RESTRICTED

Report No. WH- 160a

This report wcs prepared for use within the Bank and its affiliated organizations.They do not accept responsibility for its accuracy or completeness. The report maynot be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

CURRENT ECONOMIC POSITION

AND PROSPECTS

OF

TRINIDAD AND TOBAGO

May 24, 1966

Western Hemisphere Department

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CURRENGY EQUIVALENTS

TT$l = US $0. 58TT$1 million = US $583, 330US $1 = TT$1. 71US $1 million = TT$l, 714, 290

TABIE OF CONTENTS

Page No

BASIC DATA i - ii

SUMMARY AND CONCLUSIONS i - iv

I. INTRODUCTION 1

II. NATURE OF THE DEVELOPIVENT PROBIEM 1

III. CONSUMPTION, SAVINIGS AND INTVEST-!ENT 5

IV . THE PUBLIC INVESTMENT PROGRAM 7

V. BUDGETARY OUTLOOK FOR 1966 10

VI. CVERSEAS TRADE AND PAYMENTS 12

VII. INDUSTRIAL AND COMMERCIAL POLICY 13,

VIII. INCOMES POLICY 15

IX. FISCAL POLICY AND EXTERNAL BORROWING 16

X. ECONOMIC PROSPECTS AND CREDIThORTHIN3ESS 19

ANNEX 1. STATISTICAL TABLES

ANNEX 2. THE PETROLEUM SECTOR

ANNEX 3. AGRICULTURE

ANNEX 4. INDUSTRY

ANNEX 5. PUBLIC FINANCE

ANNEX 6. EXTERNAL FINiANCES AND TRADE

MAP.

This report is based on the findings of a mission in November/December 1965 and M2Iarch 1966 to Trinidad and Tobago, composedof Messrs. E. Peter Wright and Hendrik van der Heijden.

BASIC DATA

Area: 1,980 square miles

Population (mid 1965) 980,000 (estimated)Rate of growth (1950-1965) 2, 9%Rate of growth (1965-1980) 3.1%Population density (per square mile) 495

Gross National Product (1965) TT" 1,073 millionRate of growth 1/ 1952-1962 8.7%

1962-1964 3.2%1965 5.2% (estimated)

Per capita G-NP (1965) US;; 640

Gross Domestic Product at CurrentFactor Costs (1965) TTV 1,111.9 million

of which:Petroleum and Asphalt 25.8%111anufacturing 1h.2%Agriculture 10.6%Distributive Trades 13.2%Govermnent 11.8%

Percent of GDP at Current Marlcet PViees 1965 1963-1964 1952-1962

Gross investment 24.4 27.3 26.9Gross savings 15.9 18.2 18.7Balance of payments current 8.5 9.1 8.2

account deficitInvestment income payments 9.4 io.6 10.7Goverment current revenues 17.6 17.6 16 .1

Resource Gap as % of Investment

Loney and Credit

Annual Rateof Change (M)

19'o2- lQ5LL-1965 1965 1961 1961

(TT'i Millioi-,)

Total money supply no.07 2.0 -0.2 3.3Tirme and savings deposits 166.i 7r7 7.9 9.8Colmnercial bank credit to private sector 130.9 27.8 7.5 13.2Other lending to private sector n.a. ri.a. n.a. n.a.Rate of change in prices - n.a. 3.41 2.0

1/ Gross domestic product at constant. market prices.

Public Sector Operations

Annual Rateof Change (%)

1963- 19152-1965 1965 1965 1962

Government current receipts 2o8.5 2.8 5.7 10.3Government current expenditures 203.6 2.4 11.1 10.8Current accounts surplus 3.8 .... ... ....Government capital expenditures 59.D3 -7.1 -2.8 2048Total external assistance to public

sector 6.9 - . ....

External Public Debt (In US$) December 31, December 31,1965 lQ64

Total debt 77,. million 59.8 millionTotal annual debt service 1(X2 million 7.1 7nillion

Debt service ratio 7% 6/ 34'

Balance of Pamnents (In US$)Annual Rate of Change (%

1963- 1952-1965 1965 1965 1962

(;iillion)

Total exports 1/ 517.7 10.3 9.4 10.5Total imports F/ 521.7 11.5 12,8 9.9Net invisibles -65.3 -2.8 0.8 17,6Current account balance -58.5 -14,9 12.9 13.8

1964 1962-1963 1952-1962

Commodity 2/ concentration ofexports 3/ 76.2 83.9 87.0

Net foreign exchange reserves 83.2 mil. 91.3 rail. 96 6 mior: month of Limports 3/ 4.5 5 7S5 4

External Financial Assistance (In US" Ml11illion)

1965 Annual Average 19'3-1964Conmmitments Disbursements Comrm-aitments Disbursements

"OTAL 1005 6.9 3.8 11.5Soft assistance 3e2 - 0.3Hard assistance 7.3 6.9 3.8 1lo2

.iajor Donor: 5/ 3.2 - - 0.3Canada 3.2 -UK - 0.3

-L Including crude oil V/ 1952-1961F/ Fuel and lubricants. g/ Soft assistance

3/ Exclv.-,il of crud's- oil 6/ 7% of net earnings on currentaccount.

SUMMARY AND CONCLUSIONS

it

1. During the past fifteen years Trinidad and Tobago's real grossdomestic production increased by a compound annual rate of roughly7.5 percent, paced by the rapidly expanding petroleum and petrochemicalindustries. Economic growth has, however, slowed down since 1963,principally because of a reduced growth rate in the all-important petro-leum sector. It is the prospective slowing down of the growth in thepetroleum industry that presents the country with a major developmentproblem.

2* As the petroleum industry no longer provides Trinidad and Tobagowith an assured source of rising income, alternative sources of incomehave to be developed to support the moderately high standard of livingwhich the country now enjoys. Trinidad and Tobago have natural resourcescapable of iurther exploitation, principally in agriculture and fisheries,in tourism and to some extent in manufacturing, and the outlook is by nomeans discouraging. Accordingly, a basic aim of Government policy,, asset out in the development plan 1964-1968, is to diversify tlle economy.This will not be easy with a population growth of about 3 percent per annum.In addition, the problem of readjustment is made more difficult by theweak position of some of Trinidad and Tobago's traditional export crops.

3. The Government has shown itself to be genuinely concerned witheconomic development problems and to a quite unusual degree has educatedthe people in the facts of economic life. A number of necessary, butunpopular decisions have been taken, and considerable progress has beenmade since Independence in 1962 in modernizing some of the country'seconomic institutions. At the same time, a number of encouraging measureshave been taken raising revenues (excluding the oil sector from both sidesol the account) from 14.5 percent of GDP in 1961 to 18.3 percent in 1965.

4. The most serious problem which Trinidad and Tobago faces infinding a substitute for the oil sector as the source of continuinggrowth is that of restraining the growth of consumption so that a largershare of the resources available can be used for investment, and to dothis wnthout dampening down demand to such an extent that expansion ischecked and private investment discouraged. Given the uncertain prospectsfor oil and petrochemicals there must be some doubt about the wisdom ofhaving allowed consumption to grow as fast as it has in the past few years.The increases in consumption since 1962 have swallowed up the whole ofthe growth in the domestic product so that investment and savings havedeclined both in absolute and relative terms. While the rapid increasein consumption has been providing the main stimulus to the expansion ofproduction outside the petroleum sector, it has also contributed to theworsening external balance of payments, which cannot be allowed to con-tinue unchecked.

5. Public current expenditures have been rising even faster thancurrenit revenues in recent years and public savings have been steadily eroded,Whereas in the five years 1958-1962 the current account surplus wassufficient to finance about 50 percent of public investment (and totalpublic savings about 60 percent), the surplus has now been almost elimin-ated. In 1965, the latest estimates suggest that only about 10 percentof the finance for public investment expenditures have been provided outof budgetary savings and the gross savings of public utilities. Presentprospects for the 1966-1968 period are for public dis-savings unlesscorrective action is taken.

6. The decline in public savings over the past five years ismainly explained by the rise in current expenditures of the Central Govern-ment due in part to the increasing cost of social services, and in partto the steady increase in public debt charges and subsidies paid topublic undertakings. The Government is concerned at the decline in publicsavings and recognizes the need to arrest it. Consideration is beinggiven to possibilities of further increases in taxation, improvements intax administration, reductions in the operating costs of public under-takings and higher charges for their services. However, the 1966 Budgetdoes not contemplate any net increases in taxation, As a result, thecurrent account surplus is likely to be further reduced, if not eliminatedaltogether. If no further action is taken, public investment in 1966 willhave to be almost entirely financed from domestic borrowring and from ex-ternal grants and loans.

7. Government officials informed the mission however, that itwould be a major objective of policy in 1967 and 1968 to mobilize addi-tional savings through the Budget and to slow down the growth of privateconsumption. The Government's goal is to achieve budget surpluses of atleast TT$10 million in 1967 and TT$12 million in 1968. The Governmentis aware that addi-tional revelnue measures might prove necessary toachieve this end. Depending on how oil revenues develop over the nextthree years, this could require a program of fiscal action yieldinganything from TT$15-20 million a year in the way of additional revenues.

