,291.938,276.92,663.29,360.11,991.73. Capital GoodsTransport EquipmentOther Machinery and Equipment348.536.9311.6686.3260.5425.8672.2138.0534.2700.4183.0517.4756.6223.7532.94. Other Commodities518.1573.0751.5821.8710.35. Total Exports Unadjusted forBalance of Payments (1+2+3+4)32,600.340,144.460,548.589,298.055,859.0SOURCE: Central Statistical Office.* Reflects data for January – September 2007 only.116

TABLE A.39IMPORTS BY ECONOMIC FUNCTION, 2003 - 2007/ $MILLION /COMMODITY GROUPS 2003 2004 2005 2006 r 2007 *1. Consumer GoodsNon-durablesFoodOther4,733.62,823.51,790.21,033.35,251.23,100.22,043.91,056.36,665.03,861.62,558.51,303.17,128.63,983.52,541.91,441.65,767.53,301.42,221.01,080.4DurablesC.K.D. Passenger CarsNon-C.K.D. Passenger CarsOther1,910.1-756.31,153.82,151.0-946.41,204.62,803.4-1,192.11,611.33,145.1-1,356.41,788.72,466.1-1,009.21,456.92. Raw Materials and Inter. GoodsFuelsConstruction MaterialsOther Raw Materials10,153.16,665.51,113.32,374.311,853.57,407.21,556.62,889.717,669.912,482.61,462.43,724.920,404.314,329.71,507.94,566.717,919.211,443.01,771.54,704.73. Capital GoodsTransport EquipmentOil and Mining MachineryOther Machinery and Equipment6,597.91,118.8534.74,944.410,957.52,212.72,050.46,694.47,047.9978.7546.45,522.87,537.11,508.9593.25,435.06,648.51,309.8719.84,618.94. Other Commodities3,016.82,538.14,486.35,864.24,281.35. Total Imports Unadjusted forBalance of Payments (1+2+3+4)24,501.430,600.335,869.140,934.234,616.5SOURCE: Central Statistical Office.* Reflects data for January – September 2007 only.117

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.40DIRECTION OF TRADE – EXPORTS, 2004 - 20072004 2005 2006 r 2007*Country $Mn % $Mn % $Mn % $Mn %United StatesUnited KingdomJapanOther European Union Countries 1(excluding U.K.)CanadaCARICOMof which:JamaicaGuyanaBarbadosPuerto Rico and U.S. VirginIslandsCentral and South America 2European Free TradeAssociationOtherTOTAL 3 27,626.0614.04.9593.7506.45,140.91,467.0669.11,228.4585.91,765.728.83,026.939,893.269.21.50.01.51.312.93.71.73.11.54.40.17.6100.034,888.9460.84.8602.2654.312,807.54,496.91,671.62,541.9553.63,814.232.76,042.559,861.558.30.80.01.01.121.47.52.84.20.96.40.010.1100.050,553.3759.3452.58,357.21,076.015,223.95,055.02,089.02,915.21,370.34,370.3110.06,002.788,275.557.30.90.59.51.217.25.72.43.31.64.90.16.8100.032,306.71,003.6199.34,923.6516.47,783.52,624.31,032.51,332.91,064.43,064.7504.54,100.955,467.658.21.80.48.90.914.04.71.92.41.95.50.97.5100.0SOURCE: Central Statistical Office.1Updated to include all EU countries.2Excludes Guyana, French Guiana, Suriname and Belize.3Excluding ships’ stores/bunkers.* Reflects data for January – September 2007 only.118

TABLE A.41DIRECTION OF TRADE – IMPORTS, 2004 - 20072004 2005 2006 r 2007*COUNTRY$Mn % $Mn % $Mn % $Mn %United StatesUnited KingdomJapanOther European Union Countries 1(excluding U.K.)CanadaCARICOMof which:JamaicaGuyanaBarbadosCentral and South America 2of which:BrazilVenezuelaEuropean Free Trade AssociationIndonesiaOtherTOTAL 3 10,375.41,631.61,174.34,681.3675.5633.688.8163.0141.95,294.43,204.5962.1229.90.05,904.330,600.333.95.33.815.32.22.10.30.50.517.310.53.40.80.019.3100.010,295.71,417.61,415.11,989.8770.7700.293.3137.7179.510,236.54,859.12,164.6425.80.08,617.735,869.128.74.04.05.52.12.00.30.40.528.513.56.01.20.024.0100.011,152.51,072.81,419.03,241.1911.4611.9110.2117.5204.111,040.05,678.11,755.0159.30.011,326.240,934.227.22.63.57.92.21.50.30.30.527.013.94.30.40.027.7100.08,627.6999.41,233.93,245.21,104.3539.373.9114.0201.89,013.14,142.01,209.2111.20.09,742.534,616.524.92.93.69.43.21.60.20.30.626.012.03.50.30.028.1100.0SOURCE: Central Statistical Office.1Updated to include all EU countries.2Excludes Guyana, French Guiana, Suriname and Belize.3Unadjusted for balance of payments purposes.* Reflects data for January – September 2007 only.119

