TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR SEPTEMBER, 2009

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000405 SIPDIS SANTO DOMINGO FOR REGIONAL COMMERCIAL OFFICE JUSTICE FOR OPDAT E.O. 12958: N/A TAGS: ECON EFIN EIND TPHY TD SUBJECT: TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR SEPTEMBER, 2009 Notable economic developments in Trinidad & Tobago in September not otherwise reported include: ¶1. Foreign exchange crisis or not?! ¶2. Trinidad and Tobago off credit watch list ¶3. TT Eximbank line of credit for exports to Cuba ¶4. Inflation/Repo rate continues to fall ¶5. Ship building ... way to economic diversification ¶6. India to set up weather station ¶7. Lack of funds halts InTech Park ¶1. Foreign exchange crisis or not?! -------------- The GOTT continues to defend the country's foreign exchange position. Responding to opposition questions on this issue and the reason businessmen have been unable to have immediate access to foreign exchange, Minister in the Ministry of Finance and Minister of Trade and Industry Mariano Browne assured the Senate that "there is no foreign exchange crisis" and TT will be able to meet all of its trade requirements in the marketplace. As of May 2009, the country's international reserves stood at US$8.9 billion (increasing to US$10.2 billion when commercial banks reserves are taken into consideration). Browne admitted that there is a greater demand for foreign exchange at this time, but firmly stated that there is no shortage. He said current reserves would allow for 11 months of import cover. ¶2. Trinidad and Tobago off credit watch list -------------- Moody's Investors' Services and Standard and Poor's (S&P) expressed confidence in the GOTT's ability to manage the economy and any projected deficits by maintaining its Baa1 government bond ratings in both foreign and local currency and S&P removed T&T from its negative credit watch list. Regional credit rating agency Caribbean Information and Credit Rating Service also reaffirmed Trinidad and Tobago's AAA rating on local and foreign currency debt obligations. ¶3. TT Eximbank line of credit for exports to Cuba -------------- -------------- Trinidad and Tobago Export Import Bank (Eximbank) will establish a US$10 million line of credit for the benefit of TT manufacturers to facilitate export of goods to Cuba. Trinidad and Tobago Manufacturers Associations' (TTMA) President Greig Laughlin said this facility would allow TT manufacturers to be paid up front and make their goods competitive. He believes the TTMA/Eximbank strategy comes at an excellent time when the Cuban market is about to expand. ¶4. Inflation/Repo rate continues to fall -------------- The Central Bank of Trinidad and Tobago (CBTT) reports that headline inflation continued to decline, dropping from July's 5.9 percent to 4.3 percent in August. However, the Bank warned that the GOTT's budget deficit and increased taxes on cigarettes and alcohol could snuff out the gains made. Headline inflation also dropped from 10.1 percent in July to 5.2 percent on a year-on-year basis in August. Core inflation remained unchanged at 3.8 percent. The continued fall of the inflation rate and excess cash in the system, has prompted the Bank to further reduce its Repo rate by 50 basis points to 6.25 percent. The next Repo rate announcement is scheduled for October 23, 2009. The full text of the Central bank announcement is posted at hppt://www.central-bank.org.tt/. ¶5. Ship building ... way to economic diversification -------------- -------------- Prime Minister Patrick Manning recently announced plans to turn to ship building and marine repairs as a way to further diversify the local economy. In line with this, he referred to a private sector proposal for the construction of a major dry dock. Another area of interest is the fast growing marine segment of the oil and gas exploration. According to Manning, this industry has the potential to be labor intensive and to create a new industry that can make significant contribution to TT's economic activity. ¶6. India to set up weather station -------------- The Indian High Commission to Trinidad and Tobago promised to assist with the establishment of a regional weather station in TT using space technology. India-based scientists are expected to assist in setting up the center with footprints throughout the region. The PORT OF SP 00000405 002 OF 002 center also would focus on renewable wind energy and ocean studies. ¶7. Lack of funds halts InTech Park -------------- The pressures of the global economic slowdown hit the GOTT US$79 million Tamana InTech Park. The proposed 2010 completion date of the technology industrial center has been pushed back and the project scaled down. The park, the only one of its kind in the West Indies, was intended to assist the GOTT to develop a competitive onshore business environment, form the background for a Caribbean ICT cluster or business hub, and house the headquarters of the University of Trinidad and Tobago. It is believed that many of the intended occupants have pulled out of the project or are unable to sign on to any expansion projects at this time. KUSNITZ