8. The public investment program - which on the whole appears tohave been well thought out in relation to Trinidad and Tobago's needs -contemplates total expenditures of TT$214 million over the three years1966-1968. It looks, however, as if investment expenditures may have tobe held back in 1966 for lack of funds. In the remaining two years,against proposed investment of around TT$140 million, the Governmentplans to finance half out of domestic savings and to raise the remainingTT$70 million from external sources. This would in the mission's viewbe a reasonable financing plan that should adequately safeguard thecountry's creditworthiness.

9. In the short-run, the critical factors governing Trinidad andTobago's balance of payments will be the levels of crude oil productionand prices and the investment policies of the major international com-panies operating in Trinidad. Assuming no further fall in oil pricesand crude oil production of around 52 million barrels a year and allowving

for a modest further expansion of gross receipts from tourism, themission reckons that total foreign exch3ange earnings in 1968 might on themost optimistic assumptions be about TT$40 million higher than in 1964and considers it therefore reasonable to budget for a 10 percent increasein imports between 1964 and 1968.

10. In this connection, and in line with the program for mobilizing

additional public savings in 1967 and 1968, Government officials informedthe mission t-hat the rise in private consumption during this period would

be limited to 3.5 percent a year and the rise in current Government

expenditures to 5 percent a year. Larger increases than this would putexcessive pressures on the balance of payments. However, the rise inpersonal disposable income during 1966 resulting mainly from wage andsalary increases couild well turn out to be larger than has been foreseen,and in that case supplementary fiscal measures might be called for thisyear to restrain the demand for imports.

11. In the longer run, the revitalization and diversification ofagriculture, energetic exploitation of tourism and the opening up of alarger regional market in the Caribbean and Latin America are threeessential conditions for the country's continued prosperity once the growthof the petroleum and petrochemical sectors comes to an end. Meanwihile,and depending primarily on the availability of foreign exchange receipts,which in turn will depend in the short-run on factors largely outsideTrinidad's control, the real gross national product miaht increase by2 or 3 percent a year over the next few years.

12e Trinidad and Tobago's total external public debt repayrable inforeign currency amounted at the end of 1965 to US$77,5 million, andservice charges on this debt will at their peak in 1971 be equal to about

7 percent of the country's present earnings on external current account(net of oil company imports and payments of income abroad). This is not

a very high figure,and while it has to be viewed against a large elementof uncertainty which clouds the long-term balance of payments out'ook,

it provides for a margin of creditworthiness for modest external borrow-

ing in 1966, up to US$15-20 million. However, further borrowing abroad-during 1967 and 1968 can only be justified as part of a program designed

at the margin to maintain investmeint at the expense of consumption (and

not consumption at the expense if investment).

13. Provided that a satisfactory program is worked out for mobili-zing domestic savings, so that at least half of the public investment

program in 1967 and 1968 can be financed from domestic sources, themission considers that Trinidad and Tobago would be creditworthy for

additional external borrowing up to US$25-30 million to cover the other

half.

I. INTRODUCTION

.1. Trinidad and Tobago, since August 1962 an independentcountry within the British Commonwealth of Nations, is the mostsoutherly (two-island) nation of the W-,est Indies. Trinidad, themain island, with an area of l,86Lh square miles, lies less than tenmiles off the coast of Venezuela of wihich - geologically - it is anextension. More than half of it is covered by forest. AdjacentTobago is a tiny tropical island of only 116 square miles in size.This young Caribbean nation, whose two islands are now jointlyadministered, became a sovereign independent state in 1962 after thleFederation of the West Indies, of which Trinidad and Tobago formedpart, was dissolved.

2. The population of Trinidad and Tobago - amounting in 1965to roughly 980,000 - comprises a cosmopolitan community. Peopleof African descent account for about L3 percent of the total anddescendants of East Indian immigrants about 36 percent; people ofEuropean, Chinese and mixed descent provide the balance. Most of thepeople live in Trinidad, where nearly 40 percent inhabit urban areas,the Port-of-Spain metropolitan area alone having a population of about250 ,00O.

3. The present Government, headed by Dr. Eric Williams anddrawn from the People's National Movement (PNM), has been in powersince 1956. The PNM derives its support mainly from the populationof African and mixed descent who constitute a large majority in thleurban area of Port-of-Spain. The party increased its majority in theDecember 1961 elections by winning 20 seats in the ilouse of Representa-tives, The Opposition (the Democratic Labor Party), which mainly drawsits strength from the rural East Thndian population, won the remainingten seats, There are no significant differences between the two partiesin matters of foreign affairs and domestic economic and social policy.The present Government is concerned with establishing a distinctnational outlook which would transcend racial differences.

II. NATURE OF THE DEVELOPNENT PROBLEM

4. Trinidad and Tobago, with a population that has beenincreasing by roughly 3 percent per annum, has during the past fifteenyears enjoyed a period of rapid economic growth, paced by the expandingpetroleum and petrochemical industries and a growing manuiacturingsector. Real gross domestic product more than doubled between 1952and 1965, reflecting a compound annual rate of growth of roughly 7.5percent. Ovrer the same period, real national income increased at acompound annual rate of about 6 percent, or nearly 3 percent on a percapita basis, Income per head is now in the region of US$5OO, a levelon a par with Argentina and exceeded by only one country in the vlholeof Latin America and the Caribbean (Venezuela). This provides for a

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relatively high standard of living and with it a diversified demand for con-sumer goods and services. Economic expansion has, however, slowed down since1963, primarily because of a reduced growth rate in the petroleum sector. Itis this slowing down of growth in the petroleum industry that presents thecountry with a major economic pr,blem.

5. During the years 1952 through 1962 the basic impetus to the growthof the economy of Trinidad and Tobago was provided by large foreign invest-ments in petroleum, petrochemicals and sugar and by local and foreign invest-ments in housing and manufacturing. In this period gross domestic capitalformation increased more than threefold, accounting for 30 percent of grossdomestic production in 1962, as compared to 27.5 percent in l952. In 1962,about 35 percent of gross domestic capital formation consisted of investmentsin the petroleum industry. Since 1962 gross domestic capital formation de-clined in both absolute and relative terms. This decline was largely due tothe completion of a phase of major expansion in the petroleum and petrochemi-cal industries, which included construction of a new fertilizer plant (treatedin the national accounts as part of the manufacturing sector).

6. The petroleum industry, including refining, at present contributesbetween 25 and 30 percent of Trinidad and Tobago's gross domestic product,a similar proportion of the Government's revenues, close to 40 percent ofthe country's gross domestic capital formation and over 50 percent of privatefixed investment. Its contributions to national income and foreign exchangeearnings can, however, easily be exaggerated. Thus, while the gross valueof exports of petroleum and petrochemicals in 1964 was of the order of TT$650million, net foreign exchange e1arnings from this source were no more thanabout TT$150 million. The difference is accounted for by imports of crudeoil, equipment and other imports directly consumed by the industry and byprofits retained abroad by the producing companies. The value returned tothe country by the petroleum and petrochemical inidustries consists mainlyof income tax and royalty payments to the Government, payments of wages andsalaries in Trinidad and some local procuremXent of goods and services(eQg. electricity, cement, timber). Direct employment in the two industriesis around 15,000 or 5 percent of the labor force.

7. Production of crude oil in Trinidad, after rising rapidly inthe period up to 1962, leveled off in that year at around 49 millionbarrels (7 million tons) a year. This level has since been maintainedwith only minor fluctuations, and in 1965 production was 48.9 millionbarrels. Meanwhile petroleum prices have declined since the end of1960 by a little over 10 percent. The oil companies have been devotingconsiderable efforts to developing techniques of secondary recovery, andthis, along with the discovery of some minor new fields, has helped toimprove somewhat the prospects for production over the next few years.In the early months of 1966 production rose to an annual rate of52-53 million barrels a year, and it now appears likely to stay ataround this level at least through 1968. Thereafter, unless major new

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discoveries are made, there could well be some decline. Oil priceshave recentlyr been holding fairly firm, and while some experts expecta further decline of 5-10 percent over the next three years, there areothers who believo that, in the Caribbean at any rate, prices couldshow a sliglht recovery. (For the purposes of its own economic projec-tions, the Trinidad Government is assuming crude oil production of52 million barrels a year in each of the three years 1966-1968, withprices averaging the same as in 1964. The mission considers this areasonable assumption.)

8. There are two oil refineries and a large fertilizer plantin Trinidad, all of them owqned and operated by foreign companies(Annex 2 ). The larger of the two refineries, which belongs to Texaco,has a throughput of 325,000-350,000 barrels a day (17-18 million tonsa year) and is one of the biggest in the vworld. Over three-quarters ofits output now comes from the processing (for fixed fees) of crude oilimported mainly from Venezuela and the 1Mfiddle East. Haile severalextensions have recently been made to the two refineries, these will notdirectly contribute much to the growth of income in Trinidad and Tobagofor the time being, since profits made on their operations are exemptfrom tax under the present industrial incentives legislation for periodsranging between 5 and 10 years. The fertilizer plant (FederationChemicals), which came into production in 1960, converts natural gasinto ammonia and solid fertilizers for export to neighboring countries,North America and Europe; when its present expansion plans are com-pleted, its gross output will be in the region of US$30 million a year.However, Federation Chemicals also enjoys substantial tax concessionson new investment and its local wage and salary bill is comparativelysmall. Consequently, the increased income accruing to Trinidad andTobago from the expansion of fertilizer production during the nextfew years will at most amount to a few million dollara. a year.