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.42WEIGHTED AVERAGE TT DOLLAR EXCHANGE RATESFOR SELECTED CURRENCIES 2003 - 2007 1PERIODUNITED STATESDOLLARCANADIANDOLLARUK POUNDSTERLINGJAPANESE YENEURO*BUYING SELLING BUYING SELLING BUYING SELLING BUYING SELLING BUYING SELLING(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)200320042005200620076.23146.24406.23196.24956.27356.29516.29906.29966.31226.32824.36704.71075.08665.44305.77444.55504.90585.28495.67656.04029.980911.195311.155911.320512.298810.402811.674211.632511.832412.88520.05370.05750.05660.05360.05310.05440.05830.05950.05450.05386.87367.59917.61717.72958.43617.16617.92447.88188.05668.79902007JanuaryFebruaryMarchI6.26896.25356.28236.26906.32546.31926.32886.32485.25765.27365.30025.27705.48085.49065.52105.497512.049512.019911.997012.022712.598012.585812.550112.57790.05190.05190.05360.05250.05280.05260.05400.05317.99818.02478.14568.05678.35118.35688.49158.4011AprilMayJuneII6.27526.26016.27896.27096.32216.31526.32306.31995.45355.63085.81345.63255.68295.87516.05285.870512.221412.191812.212312.207712.790112.749412.753112.76350.05260.05170.05090.05170.05360.05250.05210.05278.32438.34158.26768.31268.66818.66338.59478.6431JulyAugustSeptemberIII6.28136.27606.28126.27956.33506.33116.33156.33265.87645.79685.96875.87776.15716.10416.26936.173512.538712.326912.371412.415713.098812.926012.985712.89600.05120.05370.05440.05300.05250.05260.05440.05318.45378.36978.56038.45798.83508.76648.92638.8398OctoberNovemberDecemberIV6.28046.26916.27286.27446.33376.33676.33476.33506.30796.39586.15026.28966.61706.71566.43826.596012.500312.708212.395212.537913.157913.340013.030313.18010.05400.05620.05560.05520.05480.05730.05650.05618.73808.98439.00158.89969.12689.42749.34429.2926SOURCE: Central Bank of Trinidad and Tobago.1Monthly rates are an average for the month.* The Euro was first traded in the foreign exchange market in 2000.120

TABLE A.43TRINIDAD AND TOBAGO - INTERNATIONAL RESERVES, 2003 - 2007/ US$MILLION /END OFPERIOD20032004200520062007FOREIGNASSETS*(1)2,007.42,539.04,014.85,133.66,673.4IMFRESERVETRANCHEPOSITION(2)0.00.00.00.00.0CENTRAL BANKof whichSDRHOLDINGS(3)1.11.91.61.20.9FOREIGNLIABILITIES(4)16.216.216.116.114.8NETINTERNATIONALRESERVES(1-4)(5)1,991.22,522.83,998.75,117.56,658.6CENTRALGOVERNMENT(6)0.10.10.10.10.1NETOFFICIALRESERVES(5+6)(7)1,991.32,522.93,998.85,117.66,658.72006IIIIIIIV4,532.05,285.35,137.85,133.60.00.00.00.01.11.11.11.216.116.016.216.14,515.95,269.35,121.65,117.50.10.10.10.14,516.05,269.45,121.75,117.62007IIIIIIIV5,483.66,081.36,376.26,673.40.00.00.00.01.22.01.50.916.016.116.214.85,467.66,065.16,360.06,658.60.10.10.10.15,467.76,065.26,360.16,658.7END OFPERIOD20032004200520062007FOREIGNASSETS(8)1,002.21,262.01,407.21,945.81,959.6COMMERCIAL BANKSFOREIGNLIABILITIES(9)1,042.2740.5956.6753.1855.2NET FOREIGNPOSITION(8-9)(10)-39.9521.6450.61,192.71,104.4GROSS FOREIGNASSETS(1+6+8)(11)3,009.73,801.15,422.17,079.58,633.1TOTAL FOREIGNLIABILITIES(4+9)(12)1,058.4756.6972.7769.2870.0NET FOREIGNPOSITION(11-12)(13)1,951.33,044.54,449.46,310.37,763.12006IIIIIIIV1,650.01,750.41,579.71,945.8835.7809.6747.9753.1814.3940.8831.81,192.76,182.17,035.86,717.77,079.5851.8825.6764.1769.25,330.36,210.25,953.66,310.32007IIIIIIIV2,206.31,955.31,884.51,959.6719.1796.2784.6855.21,487.21,159.11,099.91,104.47,690.08.036.78,260.88,633.1735.1812.3800.8870.06,954.97,224.47,460.07,763.1SOURCE: Central Bank of Trinidad and Tobago.* On March 15, 2007 the Heritage and Stabilization Fund Act (Act No. 6 of 2007) was assented to by the President. The fund will now be managed by anindependent Board of Directors and as a result, will no longer be included in the Central Bank’s assets. For conistency, annual allocations to the HSFsince its inception in 2000 are also excluded from Central Bank foreign assets.121

