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Trinidad warns of major budget cuts amid drop in oil prices

Published:Sunday | January 11, 2015 | 1:00 AM

Trinidad & Tobago's prime minister warned late Thursday of major cuts in expenditures following a sharp drop in oil prices that has forced the government of the wealthy twin-island nation to reduce its projected revenue this year.

Trinidad expected to earn US$80 per barrel of oil but has revised that to US$45 per barrel, Prime Minister Kamla Persad-Bissessar said in a televised address. The government has subsequently reduced expenditures by US$7 million, and more cuts are expected.

The country is a major fuel supplier for the United States and other nations thanks to oil and natural gas reserves that make it among the most prosperous in the Caribbean. Oil and gas make up about 40 percent of the island's GDP and 80 per cent of exports, with Trinidad having one of highest per capita incomes in Latin America.

Falling energy prices have led to a US$1.18 billion deficit, Persad-Bissessar said, adding that the government plans to help close the gap by selling 49 per cent of government shares in a state-owned, gas-processing company.

Persad-Bissessar pledged to uphold social welfare programs, among other things.

"We shall also ensure that the pace of business activity continues to protect jobs and personal incomes, and to continue with critical infrastructure projects such as roads and to support education and health," she said.

The drop in oil prices has had at least one positive effect in Trinidad: the government expects to save US$235 million on a subsidy it pays oil companies so local consumers can buy cheaper gasoline.

- AP