9. As the petroleum industry no longer provides Trinidad andTobago with an assuired source of rising income, the Government recog-nizes the need to developalternative sources of income to support thiaemoderately high standard of living which the country now enjoya.Accordingly, a basic aim of government policy, as oet out in the develop-ment plan for 1964-1968, is to diversify the economy. To achieve thiswill not be easy so long as the 'population continues to increaseat tie rate of around 3 percent per year. In addition, the problem ofreadjustment is made more difficult by the wqeak position of some ofTrinidad and Tobago's traditional export crops, particularly sugar,which is the next most important industry after oil.

10. Thne oil boom of the 1950's, while tlhe mainspring of theisland's spectacular rate of growth, perpetuated 'Trinidad and Tobago'salready heavy dependence on foreign trade and led successively to awidening of the gap between urban and rural incomes, a consequentdrift of the population to towns, high labor costs (stimulated bydemands made by the powJerful labor unions), rising unemploy,ment(now officially estimated at about 14 percent of the labor force, ascompared to 10 percent during the 1950's) and a slowiing dowm in the

growth of agricultural production. The share of agriculture in thegross domestic product has dropped from about 18 percent in 1952 to10 percent in recent years. The relative, decline in agriculture is inpart attributable to the fall in prices of agricul3tural products suchas sugar and cocoa. The decline has been .mainly at the expense ofexports rather than production for the domestic market, and importsof food account for a smaller proportion of national income today thilanthey did 15 years ago. In fact, a fair amount of import substitution hasalready taken place in agriculture as well as in manufacturing. Thiisprocess will have to be continued - and is feasible - since it is highlyimprobable that other export products can be developed to the pointwhere they can fullv replace oil and natural gas as a basis for thelong-term development of the economy.

11. Nevertheless, Trinidad and Tobago have other natural resourcescapable of exploitation, principally in agriculture and fisheries, intourism and in manufacturing, and the outlook is by no means discour-aging. Though the domestic market is small, a surprisingly wide rangeof manufacturing industries has already been est ablished, primarilysubstituting for imports. Some enterprises have also been startedthat cater mainly for export markets in the United States, the UnitedKingdom, Canada and the neighboring islands. Thae latter include(apart from petrochemicals) textiles and processed agriculturalproducts. If agriculture is developed further, there should be addi-tional scope for profitable investment in food processing for domesticconsumption and export, as well as in light manufacturing industriessuch a.; clothing, leather and footwear. The people are practical,lively and adaptable, educational standards are fairly high, andthough there is still a shortage of some professional and technicalskills, Trinidad and Tobago is probably better placed in this respectthan most other newfly independent countries. Development of agri-culture, tourism and manufacturing into highn-income generating sectorsrequires the further development of skills (rather than literacy) andproductivity. In addition, a competitive wqage structure is a conditiosine que non.

12. WShen the country gained its independence in 1962, power wastransferred smoothly, and political conditions have since remainedremarkably stable. The Government has shown itself to be genuinelyconcerned with problems of economic development and to a quite unusualdegree has gone out of its way to educate the people in the facts ofeconomic life. A number of necessary, but unpopular decisions havebeen taken (e.g. increased taxation of luxury imports and the closingdown of most of the government railway in 1964-65), and considfrableprogress has been made since Independence in modernizing some of tlhecountry's economic institutions. For eXample, the tariff was over-hauled in 1962 as part of the process oL establishing a more progressivesystem of indirect taxation and semi-autonomous public corporationshave been set up for transport and wjater and sewerage., replacing amultiplicity of private, maunicipal and government undertaldngs.

13. Trinidad has a civil service wihich is more or less adequatelyequipped to discharge its traditional functions, but is in some dangerof being called upon to undertalke tasks which are beyond its capacity(e.g. in the field of tax administration). It is important that thistendency should be resisted. So far, the Government has left the processof economic decision-making to be determined largely by market forces,subject only to its general guidance and 3upervision. It is acti-velyengaged in promoting economic growth through its stepped-up publicinvestment program - which is executed (annually, through the Budget)against the background of targets outlined in the Second Five-Year Plan1964-1968 - and through stimulating the efforts of the private sector.Entrepreneurial talent (and private finance) has in the past come mainlyfrom abroad, but there is an active group of local businessmen,traditionally engaged mainly in trade, wlho have increasingly becomeinterested in investing in industry and agriculture. Provided thatdirect government intervention in the operation of the economy continuesto be sensibly restrained, and that financial. stability continues toprevail, there is no apparent reason why the flow of private capitalinto agriculture and manufacturing should not continue.

III. CONSUMPTION, SAVINGS AND IUS-TIMHT

1L. The most serious problem which Trinidad and Tfobago faces infinding a substitute for the oil sector as tuhe source of continuinggrow.,th is that of restraining the growth of consumption so that a largershare of the resources available can be used for investment - and to dothis without dampening down demand to suclh an extent that expansion ischecked and private investment disoouraged. This would have been aneasier nettle to grasp if it had been grasped rather earlier. Giventhe uncertain prospects for oil and petrochemicals, there must be somedoubt about the wisdom of having allowed consumption to grow as fast asit has in the past few years. Between 1962 and 1965, private consumer'sexpenditures have risen on average at the rate of 6 percent in real terms,while tlhe comparable rate of growfth in government consumption expendi-tures has been about 10 percent. Admittedly, education has been a bigitem in the growth of government expenditu-es, and tlhe improvements whichhave taken place in the education and health of the people over the pastdecade are an important contribution to the courntry t s economic develop-ment. But there are obvious dangers in allow<zing social service expendi-tures to run too far ahead of the growth of porocluction.

15. The increases in consumption since 1962 have swallowed upthe whole of the growth in the gross domestic product, so that invest-ment and savings have declined both in absolute and relative terms,The rise in export earnings appears until recently to lhave more or lesskept pace with the rise in expenditure on import,p, notwithstanding thesubstantial deterioration in Trinidad and Tobago's terms of trade, butin 1964 the balance of payments has come under pressure and a 20 percentreserve loss occurred, of' which a small part appe3ars to have beenrecovered in 1965. The level of foreign exchangel reserves (in 1965

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equivalent to about 4 months' imports) is certainly not unduly high foran open economy exposed to considerable short-term fluctuations in thebalance of payments, especially in view of the fact that a substantialpart of these reserves is tied up in special funds (e.g. sinking funds)which are not available for general use. Internal prices have beenfairly stable in recent years, since there has been virtually no restric-tion of imports. But this stability could be quickly upset if importswere to be directly restricted without corresponding restraints oninternal demand.

16. The savings habit is well ingrained in Trinidad and Tobago,and personal savings, which are mainly channeled through the commercialbanks and life insurance companies, have beern quite buoyant in recentyears. Time and savings deposits with the banks rose faster thannational income between 1962 and 1965 and increased from about 16.5 per-cent of national income at the end of 1961 to about 18 percent at the endof 1965. Fublic savings, however, have been steadily eroded, in partbecause of the fall in petroleum prices., Whereas in the five years1958-1962 the current account surplus was sufficient to finance about50 perQent of public investment (and total public savings about 60 per-cent), the surplus has now been almost eliminated. In 1965, the latestestimates suggest that only about 10 percent of the finance for publicinvestment expenditures has been provided out of budgetlary savings andthe gross savings of public utilities, with another 15 percent comingfrom non-inflationary internal borrowing and the remaining 75 percentfrom external sources. Present prospects for the 1966-68 period are forpublic dissavings unless corrective action is taken to eliminate theprospective current account deficit and to increase gross savings of thepublic utilities.

17e The decline in public savings over the past five years ismainly explained by the rise in current expenditures of the CentralGovernment due in part to the increasing cost of social services,especially education and welfare expenditures, and in part to the steadyincrease in public debt charges and subsidies paid to public under-takings, principally for road and rail t7ansport and water and sewerage(Annex 5'). The combined deficits of the transport and water andsewerage authorities alone are equivalent at present to over one percentof the national income. The port authority and the telephone companyhave been barely covering their costs, and only the electricity companyhas been making a (modest) profit. The Government is making a deter-mined effort to reorganize these undertakings and put their finances ona sounder footing, but in some undertakings - as things are going atpresent the situation may well get worse before it gets better, partic-ularly in the transport sector. The Government is also engaged in areorganization of the civil service designed to increase efficiency byeliminating surplus jobs in the lower grades and providing more attrac-tive careers for professional and technical staff who are not beingrecruited in adequate numbers. This too will take time.