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007TABLE A.44SUMMARY ACCOUNTS OF THE CENTRAL BANK, 2003 - 2007/ $MILLION /END OF PERIOD2003 2004 2005 20062007Net Foreign AssetsNet International ReservesAssetsLiabilitiesOther Foreign AssetsOther external assetsMedium and long-term foreign liabilitiesSDR allocation14,31513,83413,935102481916-37-39918,92918,48718,589102442885-16-42731,32630,69230,7941026341,079-29-41640,77641,00641,107102-230275-76-42841,79742,02442,11893-227282-66-442Net Domestic AssetsNet credit to the public sectorCentral Government (net)Treasury billsOther Government securitiesLoans to GovernmentUse of reserves(-addition)Rest of Public Sectorof which: Public enterprisesNet Claims on financial institutionsOther items (net)-8,433-8,000-8,156000-8,1561560380-813-13,144-12,718-12,871000-12,8721540380-806-23,292-20,437-20,586000-20,5861490380-3,234-31,144-27,192-27,230000-27,231390380-4,332-31,142-23,661-23,806173180-23,99714500-7,481Reserve MoneyCurrency in circulationDeposits of commercial banksDeposits of non-bank financial institutions5,8822,2952,9556325,7852,5542,7834498,0352,9914,6733719,6323,5605,68838410,6564,2056,087364Net International ReservesChanges as a percent of beginning-of-period reserve money33.279.1211.0 128.410.6Net Domestic AssetsOf which: Central Government-26.9-29.6-80.1-80.2-175.4-133.4-97.7-82.70.035.6Reserve Money5.3-1.638.919.910.6Memorandum Items:Net Domestic Assets (Net of RSF)Net claims on public sector (Net of RSF)Central Government (Net of RSF)Government Blocked Account-6,866-6,433-6,5893,100-10,298-9,872-10,0256,105-17,807-14,952-15,1017,407-22,352-18,399-18,4388,843-31,142-23,661-23,80615,533SOURCE: Central Bank of Trinidad and Tobago.122

CALENDAR OF KEYECONOMIC EVENTSJANUARY - DECEMBER, 2007appendix THREE

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007JANUARY3 Jamaica Money Market Brokers launched itsTrinidad Select Index Fund (TSIF), which will trackthe 15 most liquid and blue chip stocks listed onthe Trinidad and Tobago Stock Exchange. Theminimum opening balance for the mutual fund isTT$1,000 or JS$10,000. Four classes of shares, SeriesA through to D will be offered by the fund. The netasset value of the fund is J$10 or approximatelyTT$1.4 The Central Bank of Trinidad and Tobago issuedthe “Guidelines for Second Tier Primary Dealersfor Open Market Operations”. These guidelineswere intended to add new counterparties whocan make bids for offers for all securities that areoffered or bid by the Central Bank of Trinidad andTobago.8 The High Court placed Goodwill GeneralInsurance Company Limited into compulsoryliquidation. Victor P. Herde, the court appointedliquidator, informed Goodwill policy holders via anewspaper notice that as per Section 79(1) of theInsurance Act 1980, their policies were cancelledeffective January 08. The closing of Goodwill leftan estimated $35 million dollars in claims unpaid.licence gave First Citizens Trustee Services Limitedthe authority to operate as a Trust Company,effective from December 31, 2006. The directorsof the company are Mr. George Bovell Junior, Mr.Michael Quamina, Ms. Sharon Christopher and Mr.Shiva Manraj.An act to vary the appropriation of the sum the issueof which was authorized by the Appropriations Act,2006 was assented to on this date. The Act may becited as the Finance (Variation of Appropriation)(2006) Act, 2007. (Act No. 2 of 2007)26 The Central Bank of Trinidad and Tobagoannounced that it had decided to maintain the‘Repo Rate’ at 8.00 per cent. The ‘Repo’ Ratewill remain at this level while the Central Bank ofTrinidad and Tobago intensifies liquidity absorptionmeasures to help contain domestic demand andaddress core inflation. In this context a secondbond issue of TT$300 million dollars at a couponrate of 7.80 per cent per annum will be issued tothe public on February 09, 2007. The proceedsof this bond will be sterilized by the Central Bank.Customary open market operations and the saleof foreign exchange will help tighten liquidity.12 The Central Bank of Trinidad and Tobago filed anapplication in the High Court for Citizen InsuranceCompany Limited to be placed under judicialmanagement. This course of action was allowedunder Section 68 of the Insurance Act (84:01).24 The Central Bank of Trinidad and Tobago issued alicence to First Citizens Trustee Services Limited. The30 The Central Bank of Trinidad and Tobagocollaborated with De La Rue Currency, the Bank’snote printers to host its “Know Your Money” publicseminars. These seminars form a part of the Bank’sEducation Outreach Programme and is intended toenlighten participants on the key security featuresof the current bank notes.124

31 The Central Bank of Trinidad and Tobago launchedthe National Financial Literacy Programme (NFLP),with an initial “seed capital” of four million dollars.At its launch, Governor of the Central Bank, Mr.Ewart Williams acknowledged the Tobago Houseof Assembly’s Financial Outreach Programmewhich had already been implemented. ThisNFLP will target priority groups, namely primaryand secondary school students, young adults,employees and members of community groups.Emphasis will be placed on providing opportunitiesfor financial education in low income communities.The NFLP programme is intended to empowerindividuals with sufficient skills and knowledge tomake financial decisions, thus enabling them tomake more informed choices about their spendingand saving patterns.FEBRUARY6 An act to amend the Home Mortgage BankAct, Chap. 79:08 was assented to on this date.This amendment seeks to identify the classes offinancial activities of the Home Mortgage Bankthat the Central Bank of Trinidad and Tobagocan supervise. These classes include MerchantBanking, Mortgage Institution, Trust Company andCollective Investment Funds. This Act may becited as the Home Mortgage Bank (Amendment)Act, 2007. (Act No. 1 of 2007)7 The Central Bank of Trinidad and Tobago issueda second bond to absorb excess liquidity in thefinancial system. An advertised amount of $300million was offered, but due to overwhelmingpublic support, the actual amount allotted wasincreased to $674 million, with a maturity of fiveand a half years and a coupon rate of 7.80 percent per annum. The bonds will be issued underthe authority of the Development Loans Act, Chap.71:04, and the money raised will be sterilized at theCentral Bank of Trinidad and Tobago.14 The proposed Foreign Investment (Tobago LandAcquisition) Order, 2007, was made by the Ministerof Finance under Section 6(2) of the ForeignInvestment Act. On implementation of this order,foreign investors shall first obtain a licence underthe Act before acquiring any land in Tobago.(Legal Notice No. 53 of 2007)23 The Central Bank of Trinidad and Tobago announcedthat the ‘Repo’ Rate was left unchanged at 8.00per cent.26 An Act to amend the law relating to the minimumage of admission to employment in Trinidad andTobago was assented to by the President. This Actalters the minimum employment age from fourteen(14) to sixteen (16) years. The Act may be citedas the Miscellaneous Provisions (Minimum Age forAdmission to Employment) Act, 2007. (Act No. 3 of2007).MARCH2 The Central Bank of Trinidad and Tobagoannounced that on February 27 2007 the HighCourt placed Citizen Insurance Company Limitedunder judicial management. Mr. Brian Hackett wasappointed the Judicial Manager, in accordancewith Section 69 of the Insurance Act.125

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 200706 The Central Bank of Trinidad and Tobago gaveapproval in principle for India’s Bank of Barodato operate in Trinidad and Tobago. The Bank ofBaroda has extensive experience in project finance,international trade finance, loan syndication, retailfinance and SME lending, and has offices in 21countries.08 The Government of Trinidad and Tobago andthe Government of Equatorial Guinea signeda Memorandum of Understanding (MOU). Thememorandum establishes a framework for furthertalks on the development of natural gas projectseither in Trinidad and Tobago or in EquatorialGuinea. The MOU also sets out other areas forcooperation such as technical assistance, businessdevelopment and industrial growth initiatives,human resource development, the developmentof industrial estates, infrastructure and ports.09 The Trinidad and Tobago Electricity Commission(T&TEC) announced the signing of an $80 millioncontract to build three new substations at Debe,Reform and Union Estate. The expansion is beingundertaken to meet Trinidad and Tobago’sincreased demand for electric power to meet itsgrowing social and economic needs.15 An Act to provide for the establishment andmanagement of the Heritage and StabilizationFund was assented to by the President. This Fundis intended to insulate fiscal policy from swings ininternational oil and gas prices, while accumulatingsavings for future generations from the country’sassets of oil and gas. This Act can be cited as theHeritage and Stabilization Fund Act, 2007. (ActNo. 6 of 2007).21 The Prime Minister announced, that he hadsigned a treaty determining the unitisation ofgas reserves between Trinidad and Tobago andVenezuela. This treaty is the first cross-borderinitiative in the Western Hemisphere and focuseson general provisions, exploitation of cross-borderhydrocarbon resources and other legislative andadministrative issues.22 British Gas (BG) and the Government ofTrinidad and Tobago signed a Memorandum ofUnderstanding. This agreement will allow for ajoint study to determine the way forward for a newexport train (Train X) of Liquefied Natural Gas.23 The Central Bank of Trinidad and Tobagomaintained the ‘Repo’ Rate at 8.00 per cent.14 CariSal Limited announced its intensions to buildan $80 million chemical facility on the Point LisasIndustrial Estate. The new plant will produceapproximately 100,000 tonnes of caustic sodaand 100,000 tonnes of calcium chloride per year.CariSal Ltd. is a global manufacturing companyspecializing in calcium chloride, caustic soda andother speciality chemicals.29 The Ministry of Planning and Developmentannounced the signing of a loan agreement withthe Inter-American Development Bank. The loanis worth US$28 million and the funds will be usedto assist in implementing an E-Government andKnowledge Brokering Programme. The objectiveof the E-Government Programme is to increase theeffectiveness and efficiency of public services via126