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IV, THE PUBLIC INVESTMENT PROGRAM

18. During the past ten years public investment increasednearly threefold, from TT$21 million in 1956 to nearly TT$60 millionin 1965 and rose from 3.5 percent of GDP in 1956 to about 5 percentin 1965. Especially during the period of the First Five-Year Plan(1958-1962) public investment rose rapidly, to about TT$63 millionin 1962. Since then, the annual level has been fairly stable. Thecurrent Five-Year Plan, covering the period 1964 through 1968, has asits principal objectives the diversification of the economy thlroughi astrengthening of the country's economic and social infrastructure andthe opening up of new land to agriculture and livestock farming. Tllisplan is now undergoing revision. Rather over 20 percent of the invest-.rment included in the revised program is allocated for the development ofhighways, the telephone service and other transport and communications,a little under 20 percent for electric powier and upwards of 10 percentfor water and sewerage. Social investment accounts for roughly another20 percent of the program., with primary emphasis on schools and housing.The other large allocaticn is for agriculture, which, together withforests and fisheries, absorbs about 16 percent of the total. Theproject for settling farmers on government land has been slow ingetting under way, and the provision made for agricultural developmenthas been somewhat reduced during the revision of the Five-Year Plan.

19. Most of the major infrastructural projects have already beencommitted in the sense that construction has already begun or orders havebeen placed abroad for equipment. The first phase of the ElectricityCommission's expansion, which has been assisted by a loan from the IBRD,is now nearing completion and the second phase is expected to be initiatedin 1969. Before then, an expert survey needs to be undertaken to see ifsufficient natural gas will be available for the generation of additionalthermal power, or whether use will have to be made of alternative andpossibly more expensive fuels, With limited supplies available, it isextremely important that Trinidad and Tobago should make the mosteconomical use possible of the natuaral gas it has, and further use ofgas for power generation might not be justified if this were to be atthe expense of other, perhaps more profitable, uses (e.g. for producingmore fertilizers)0

20. The expansion and improvement of the telephone service isbeing carried out with financing from the U.S. Export-Import Bank andan American supplier. 'The Eximbank has also helped to finance a sewagedisposal scheme for the three principal towns of Trinidad (Port-of-Spain,San Fernando and Arima) wihich should be completed during 1966. Watersupplies are being developed by stages to meet the requirements ofhousehold and industrial consumers, and the Canadian Government is pro-viding funds for a comprehensive water resources survey as well as fora study of the island's transport. Of the three major projects in thetransport sector, the equipment of British UIest Indian A.irways withthree medium-range jets has now been completed; wrork has started on a.n.w highway to provide a better connection between Chaguanas and SanFernando (part of a road linking Port-of-Spain and San Fernando) and plans,

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are under consideration for the improvement of the port of Port-of-Spain.The Bank's help has been requested in financing these last two projects.Improvement of the road connection between Port-of-Spain and San Fernando,including the widening of the Churchill-Roosevelt Highway and arrangementsfor the better circulation of traffic within Port-of-Spain itself, wouldappear to be projects of high economic priority. The latter problem isbeing studied as part of a general transportation study under a CanadianGovernment loan.

21. The Government is not itself spending much directly onindustrial development, and its main financial contribution during thepresent Five-Year Plan is intended to be made through the establishment ofa private industrial development bank for which a sum of TT$3 tnillion hasbeen earmarked in the 1966 Budget as an initial government advance (Annex h).There would appear to be a need for an institution of this kind in Trinidadwhere there is no other source of long-term risk capital, and where a privateagency under enterprising and imaginative management could perform a valuablerole in helping to promote the development of new industries and to stimulateprivate investment in commercial farming and tourism. The mission foundboth the local business community and the Government very much interestedin the venture, and a steering committee - drawn from th'e private sector -has already been formed to launch the project. There is, however, somedoubt whether the volume of business which a private development bank couldattract would be large enough to make it a viable undertaking. This is amatter that calls for further investigation.

22. Tourism has been rather neglected in Trinidad and Tobago, andthe Government appears hesitant, for partly understandable reasons, to goout of its way to promote it. Beach facilities in Trinidad are admittedlyrather limited, but tourism is one of the outstanding growth industriesin the area, and Trinidad and Tobago cannot afford to neglect any reasonablyprofitable opportunities of sharing in its expansion. The constructionof the Trinidad Hilton hotel in Port-of-Spain, for which the Governmentput up the capital through its own Industrial Development Corporationl, wasan important step in putting Trinidad and Tobago on the -tourist map, anda vigorous follow-up campaign is now called for. The airlires, includingBritish W.fest Indian Airways in which the Trinidad Government has a 90 percentinterest, can also play an important role in helping to promote the touristtrade. It is easy enough at this early stage of to-irist development in thetwo islands to point out how very limi-ted their attractions are comparedwith other islands in the Caribbean. But tourism is a snowball growth,and as new resorts are developed in the two islands, the existing on-sbecome more attractive because there is more for the videor tt do. WithUnited States travel expenditures in the Caribbean growing at the rate ofov-er 10 percent a year, the choicest sites will soon become so overcrowdedthat the boom will spread to new areas, and we see no reason why tourismshould not in time take over from oil as Trinidad and Tobago's most im-portant growth industry. The impending evacuation of the U.S. naval baseat Chaguaramas (now due to be completed by the end of 1967) should givevaluable assistance to its development.

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23. The Crownlands development scheme is the central featureof the GovernmentIs agricultural program (Annex 3 ). This is aproject for the development of about 20,000 acres of government landin a number of separate blocks over the next several years at a totalestimated cost of around TT$25 million, of wghich one-third would beborne directly by the Govermnent and two-thirds financed through long-term loans to the farmers repayable over 25 years iwith varying periodsof grace. It is intended that approximately half the area should bedevoted to livestock (dairying and pigs, supplemented by poultry) andthe other half to citrus fruit, vegetables, miscellaneous food cropsand tobacco. About 2,400 families would be resettled on the land underthe scheme which is now just getting under way after several years ofpreparation. The project is essentially directed towards import sub-stitution., with the relief of unemployment as another objective. Tlhebasic questions affecting its viability are whether the Governmentwill be able to provide the farmers with adequate management, technicalsupervision, credit and marketing facilities, and whether the moreenterprising farmers will have the necessary incentives and assurancesfor the efficient development of the land, The mission was impressedby the thought that has been g:iven to some of the major issues. Never-theless, the difficuilties inherent in thiis type of settlemrent scheme,which is something entirely new for Trinidad, suggest the need for acautious approach. so that if anything goes wTrong, the risks can beminimized0 Meanwhile, every encouragement should be given to privateinvestment in agriculture which the Government rightly regards ascompJamentary to the Crownlands project and not as in competiton withit.

24. The public investment program appears on the whole to havebeen well thought out in relation to Trinidad's needs, and the agernciesresponsible for implementing the various parts of the program havefor the most part proved capable of getting the job done. Trinidad hasa well-developed construction industry in which foreign capital andknow-how have been invested, and the Government has generally beenwilling to engage foreign managers, consultants or advisers whlerenecessary to assist in the execution and operation of specific projects.At the top, the Planning Office, which works directly under the PrimeMinister and in close cooperation with the M4inistry of Finance,exercises general supervision over the program and plays a key rolein the formulation of economic policy and in the coordination ofexternal assistance. Not all the Ministries are equally well equipped,and there are still serious weaknesses in the organization and staf'fingof some of the public undertakings - a problem to which the Governmientis at present giving special attention. But apart from agriculture,where the Goverrnment is embarking on what is essentially a new enter-prise, the main limitations on the implementation of the public invest-ment program appear at this stage to be financia:L rather than physical.This applies particularly to the road program.

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V. BUDGETARY OUTLOOK FOR 1966

25. Over the years, and especially since Independence, theGovernment of Trinidad and Tobago has developed a system of taxationthat is fairly responsive to changes in incomes, and that is increasinglyrelying on taxation of domestic activity rather than on customs duties.The rationalization of the tax structure has on the whole been wellthought out, and further reforms are being prepared, including a re-assessment of land and property values, which should be completed intime for a new system of property taxation to be introduced in 1968.Since Independence, a number of encouraging revenue measures have beentaken, raising revenues from 16.8 percent of GDP in 1961 to 18.8 per-cent in 1965. 'When the oil sector is excluded from both sides of theaccount, revenues accounted for 18.3 percent of gross domestic pro-duction in 1965 as compared to 14.5 percent in 1961. Taxation inTrinidad and Tobago is, therefore, relatively heavy.

26, In the case of personal income taxation, where the exemptionlimit is fixed at TT$1,OOO and the marginal rate of taxation was untilrecently as high as 90 percent (lowered to 75 percent in the 1966 Eudget),there may be some scope for raising the presently rather low rates oftax at the bottom of the scale (for example, the first TT?"l,OOO of tax-able income is taxed at only 5 percent). But not much increased revenuecan be expected from this - nor probably from improved tax adrainistration.The corporation tax, which used to be levied as income tax on companiesat a standard rate of 4205 percent, will, under the 1966 Budget pro-posals,, normally be levied in future at a rate of 4. percent, subject topotentially quite sizeable deductions which may be justiLied by in-creased exports and/or employment. Hitlherto, in accordance with doubletaxation agreements previously in force with the United Kingdom and theUnited States, Trinidad and Tobago has levied no tax on distributionsremitted abroad by non-resident companies, but the Governmlent proposesin the future to levy a withholding tax on dividends and other distri-butions (the final rates have not been fixed, also pending negotiationsof new tax treaties with the U.K. and the U.S.). These changes may beexpected in due course to bring in some additional revenue, but theamount is not likely to be very large, particularly in view of thesubstantial tax concessions granted to new -nd expanding enterprisesunder the industrial incentives legislation as part of the Government'spolicy for attracting new industries.