the expanded and more effective developmentand implementation of E-Government solutionsand the transfer of knowledge on internationalbest practices.30 RBTT Merchant Bank executed a syndicatedloan for Hidroxacbal SA, a Guatemalan powercompany. Hidroxacbal is owned by GrupoTerra, a Honduran investment group with morethan thirteen years experience in the design,development, construction and operation ofpower plants throughout Central America. Theproceeds of the US$182 million loan will be usedto construct a 94-megawatt hydroelectric plant inChajul, Guatemala.APRIL5 The French industrial gas producer Air Liquide hadinvested over 40 million euros in a new air separationunit to be located in the Point Lisas Industrial Park.Air Liquide will use it to serve its customer baseof methanol and ammonia industries. The unit isscheduled to begin operation in mid-2009.11 The proposed External Loans (BNP Paribas LondonBranch and Lloyds TSB Offshore Ltd.) Order, 2007, wasmade by the Minister under Section 6 of the ExternalLoans Act Chap. 71:05. This order allows the Ministerto exempt from all taxes or exchange controls,the payments or principal interest and any otherdebt charges in respect of the loan raised by theGovernment, to design construct and supply threeoffshore patrol vessels to the Trinidad and TobagoCoast Guard.16 The Government of Trinidad and Tobago andthe Government of India had signed a reciprocalInvestment Promotion and Protection Agreement(IPPA). The IPPA guarantees that investments bybusinessmen in either country would be protectedunder the law, with full access to all profitsand guarantees against property seizure andnationalisation.23 The Central Bank of Trinidad and Tobago announcedthat the ‘Repo’ Rate was unchanged at 8.00 percent.27 The Government of Trinidad and Tobago issued athird bond intended to assist in domestic liquiditymanagement. The amount initially offered was $450million, but due to the public’s support, the bond’svalue was raised to $1 billion, with a tenor of sevenyears and a coupon rate of 8.00 per cent. Theproceeds of the bond were sterilized.MAY04 The Central Bank of Trinidad and Tobago launchedthe primary school’s financial education programme.This forms a part of the National Financial LiteracyProgramme (NFLP) and is aimed at helping primaryschool aged children understand and learn moreabout money and how to manage it more wisely.18 The contract to build the University of Trinidad andTobago’s Wallerfield campus was won by JiangsuInternational Corporation, a Chinese company. Thecontract is worth TT$1.8 billion.127

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 200725 The Central Bank of Trinidad and Tobago announcedthat the ‘Repo’ Rate was left unchanged at 8.00 percent.28 The National Gas Company (NGC), British GasCompany TT and Chevron TT Resources signed a US$2billion agreement for the sale of 220 million cubic feetper day of gas to NGC. The agreement has a lifespan of fifteen (15) years and NGC is expected toreceive the first delivery of gas in mid-2009.The Central Bank of Trinidad and Tobago, inaccordance with Section 8 (2) of the FinancialInstitutions Act, 1993, issued a banking licence tothe First Caribbean International Bank (Trinidad andTobago) Limited. This bank was formerly known asFirst Caribbean International Banking and FinancialCorporation Limited.JUNE13 The Finance (Supplementary Appropriation) Act wasassented to on June 13, 2007. (Act No. 17 of 2007)18 The Unit Trust Corporation of Trinidad and Tobagolaunched the UTC Energy Fund. The fund is mediumto high risk and registered in Trinidad and Tobago andthe Cayman Islands. The fund is based in the UnitedStates and a minimum investment of US$100 wasallowed in the first two weeks with the initial servicecharge being waived. The objective of the fund is toprovide investors with long term capital growth byinvesting primarily in equity and fixed income securitiesissued by energy and energy related corporations.22 The Central Bank of Trinidad and Tobago announcedthat it had decided to maintain the “Repo” rateat 8.0 per cent. Following a reversal in April 2007,inflation continued its downward trend in May. Netdomestic fiscal injections and increases in bankcredit continued to exert pressure on domesticdemand. These influences were offset in part, byliquidity absorption through open market operationsand foreign exchange sales by the Central Bank ofTrinidad and Tobago.JULY10 An Act, to provide for the imposition or variationof certain duties and taxes and to introduce otherprovisions of a fiscal nature and for related matters,was assented to on this date. This Act may be citedas the Finance Act 2007 (Act No. 17 of 2007).12 Citibank announced that it had secured US$750million in senior secured notes with a fixed couponrate of 6% over 15 years for the Petroleum Companyof Trinidad and Tobago Limited (Petrotrin). Thisfinancing was secured to fund the construction of5 new plants at their Pointe-a-Pierre refinery. Theseplants will lead to a 40 per cent increase in finishedgasoline yield at the Pointe-a-Pierre refinery. Thisproject will cause an improvement of the quality ofthe gasoline pool by increasing the motor octanenumber and decreasing the benzene and sulphurcontent.13 The FirstCaribbean International Bank opened itsfirst branch in Trinidad and Tobago. The followingproducts will be offered by FirstCaribbean: capitalmarkets and corporate banking financial services,leasing, deposit taking, foreign exchange trading,treasury and wealth management.128

17 Mr. Ewart Williams was reappointed to anotherfive year term as Governor of the Central Bank ofTrinidad and Tobago.27 The Central Bank of Trinidad and Tobago maintainedthe “repo” rate at 8.0 per cent.31 Standard and Poor’s Rating Service upgraded FirstCitizens Bank’s counterparty credit rating and CDrating from BBB/A-2 to BBB+/A-2. First Citizens Bankin Trinidad and Tobago and First Citizens (St. Lucia)Ltd had their US$100 million bonds rating upgradedfrom BBB to BBB+. The bank’s ratings were adjustedupwards since it is considered stable with continuedgrowth in its loan portfolio and maintenance ofabove average asset quality and capitalisationrates.Corporation. Marubeni was founded in 1858 and isone of Japan’s leading enterprises.11 The Energy Minister, the Honourable Dr. Lenny Saithstated that the Ryder Scott Audit of natural gasreserves showed a decline in proven gas reserves, andadmitted that it is crucial that Trinidad and Tobagofind more gas to continue production beyond the2019 projection date.17 The Central Bank of Trinidad and Tobago circulateda Proposal of the Amendment of the Insurance Act toall insurance companies and brokers for review andcomment. This proposal was circulated because ithad become necessary to review the Insurance Act,1980, given the dynamism of the financial system inTrinidad and Tobago.AUGUST3 Citizen Insurance Company Limited was liquidatedand all policies cancelled. Policy holders and thirdparty claimants were urged to lodge all claimsincurred before August 3 2007. These claims wouldfacilitate the preservation of their financial interestin the company’s assets and assist the liquidator’squalification of the company’s total liabilities.10 The Marubeni Corporation of Japan announced itspurchase of Mirant Caribbean Holdings equity in fiveCaribbean power generation companies includingthe Power Generation Company of Trinidad andTobago (POWERGEN). These power companieswere purchased by Marubeni’s subsidiary company,Marubeni Caribbean Power Holdings. Marubenibought 39 per cent equity interest in POWERGENin a competitive auction process held by Mirant20 The Prime Minister of Trinidad and Tobago announcedthe award of the rapid rail construction contract tothe Trinitrain consortium, led by Bouygues TravauxPublics. This project is expected to cost TT$7 billiondollars. Bouygues Travaux is also responsible for theconstruction of the Port-of-Spain Waterfront projectand the Transcorp Credit Union office tower.23 The Central Bank of Trinidad and Tobago releaseda Guideline for the Measurement, Monitoring andControl of Impaired Assets. This guideline will beapplicable to institutions licensed under the FinancialInstitutions Act, 1993, as well as insurance companiesregistered under the Insurance Act, Chapter 84:01.The guideline incorporates existing legislative andregulatory requirements, as well as internationalbest practises for the measurement, monitoring andcontrol of impaired assets.129