27. The main scope for additional taxation would appear to liein the field of import and excise duties. Major changes in theexisting import duties may be justified by the need to afford pro-tection to newly developing local industries and agriculture,g andfurther use could be made of indirect taxation as an economic ins bru-ment to restrain certain types of consumption, especially privatemotoring0

28. While Central Government revenues rose rapidly fromTT$148.6 million in 1960 to TT$203e6 million in 1965, current expen-ditures rose even faster in that period, from TT$117.3 million in1960 to TT$203.6 million in 1965. As a result, the current accountsurplus, which totalled TT$31.3 million in 1960, virtually dis-appeared in 1965 when it amounted to only TT$1 million, or about one-half of one percent of current revenues.Y/ Whlile gross savings ofthe public utilities rose in the same period from TT$2.4 million toTT$5.4 million, the net effect of these developments was a rapiddecline in public savings from about 3.5 percent of GDP in 1960 toabout 0.5 percent in 1965.

29. The Government is concerned at the decline in publicsavings and recognizes the need for measures to arrest it. Considera-tion is being given to possibilities of further increases in taxation,improvements in tax administration, reductions in the operating costsof public undertakings and higher charges for their services. How-ever, the 1966 Budget does not contemplate any net increases intaxation. While some excise taxes and import duties (primarily onbeverages) are being raised, the net impact of these changes on totalrevenues will probably be nullified by a reduction in marginal incometax rates and by a 10 percent reduction in the personal income taxbase for wage and salary earners. Wlith current expenditures budgetedto increase by about 6 percent, the current account surplus is likelyto be further reduced, if not eliminated altogather. The only tariffincrease so far announced is a 30 percent rise in telephone chargeseffective from the beginning of January 1966. Bus fares are expectedto go up by 30 percent in mid-1966 when 100 new buses wTill be broughtinto operation.

30. If no further action is taken, public investment in 1966will have to be almost entirely financed from domestic borrowing andfrom external grants and loans. Against projected capital expendituresof TT$71l5 million, public savings are assumed to yield only aboutTT$3.5 million and local borrowing and other receipts about TT$1ll million(from the issue of Treasury Bills, Savings Bonds and Treasury Bonds). Afurther TT$7.5 million is available locally from loans made to the Govern-.ment by the foreign oil companies; however, since for the most part theseare ultimately repayable in foreign exchange, they should be treated asan external resource. Trinidad expects to receive the equivalent ofTT$14 million in 1966 as the penultimate instalment of the payment beingmade by the United States C-overnment for the use of the Chaguaramas basenear Port-of-Spain, and these funds are equivalent to program assistancein that their use is not in general tied to specific projects. Disburse-ments out of foreign loans already negotiated for particular projects areestimated to yield about TT$16 million, leaving a gap of about TT$20million to be covered from fresh external borrowing. The Governmentintends to fill this gap in part by approaching the London and/or NewYork capital market.

1/ Debt service charges, including principal repayments,are treated in Trinidad and Tobago (and throughout this report) asa current account item,

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VI. OVERSEAS TRADE ATND PAYMENTS

31 Short-term movements in the balance of payments are so heavilyinfluenced by the transactions of the major foreign companies that it isdifficult to be sure about the underlying trends. Following the growthof export earnings from petroleum products, sugar and more recently fer-tilizers, the rise in imports over the past 15 years has been more orless in line with the rise in gross domestic production, and the volwueof imports is now roughly double what it was in the early l950's. Untilrecently, Trinidad and Tobago regularly earned a surplus on trade ingoods and services (cf. Table 34), but imports have recently been risingfaster than exports, with the result that the surplus has now disappeared(Annex 6 ). Receipts and payments on current account, excluding invest-ment income, h.ave probably been more or less in balance in 1964 and 1965.Payments of investment income abroad, however, are now running at aroundTT$110 million (net) a year and determine the magnitude of the deficiton current account (about 10 percent of GDP).

32. The deficit is being financed partly by the reinvestment ofprofits and other long-term capital inflows, partly by official grantsand loans and partly also in 1964 by a sizeable reduction in the foreignassets of the commercial banks. During the 1950's, when Trinidad was inregular surplus on trading account, the commercial banks accumulatedsubstantial balances abroad, their net overseas assets rising from TT$43million at the end of 1950 to TT$102 million at the end of 1959. Since1960 the trend has been reversed, and by the end of 1965 these assetshad been reduced to TT$27.6 million. Apart from the holdings of thecommercial banks, net foreign assets of the Government and monetaryauthorities in Trinidad amounted at the end of 1965 to TT$112 million.These assets were mostly held as cover for the currency or in the formof special funds earmarked for specific purposes (sinking funds, pensionfunds, etc.).

33c Under existing institutional arrangements, in the absence ofan effective Central Bank and with the currency backed up to 100 percentby foreign assets, the continuing deficit in the exter-nal balance ofpayments will react directly on the money supply and automatically bringabout a contraction of demand through the restriction of money and credit.While there are strong arguments in favor of implementing the CentralBank Ordinance as soon as practicable and equipping the Bank with power

(and adequately trained staff) to regulate money and credit, it would beillusory to suppose that there will be very much scope in the near futurefor the exercise of genuinely independent monetary and credit policiesdesigned to insulate the domestic economy from movements in the externalbalance of payments. Any change in internal demand is likely to havefairly direct and inmediate repercussions on imports since the importcontent of most investment and consumption expenditures is high (themarginal import component of private consumption appears to be aroundone-third). The need, therefore, to apply restraints to the growth ofconsumption is just as pressing from a balance of payments as from abudgetary point of view.

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34. In the short-,run, the critical factors governing Trinidad andTobagots balance of payments will be the levels of crude oil productionand prices and the investment policies of the major international com-panies operating in Trinidad. Assuming no further fall in oil pricesand crude oil production of around 52 million barrels a year, andassuming also no significant decline in gross investment in the petrol-eum and petrochemical industries, Trinidadts net foreign exchangeearnings from oil and petrochemicals can be expected to rise by aboutTT$30 million between 1964 and 1968. This is probably rather optimistic.Apart from oil and fertilizers, there is a possibility of modest increasesin other traditional exports such as citrus fruit, coffee, rum and bitters,cement and asphalt. Earnings from sugar, however, are expected to beabout 10 percent lower in 1968 than in 1264 on account of less faVorableprices, against which Trinidad is partly (but only partly) protected bythe Commonwealth Sugar Agreement. Allowing for these changes and for amodest further expansion of gross receipts from tourism, total foreignexchange earnings in 1968 (net of oil company imports and profitsretained abroad) might on she most optimistic assumptions be aboutTT$40 million higher than in 1964. On the other hand, if the decline inoil prices were to continue or if there were to be a major reduction ininvestment in the petroleum and petrochemical industries, the inicreasein foreign exchange earnings might be only about TT$20 million or evenless. The value of Trinidad and Tobago's imports in 1964, excludingimports by the oil and fertilizer companies and their contractors, wasprobably of the order of TT$300 million. We would consider it reasonabletherefore to budget for a 10 percent increase in imports betw.veen 1964and 1968. This would not, however, be consistent with a projection ofthe recent trends in private consumption and government current expendi-tures (see paragraph 14 above).

VII. INDUSTRIAL AND CO-ISIERCIAL POLICY

35. The Government of Trinidad and Tobago is rightly concerned tofind ways of diversifying the economy and reducing its dependence onoil, which means also reducing its dependence on foreign trade. Industrialand commercial policy must in these circumstances provide for a judiciousmeasure of protection to be given, where necessary, to new lines of agri-cultural and manufacturing production. In general, the mission considersit desirable that protection should be extended through tariffs ratherthan through quantitative restrictions on imports. TaLriffs are moreflexible and easier to administer, their influence is more obvious andthey tend to be less arbitrary and less susceptible to administrativeabuse. The administrative argument seems to us decisive in Trinidadand Tobago's case. Import controls, unless used very sparingly as atpresent, could quickly lead to an extension of industrial licensingand price controls, and the civil service in Trinidad and Tobago issimply not equipped to manage a complex system of direct controls.Judging by the experience of other countries, business would soon becomeentangled in a web of restrictions, while standards of honesty andefficiency in the public service could only too easily be undermined.

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36. It is particularly important that nothing should be done bythe Government which would endanger business codfidence or lead to aworsening of the climate for private investment. Timely action tomoderate increases in personal income and to dampen down the growthof consumer demand is likely to be less harmful from this point of viewthan import restrictions belatedly imposed to deal with a balance ofpayments crisis. Fortunately the balance of payments situation is notyet critical, and it is a major objective of govTernment policy toprevent it becoming so.

37. During 1965 the announcement of the Government's intention tointroduce a new finance bill had a bearish effect on businessmen'sinvestment plans, primarily because the exact implication of some oft'he proposals were unclear. The new bill envisages a number of importantchanges in corporate taxation, including an increase in the rate of taxapplicable to corporate profits and the introduction of withholdingtaxes on distributions of dividends and interest. Discussions are nowbeing held between the Mlinistry of Finance and the business communitywith the objective of clarifying the legislation.