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 2007The Foreign Affairs Minister the Honourable ArnoldPiggott disclosed in Parliament on this date thatTrinidad and Tobago will be donating $20 milliontoward relief efforts in Jamaica, after the devastationof Hurricane Dean. TT$10 million will come from theCARICOM Petroleum Fund and $10 million from theTrinidad and Tobago Contingency Fund.24 The Senate approved a Government of Trinidad andTobago motion to increase the authorized capitalof the Central Bank of Trinidad and Tobago from$100 million to $800 million. The increase came intoimmediate effect. The last increase in authorizedcapital was 1994 when it was raised to $100 millionafter remaining at $30 million since 1985.The Central Bank of Trinidad and Tobago maintainedthe “Repo” rate at 8.0 per cent.29 Citibank (Trinidad and Tobago) Ltd announced thatit had won Euromoney’s “Award of Excellence”2007, in the category of Best Debt Bank in Trinidadand Tobago. Citibank also made the list of Best inClass. Euromoney’s “Awards for Excellence” serve asa benchmark for high quality products and servicesacross all areas of commercial and investmentbanking.Fitch Ratings, an international credit ratings agencyassigned an international credit rating BB to DFLCaribbean Holdings Limited. DFL CaribbeanGroup provides corporate finance, risk capital,microfinance and management advisory servicesto regional private enterprises through its subsidiaries.Development Finance Ltd (DFL), a subsidiary ofDFL Caribbean Holdings Limited was also given aninternational finance credit rating of BB by FitchRatings.SEPTEMBER7 An act to amend the Insurance Act, Chap. 84.01was assented to on this date. The Act may be citedas the Insurance (Amendment) Act, 2007. (Act No.22 of 2007).An act to provide for the Service of Trinidad andTobago for the financial year ending on the 30thday of September, 2008 was assented to on thisdate. The Act may be cited as the AppropriationAct, 2008. (Act No. 23 of 2007).18 First Citizens Bank in collaboration with the Ministryof Local Government launched a banking systemfor the Unemployment Relief Programme (URP).First Citizens Bank was the sole tenderer and wonthe $4 million contract to provide the system. Thesystem provides URP employees with debit cardsthat can be used at automated banking machines(ATM), or to purchase items using the Linx system.The cards will be issued on a phased basis and willbe activated on October 1.21 The Central Bank of Trinidad and Tobagoannounced that it had decided to maintain the‘repo’ rate at 8.0 per cent.28 An act to revise the law relating to bankruptcyand make provision for corporate and individualinsolvency; to provide for the rehabilitation ofthe insolvent debtor and to create the office ofSupervisor of Insolvency was assented to on thisdate. The Act may be cited as the Bankruptcy andInsolvency Act, 2007. (Act No. 26 of 2007).An act to provide for the variation of certain dutiesand taxes and to introduce other provisions of afiscal nature and for other related matters was130

assented to on this date. The Act may be cited asthe Finance (No. 2) Act, 2007. (Act No. 30 of 2007).The Central Bank of Trinidad and Tobago inaccordance with section 44G of the Central BankAct Chapter 79:02, returned all power of controlto First Citizens Bank on this date. The CentralBank was granted control over First Citizens Bankin 1993, when it was formed from the merger ofNational Commercial Bank, Workers Bank andTrinidad Cooperative Bank.Trinidad and Tobago Electricity Commission(T&TEC) signed a contract with Itron, a UScompany, for the supply and installation ofan Advanced Metering Infrastructure forresidential and commercial customers. Itron is aleading provider of solid state meters and datacollection/communication systems. This newsystem will allow T&TEC to read customers metersaccurately and remotely. The system will alsoallow T&TEC to monitor electricity consumptionpatterns and detect meter tamper events. Theinfrastructure behind the system will include anoutage management system, providing T&TECwith immediate notification of any interruption inthe electricity supply.OCTOBER1 Caribbean Airlines assumed operational controlover Tobago Express and the Tobago air bridgeon this date. Caribbean Airlines assumed controlby purchasing all outstanding shares in TobagoExpress. As part of this absorption, Tobago Expressemployees received severance packages andwere offered new and enhanced three monthtransition contracts.Bank of Baroda (BOB) opened its first branch inTrinidad and Tobago on this date. BOB offersstandard banking services such as personalbanking, global trade financing, SME financing,wholesale banking and NRI services.2 Royal Bank of Canada (RBC) announced anagreement to purchase RBTT Financial Group onthis date. This deal will combine RBC’s Caribbeanretail group with RBTT’s, to form an extensiveCaribbean banking network, spanning 18countries and territories. The merger is expectedto be completed in mid-2008 and to cost RBCapproximately US$2.2 billion or TT$13.8 billion. It isdependent upon regulatory and RBTT shareholderapproval. RBTT shareholders will receive TT$40 pershare payable 60 per cent in cash and 40 percent in RBC common shares. The number of RBCcommon shares received by RBTT shareholders issubject to a plus/minus 10% “collar”, based on anRBC share price of US$54.42. The TT$40 per sharewas based on valuations by investment housesCredit Suisse and Merrill Lynch.3 The Institute of Banking and Finance of Trinidad andTobago (IBAF) launched its enhanced Diploma inBanking Programme. The enhanced programmeexposes students to new and updated conceptswithin Banking. It requires students to take fourteeninstead of seventeen modules, thus reducing thetime needed to complete the Diploma. The diplomais geared towards persons who are employed inthe Banking profession, as well as students whohave completed C.X.C. examinations and wish topursue professional qualifications.131