38. Promoting new industry in a small country like Trinidad andTobago depends so much in the final analysis on political and personalfactors and on skillful public relations that it is difficult to laydown any reliable economic criteria for the guidance of industrialpolicy. Trinidad and Tobago offers liberal tax incentives to theprivate investor, and these have probably been an important factor inencouraging industrial expansion in the islands. How far a country inTrinidad and Tobago's position should go in this direction is a matterof judgment. With neighboring countries offering similar incentives(e.g. Puerto Rico and Jamaica) Trinidad and Tobago can hardly affordto be much less generous than they are, but if all countries in the areacould agree on a standard code of investment incentives, some of thepresent concessions might be reduced. Other attractions which Trinidadand Tobago has to offer to the industrialist, in addition to politicalstability, a-re fairly cheap and plentiful power, adequate water supplies,good banking services, a supply of potentially resourceful labor and areasonable degree of freedom from government controls and interference.The relatively high standard of living in the island and the diversifieddemand for consumer goods and services are in themselves a considerableattraction, but there is the disadvantage that labor costs are ratherhigh and tending to increase. The highly capital-iintensive nature ofthe oil and petrochemicals industries is partly responsible for this.

39. Trinidad and Tobago possesses a small, but well-diversifiedindustrial base which can serve as a point of departure for a policydesigned to promote new exports. At present exports other than pe-troleum,fertilizers, asphalt, rum and bitters and plantation crops amount toonly about TT$25 million a year or about 8 percent of total exports.Cement and made-up clothing are two of the principal items: othersinclude processed foods, oils and fats. Very little is at presentexported to Latin America, and Trinidad and Tobago faces discriminatorybarriers in Europe. It enjoys, however, special preferences in the

United Kingdom (of particular value for sugar and citrus fruit).Canada and the United States are the most promising long-term marketefor exports of processed foods and nmanufactured goods, but marketingis a major problem for a small supplier, and there are certainrestrictions imposed to safeguard local industries which operate toTrinidad and Tobagots disadvantage (e.g. in textiles and ready-madeclothing). A larger markcet in the Caribbean area must therefore continueto be one of the principal objectives of Trinidad and Tobago's commercialpolicy. The case for closer economic cooperation in the area appears t.obe so strong on economic grounds that the political obstacles willsurely in time be overcome.

VIII. INCOMES POLICY

4o. Wage and salary rates in Trinidad and Tobago have risensharply in recent years (Table 23): out-stripping the growth ofproduction and forcing up unit costs. This trend is continuing. A majorrevision of government pay scales has just been completed, and theemoluments of government employees will be over 20 percent higher thisyear than last. The oil workers have just been awarded a 12 percent payincrease, to take effect over two and one-half years beginning last July.Workers in other industries will be encouraged to follow suit; and thesugar workers have already put in for a substantial wage increase. Thecost-inflationary impact of these wages and salary increases will be allthe greater because existing wage agreements are frequerntly linked insome way with the official cost of living index. On the demand side, arise in personal disposable income, stimulated this year by a reductionin income taxation, will add to the pressure on imports and make it allthe more difficult to hold the internal price line. Rising wage costsare meanwhile encouraging firms to economize on labor, thereby aggrava-ting the unemployment problem.

41. These trends are not consistent with healthy economic develop-ment. Their effect is to benefit a minority oL organized wvuorkers at theexpense of the rest of the population, particularly those engaged inagriculture and the urban unemployed. Since foreign companies engagedin capital-intensive forms of production are in a weak bargainingposition to resist wage demands, the Government bears a special respon-sibility for the enforcement of a more rational incomes policy. Animportant step in this direct,ion was taken in March 1965 with theintroduction of an Industrial Stabilization Act which imposed certainrestrictions on the right to strike and established an Industrial Courtto arbitrate on disputes referred to it by the Minister of Labor.The first major case to be tried before the Court was the oil workers'claim for increased wages. The decision in this case, understandably

enough, was fairly favorable to the wJorkers. It remains to be seenwhat general principles will be established by the Court for theadjudication of claims, but the fact that the Court has been set up atall, against vigorous opposition from the trade unions, is indicativeof thie Governmentts desire to encourage wage restraint and goodindustrial relations.

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IX. FISCAL POLICY AND EXTERNAL BORROWING

42. The task for fiscal policy in Trinidad was well defined inthe Draft Second Five-Year Plan in 1963:

"IThe basic objectives of the Government t s fiscal policyare to increase the rate of total domestic saving (in-cluding both public and private saving) and to ensuirethat such saving is channeled into forms of investment,which will facilitate the long-run growth of the economy.If these objectives are to be achieved, there must besome restraint in the growth of consumption."

43. A combination of measures will be required to achieve theseobjectives and to keep the economy in balance during the remainder ofthe current Five-Year Plane The following are the principal areas inwhich further action will have to be considered:

a. Public TUtilities. The Government is giving high priorityto measures to improve the financial position of thepublic utilities and is currently considering a 30 percentincrease in bus fares to take effect in mid-1966 and another30 percent increase in fares in mid-1967. A decision toincrease telephone rates by 30 percent took effect fromthe beginning of 1966. In addition, plans are beingformulated for a si.gnificant increase in electricity ratesto be introduced at the latest by the beginning of 1967.Action on water and sewerage rates is being considered,but may have to wait until a new system of rating isworked out in collaboration with the World Health Organi-zation. On the expenditure side, there appears to beconsiderable scope for improving the operating efficiencyof the road and rail transport undertakings and of theport authority. British West Indian Airways have sofar been operatir-; in the red, but with the recentacquisition of three jet aircraft and improved commer-cial policy the Corporation should manage to earn asurplus in 1967.

b. Indirect Taxation. A strong case can be made out oneconomic grounds for heavier taxation of luxuries andsemi-luxuries which are mainly imported or diverted tohome consumption from export. In particular, dutieson cars and accessories, gasoline and household durablegoods could all be increased. Taxr measures which gavediesel oil a more pronounced advantage over gasolinewould help to bring about a shift of passengers fromprivate cars and taxis to buses; without such a shiftthere is little chance of public bus transport e,-'-r.becoming a viable undertaking. Other forms of consumerexpenditures where increases in taxes might be consideredinclude cigarettes, alcohol and entertainment. Considera-tion should also be given to the introduction of a generalsales tax.

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c. Consumer Credit Consumer credit has been considerably

expanded in recent years for financing purchases ofcars and durable household goods. Two companiesspecia.lizing in hire purchase have entered intobusiness in Trinidad and Tobago. We suggest thatthe Government should take powers to regulateconsumer credit, requiring larger initial depositsand insisting on repayment over a shorter periodas occasion demands.

d. Corporate Taxation. TIle 1966 Finance Bill providesfor the overhaul of corporate taxation and for theintroduction of withholding taxes on corporatedividends. When fully operative, which will notbe before 1968, the new taxes are expected to yieldsome additional revenue, wzith a corresponding gain

to the balance of payments. This gain will in part

represent a transfer of tax receipts to Trinidadand Tobago at the expense of tax authorities in

other countries. It is the Government's general

intention to replace the present rather indiscrimi-nate tax incentives for new investment with a moreselective system of investment allowances, coupledwith special allowances geared to increases inexports and employment.

e. Personal Income Taxation. The reduction in the personal

income tax- base introduced in 1966 wiill cost aboutTT$1-2 million per year. Consideration might begiven to ways in which the loss of revenue couldbe made good, e.g. by raising the present very low0rates of tax applicable to the first slabs of taxableincome. In general, however, personal taxation in

Trinidad and Tobago is high by comparison with mostunderdeveloped countries, and a capital gains taxhas been introduced this year. The problem ofevasion is most serious in relation to the self-

employed, and the Government is concentrating on

improving collections from this section of thepopulation.

f. Social Insurance. The Government is contemplatingthe introduction during 19606 of a scheme of compulsorysocial insurance which is expected by 1968 to bebringing in about TT$6 million net from employerstand workerst contributions.

g. Other Social Services. Education, health and housingaccount for 35 percent of the current expendithuresof the Government. The services provided are notin general extravagant for a country at Trinid.ad

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and Tobagots stage of development, particularlysince defense expenditures are happily so low;but there is still room for economy in certainareas, Charges might well be levied for some ofthe treatment and medicines dispensed under thehealth service. Housing subsidies could beextended on a more selective basis by the appli-cation of a stricter means test. And so on.

h. Government Administration. Efforts are being madeto secure economies in the general costs of govern-ment. These are always possible, but are nevereasy to pin down and will only be achieved ifMinisters are resolutely determined to pursue them.Trinidad and Tobago is no different from any othercountry in having an excess of governnient staff inthe lower grades and a lot of jobs that are unnecessaryeOn the other hand, in contrast to many other develop-ing countries, the Government has been rather econo-mical on expenditure on new public buildings, andoffice accommodation in general is certainly notlavish.

44. As noted already (paragraphs 28-30 above), the Governmentcurrent account surplus has nowJ been practically eliminated, and publicinvestment in 1966 will have to be financed almost entirely fromdomestic borrowing and from external grants and loans. Governmnentofficials informed the mission, however, that it would'be a majorobjective of policy in 1967 and 1968 to mobilize additional savingsthrough the Budget and to slow down the growth of personal consumption.The Uovernment 1 s goal is to achieve budget surpluses on current accountof at least TT$10 million in 1967 and TT$12 million in 1968. Althoughmeasures already taken or to be taken in 1966 are expected to yieldsome revenue increases, officials stated that the Government was awarethat additional measures might prove necessary to achieve this end.Depending on how oil revenues develop over the next three years, thiscould require a program of fiscal action yielding anything fromTT$15-20 million a year in the way of additional revenues. At thesam-e time, measures already taken or under consideration are expectedto increase -the gross savings of public utilities (electricity, tele-phones and port)from an estimated TT$3.5 million in 1966 to overTT$8.5 million in 1967 and TT$12 million in 1968.

45. If all these measures are taken, public savings would beraised from under TT$5 million in 1966 to TT$24 million in 1968, whenthey would be sufficient to cover over one-third of proposed publicinvestment expenditures of around TT$70 million. About TT$13 milliona year is expected from government borrowing locally throug,h the saleto the public of Treasury Bills, Savings Bonds and Treasury Bonds.This estimate is consistent with past performance and with the trendof national income, and the mission would not expect it to have anyinflationary consequences. Scope for local borrowing will be increasedas a result of legislation to be introduced shortly, under which

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insurance companies will be required to invest a certain proportionof their premium income in domestic securities (there is no suchrequirement at present).

46. The public investment program contemplates total expendituresof rT$21i million over the three years L966-68. It looks, however, asif investment expenditures ma:y have to be held back in 1966 for lackof funds. In the remaining two years, against proposed inves-tment ofaround TT$140 million, the Government plans to finance half out ofdomestic savings (a little less than half in 1967, a little more thanhalf in 1968) and to raise the remaining TT$70 million from ex;ternalsources. Towards this TT$70 million of external finance, the finalpayment by the United States for the Chaguaramas Base will contributeTT$9 million (in 1967) and another TT$6 million can be expected fromloans promised by foreign oil and sugar companies for the purchase ofIndependence Development and Better Village Bonds. Disbursementsfrom existing project loans should yield approximately anotherTT$15 million during the two years, leaving TT$40 million (US.i12) 4 million)to come from new project loans and borrowing in private capital marltetsabroad, This would in the mission t s view be a reasonable financingplan that should adequately safeguard the country's creditworthiness.

X. ECONOMIC PROSPECTS AND CREDITORTHINESS

47. Trinidad and Tobago is facing a difficult problem ofreadjustmernt consequent upon the slowing down of' expansion in theoil industry and a marked deterioration in the terms of trade. Thorapid growth of income during the past fifteen years has largelyoriginated in the foreign "enclave"l sector of the economy, and outsidethis sector only very limited changes have yet been brought about inthe structure of production. The small size of the countury and thepaucity of its natural resources inhibit t,he development of a broadlybased manufacturing sector, and the growth of domestic agriculturehas been handicapped by factors stemming from the oil boom (easy accessto imports, rising labor costs, etc.). The revitalization and diversi-fication of agriculture, energetic exploitation of tourism and theopening up of a larger regional market in the Caribbean and LatinAmerica are three essential conditions for the countryt s continuedprosperity once the growth c:f the petroleum and petrochemical sectorscomes to an end.

48. Successful adjustment to the change in external conditionswill depend on Trinidad and Tobago remaining an attractive field forprivate foreign investment, since at this stage the foreign investorhas to provide most of the capital and know-how needed for thedevelopment of manufacturing, tourism and cotrnercial agriculture.The maintenance of stable intern-E and external financial conditionsis imperative not least from this point of view. Pro-vrided that thisstability is maintained, and provided also that the uncertaintiesstemming from the Finance Bill are cleared up, the outlook for privateinvestment looks quite favorable. Already, sizeable amounts of privatecapital are being invested, or reinvested, in manufacturing industryr,banking and real estate development; there appear to be some possibilities

- 20 -

of further expansion in petrochemicals; a project is going ahead forconstruction of a dry dock and ship repair yard near Port-of-Spainr;and schemes for establishing new tourist resorts in Tobago and in

the Chaguaramas base area are reportedly under active consideration.

49. The rapid increase in demand for private consumption hasbeen providing the main stimulus to the expansion of production out-

side the oil and fertilizer industries, but it has also contributedto the worsening external balance of payments, which cannot be allowed

to continue unchecked. Fairly drastic action is therefore required to

restrain the growth of consumption and to increase public savings.If this is not taken, there is serious danger of inflationary pressuresdisrupting the process of orderly expansion by upsetting the balaisceof payments and leading indirectly to unplanned cuts in both ilnvestmentand consumption. In line with the program for mobilizing additional

public savings in 1967 and 1968, government officials informed the

mission that the rise in private consumption during this period would

be limited to 3.5 percent a year and the rise in current Government expendi-

tures to 5 percent a year (both in terms of current prices). Larger increases

than this could put excessive pressure on the balance of payments. However,the rise in personal disposable income during 1966 resulting mainly from wageand salary increases in-the public and private sectors could well turn outto be larger than has been allowed for in the Government's calculations, andin that case sup)plementary fiscal measures might be called for this year torestrain the demand for imports.

50. If consumption is appropriately restrained, the growth ofoutput in the consumer goods industries must slow down. On the other

hand, activity in the building and construction industry and the local

industries supplying it with materials should continue to increase in

response to the demands of both private and public sectors. Depending

primarily on the availability of foreign exchange receipts, which inturn will depend in the short-run on factors largely outside Trinidad'scontrol, the real gross national product might increase by 2 or 3 percent

a year over the next few years.

51. Provided that a satisfactory program can be worked out for

mobilizing additional domestic savings, so that at least half of thepublic investment program in 1967 and 1968 can be financed from domesticsources, we consider that Trinidad and Tobago would be fully justifiedin looking to external borrow-ing to cover the other half and to helpbridge the uncovered gap in the investment budget for 1966. This mightinvolve total borrowing abroad of the order of US$40-50 million overthe next three years, of which up to US$20-25 million might come fromthe IBRD and the rest from other sources, including possible marketissues in London and New York.

52. Trinidad and Tobagots total external public debt repayablein foreign currency amounted at the end of 1965 to US$77-5 million,and service charges on this debt will at their peak in 1971 be equalto about 7 percent of the country's present earnings on external currentaccount (net of oil company imports and payments of incomr;e abroad).

- 21 -

This is not a very high figure ,and while it has to be viewed againsta large element of uncertainty which clouds the long-term balance ofpayments outlook, it provides for a margin of creditw,yorthiness formodest external borrowfing in 1966, up to US$15-20 million. However,further borrowing abroad during 1967 and 1968 can only be justifiedas part of a program designed at the margin to maintain investmentat the expense of consumption (and not consumptiorn at the expense ofilnvestment).

53. Provided that the program for the mobilization of additionaldomestic resources reLerred to in paragraph 51 is carried ouit, themission considers that Trinidad and Tobago would be credit-vorthy forfurther external borrowing in 1967 and 1968, up to US$25-30 million.

TABLE 1

TRINIDAD AND TOBAGO: POPULATION TRENDS 1950-1980

Population Natural Net Net Birth Death Rate of Rate of Rate of Net(thousands) Increase Miigration Population Rate Rate Natural Migration Population

(thousands) (thousands) Increase Increase Increase(thousands) (per 1000) (per 1000) (per 1000) (per 1000) (per 1000)

2/1950 631.5 16.1 1.2 17.2 37.3 12.1 25.2 0.2 25.4

1 648.7 :L6.0 -0.8 15.2 36.7 12.0 24.7 -0.1 24.62 669.8 14.9 1.e6 13.4 34.6 12.1 22.5 -0.2 22.33 678.3 18.3 0.1 18.3 37.8 10.7 27.1 27.14 697.5 22.4 -0.4 22.1 41.9 9.8 32.1 -0.1 32.0

5 720.8 22.8 -0.2 22.5 41.9 10.4 31.5 - 31.56 742.5 20.3 o.6 20.9 36.9 9.6 27.3 0.1 27.47 764.9 21.6 0.9 22.4 37e7 9.5 28.2 0.1 28.38 788.6 22.4 3.7 26.1 37.6 9.2 28.4 0.5 28.99 817.0 22.2 4.8 27.1 37.4 9.1 28.3 0.5 28.8

1960 841.2 26.3 -0.1 26.1 39.3 7.9 31.4 31.41 866.7 26.0 0.4 26.4 38.1 8.0 30.1 30.12 893.2 27.6 2.5 30.2 38.1 7.5 30.6 0.3 30r93 922.02' 26.2 3.1 29.3 35.7 7.2 28.5 *.3 28.84 950.0 ... ... ... ... .......

Projected 1965 969.4 .-... ... ... ..-1970 1028.8 ... ... ... ... ...1975 1320.7 .e... ... . .. -1980 1550.6 . -... ... ... *. -

1/ mid-year 2/ Estimated 2/ Provisional

Source: Central Statistical Office: Annual Statistical Digest 1963Quarterly Economic Report April - June 1965.