CENTRAL BANK OF TRINIDAD & TOBAGOANNUAL ECONOMIC SURVEY 20074. The Government of Trinidad and Tobago signeda Memorandum of Understanding (MOU) with theSunway Group, a Malaysian company. Under thisagreement, Sunway will start quarrying operationsat Scott’s Quarry in Arima in January 2008. Sunwaywill be required to produce between 4.5 and 5million metric tonnes of aggregate (asphaltic andready mix) concrete per annum. This aggregatewill be purchased by National Quarries CompanyLtd. There will be a fixed price for the material andNational Quarries Ltd will have first preference. Anyadditional material will be sold on the domesticmarket.5. Republic Bank sold its business operations in theDominican Republic to Banco BHD. The transactioninvolved the sale and transfer of Republic Bank’sDR loan assets and deposit liabilities to Banco BHD.Republic Bank executive management cameto this decision, after assessing and becomingdissatisfied with the concentration and risksinherent in its Republic Bank DR corporate bankingmodel.8. The Central Bank of Trinidad and Tobago removedThe Western General and Insurance CompanyLimited and CUNA Mutual Insurance Society, fromthe Register of Insurance Companies with effectfrom this date. These insurance companies wereremoved because of the cancellation of theirregistration, pursuant to Section 25 (1) and (2) ofthe Insurance Act, Chapter 84:01.16 The Central Bank (Deposit Insurance) Order, 2007was made by the Minister of Finance under section44N (2) of the Central Bank Act, Chap. 27:02. Thisorder increases the deposit insurance coveragelimit from fifty thousand dollars to seventy-fivethousand dollars. (Legal Notice No. 237 of 2007).The First Citizens Asset Management Limited VestingOrder, 2007 was made by the Minister of Financeunder section 49 of the Financial Institutions Act,1993 on this date. This order allowed First CitizensAsset Management Limited to transfer its mortgagelending business to First Citizens Bank Limited. ThisOrder came into force on 1st September, 2007.(Legal Notice No. 238 of 2007).26 The Central Bank of Trinidad and Tobagoannounced its decision to maintain the ‘repo’rate at 8.0 per cent. Lower fiscal injections andthe aggressive programme of liquidity absorptionbeing pursued by the Central Bank contributedto significant tightening in liquidity conditions.Underlying inflationary impulses remained stronggiven current fiscal, credit and wage pressures. Atthe same time, a substantial increase in global foodprices continues to fan food price inflation in bothdeveloped and developing countries. Accordinglyinflation control will continue to be the main focusof Central Bank’s monetary policy.NOVEMBER7 RBTT Merchant Bank was awarded the contractto partially finance St. Maarten Harbour HoldingCompany NV’s expansion of their cruise and cargofacilities. RBTT Merchant Bank will provide US$86million of the $121 million needed by the DutchCaribbean Company.132

DECEMBER25 The Prime Minister of Trinidad and Tobago,the Honourable Patrick Manning met with HisExcellency Yoweri Kaguta Museveni in Uganda. Atthe meeting, the Prime Minister reiterated Trinidadand Tobago’s willingness to continue its assistancein developing a process to monetize Uganda’srecently discovered oil and gas resources.28 National Gas Company of Trinidad and Tobago(NGC) signed a contract with Kellogg, Brown andRoot (KBR). KBR, an American company, will designa pipeline to transport liquidified fuel from NGC’sPetrotrin refinery in Pointe-a-Pierre to FredrickSettlement in Caroni. Construction of the pipelinewill begin in the third quarter of 2008. The pipelinewill be designed to transport 1.6 million gallons or42,000 barrels a day of refined distillates from therefinery to Fredrick Settlement where a new bondand associated road tank wagon facility will beconstructed.30 The Central Bank of Trinidad and Tobagoannounced that it had decided to maintain the‘repo’ rate at 8.0 per cent. The Bank stated thatinflation control will continue to pose challengesfor the remainder of the year, especially in lightof high energy prices, increased food inflation inglobal markets and recently announced domesticprice increases. As a result the Bank reiterated itscommitment to strong monetary policy aimed atlimiting domestic demand and credit expansion.12 The Trinidad and Tobago Electricity Commission(T&TEC), has awarded Finnish engineeringcompany Wartsila Corporation, with a contract tobuild a dual-fuel power plant at the Cove IndustrialEstate, Tobago. This plant will run on both naturalgas and light fuel oil. The contract is valued atapproximately TT$500 million or US$77 million andthe plant will be first of its kind in the region. Theplant will supply electricity to Tobago and transmitpower to Trinidad via two existing submarinecables. Wartsila will operate the Cove plant for aninitial period of five years under a full operationsand maintenance agreement.17 The Unit Trust Corporation of Trinidad and Tobago(UTC) launched its International Suite of Funds.These funds were divided into two classes, bondand equity funds. The funds consist of the GlobalBond fund, Asian Pacific fund, Latin American fundand a European fund. The UTC launched thesefunds for investors who desired long term capitalgrowth investments.21 The Central Bank of Trinidad and Tobagoannounced that it had decided to maintain the‘repo’ rate at 8.0 per cent. The Bank stated thatTrinidad and Tobago needs to control its domesticsource of inflation by increasing agriculturalsupplies and taking steps to contain demandpressures. Open market operations and increasedsales of foreign exchange in combination withadditional measures will need to be taken to keepinflation within the targeted range.133

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2007 ANNUAL ECONOMIC SURVEY