J

TABLE 2TRINIDAD AND TOBAGO: TREVDS IN GROSS DOMESTIC PRODUCT, GROSS NATIONAL PRODUCT AND NATIONAL INCOME 1952-1965(millions of TT$)

Preliminary Preliminary Estimated1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965GROSS DOMESTIC PRODUCT 436.o 589.9 763.5 846.2 918.3 1002.8 1061.7 1107.9 1144.2 1184.9AT CURRENT MARKET PRICES

Rate of Growth (%) 9.8 6.9 16.7 9.8 10.8 8.5 9.2 5.9 4.3 3.4 3.6GROSS NATIONAL PRODUCT 342.5 408.1 521.2 674.3 728.6 829.3 888.4 948.1 996.9 1029.1 1073.0AT CURREINT MARKET PRICES

Rate of Growth (%) 12.6 8.9 10.7 15.0 8.1 13.8 7.1 6.7 5.1 3.2 4.3GROSS NATIONAL PRODUCT 321.6 382.6 487.6 630.2 681.5 776.9 840.4 892.1 929.6 960.2 1000.0AT CURRENT FACTOR COSTS

Rate of Growth (%) 13.0 8.3 10.5 14.5 8.1 14.0 8.2 6.2 4.2 3.3 4.1NATIONAL INCOME AT CURRENT PRICES 292.3 345.3 433.8 566.9 609.1 683.8 741.9 779.4 806.2 824.7 ...Rate of Girowth (%) 12.2 9.7 9.1 13.0 7.4 12.3 8.5 5.1 3.4 2.3 ...GROSS DOMESTIC PRODUCT 468.5 499.2 654.8 770.5 823.4 918.3 987.7 1099.2 1123.0 1170.6 1231.5

AT CONSTANT MARKET PRICESRate of Growth (%) 3.4 4.6 14.9 5.6 6.9 11.5 7.6 11.3 2.2 4.2 5.2FER C,APITh GROSS N'ATIONAL PRODUCTIn TT,- 511 585 702 855 892 986 1025 1061 1081 1083 1097In US$ 298 341 409 499" 520 575 598 619 631 632 640PER Cj'FIT,-h L.TII;.;.L INCOl.EIn TT$ 436 495 584 719 746 813 856 873 874 868In US$ 254 289 341 419 435 474 499 509 510 506

Source: Tables 3, 5, 7 and Mission Estimates

TAD3LE::ryiflAl i!D_'ro;'.:o:M:X['C ri, O. ri:~OF 11l, PQr?(..9 p:V:-'PTC PI?01211CTr AT Cir~?:TF'2O OT '2.

(million of TT $)

Prel. Prel. Estimated tverage AlnnualRate of Growlth

1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965 1952-1962 1963-1964 1965Agriculture, Fishing 61.0 76.9 84.1 98.5 99.0 108.4 112.5 108.3 111.8 U11.7 117.5 5.8 1.6 5.1

Forestry and QuarryingPetroleum and Asphalt 98.3 120.1 187.1 233.3 261.4 263.4 286.3 291.5 286.6 295.4 287.0 11.5 0.7 -2.8

Manufacturing 46,i8 54.6 61.2 91.3 103.1 108.2 119.5 132.1 137.4 143.4 157.4 10.9 4.3 9.8

Sug7ar ) (16.7) (20.3) (20.2) (29.3) (31.0) (16.8) (18,2) (15.5) (...) (...) (...) (...) (..*) (..)

Other Food 3

(16.0) (19.5) (22.0) (,..) (.) (.) (.) (.) (.)

Alcoholic Beverages and Tobacco (8.4) (7.9) (7.9) (11.4) (12.1) (11.7) (9.1) (10.7) (...) (...) (..) (2.5) (...) C...)

Shoes,; Other Footwear, Tailoring,Dressmaking and other Clothing (8.9) (10.5) (11.6) (16.2) (18.7) (18.2) (21.0) (22.9) ()..) ( ) (9.9) (s*) (.)

Other Manufacturing (12.8) (15.9) (21.5) (34.4) (41.3) (45.5) (51.7) (61.0) (..) C...) C...) (16.7) (...) C...)

Construction 9.3 10.1 17.0 32.3 36.3 40.6 49.7 55.3 59.6 61.2 61.2 19.5 5.3 0

Public Utilities 12.4 13.5 16.2 19.6 21.3 28.4 36.6 41.5 43.0 45.3 48.3 13.2 4.6 6.6

Transportation 9.9 11.) 16.8 22.1 23.9 32.4 36.o 39.0 42.6 43.1 43.1 14.9 5.3 0

Wholesale and Retail Trade 34.3 37.0 72.6 97.2 109.3 117.2 126.1 134.7 137.6 140.0 147.0 14.8 2.0 5.0

Government 36.2 47.9 51.2 63.4 70.8 82.5 93.1 100.5 112.4 123.3 132.0 10.7 11.3 7.0

Other activities 35.2 39.1 50.1 61.7 74.0 84.8 95.0 102.8 108.7 111.9 118.4 11.5 4.4 5.8

GROSS DOM,ESTIC PRODUCT AT CURRENTFACTOR COSTS

343.4 410.5 L55l_ 719.4 799.1 865.9 924.8 1005.7 1039.7 1075.3 1111.9 11.5 3.5 3.4Plus: Indirect Taxes 31.1 34.4 39.1 50.1 53.7 59.3 57.7 66.2 79.4 83.5 89.0 7.8 13.0 6.6

Minus: Subsidies 10.2 8.9 5.5 6.o 6.6 6.9 9.7 10.2 12.1 14.6 16.0 - 21.6 9.5

GROSS DOMESTIC PRODUCT AT CU?RENTMARKET PRICES 364.3 416o 58939 763.5 846.2 918.3 1002.8 161.7 1107.0 1144.2 1184.9 11.4 3.9 3.6

Source; Central Statistical Office; The National Income of Trinidad and Tobago 1952 to 1962and Economic Planning Division: National Income and Capital Formation, November 1965.

TAI3Lz LTRINIDAD AND TOBAGO: PERCENITAGE SECTORIAL ORIGIN OF THE GROSS DOIESTIC PRODUCT AT CURRENT FACTOR COSTS 1952-1965

1952 1954 1956 1958 1959 1960 1961 1962 Preliminary Preliminary Estimated1963 1964 1.965

GROSS DOESTIC PRODUCTAT CURRENT FACTOR COSTS 343.4 J 410.5 556.3 719.4 99.1 865.9 954,8 1005.7 1039.7 1075.3 1111.9(million of TT$)

(P E R C E N T A G E O F T O T A L)

Agriculture, FishingForestry and Quarrying 17.8 18.7 15.1 13.7 12.4 12.5 n1.8 19.8 10.8 10.4 10.6Petroleum and Asphalt 28.6 29.3 33.6 32.4 32.7 30.4 30.0 29.0 27.6 27.5 25.8Manufacturing 13.6 13.3 11.0 12.7 12.9 12.5 12.5 13.1 13.2 13.3 i4.2Construction 2.7 2.5 3.1 4.5 4.5 4.7 5.2 5.5 5.7 5.7 5.5Public Utilities 3.6 3.3 2.9 2.7 2.7 3.3 3,8 4.1 4.1 4.2 4.3Transportation 2.9 2.8 3.0 3.1 3.0 3.7 3.8 3.9 4.1 4.0 3.9Wholesale and Retail Trade 10.0 9.0 13.1 13.5 13.7 13.5 13.2 13.4 13.2 13.0 13.2Government 10.5 11.7 9.2 8.8 8.9 9.5 9.8 10.0 10.8 11.5 -1.8Other Activities l.3 9.5 9.0 8.6 9.3 9.8 9.9 10.2 10.5 10.4 L0

TOTAL 100.0 100.0 100.0 100.0 100.0 100., 100.0 10.0 100.0 100.) 200.0

Source: Table -3

T,- ;E 5

TRINIDAD AND TOBAGO: SECTORIAL ORIGIN! C'F THE GROSS DOMESTIC PRODUCT AT CONSTANTFACTORq COSTS MMiS CONSTANrT MIARKET PRICES 1952 - 1965

(millions of TT$, 1960 prices)

Prel. Prel. Estimated Average Annual1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965 Rate of GrowthAgriculture, Fishing 71.5 82.6 94.4 103.0 100.1 108.4 112.9

5.1Forestry and Quarrying

NPetroleum and Asphalt 128.1 135.9 177.1 227.7 252.6 263.4 297.6

9.8 0M-ranufacturing 55.3 63.8 72.0 93.0 100.2 108.2 117.5

8.8 TS,;tar (10.6) (13.3) (12.3) (14.4p) (13.9) (16.8) (18.5)

(6.4)Other Food (10.5) (11.3) (12.2) (14.7) (14.0) (16.0) (17.9)

(6.1)Alcoholic Beverages (10,0) (9.5) (9.3) (11.4) (12.1) (11.7) (11.1)

(0.1) Aanl Tnbacco

N O T A V A I L A B L E vOther Yianufacturing (24.2) (29.7) (38.2) (52.5) (60.2) (63.7) (70.0)

(12.5) AConstruction 11.8 12.6 19.7 34.6 38.1 40.6 45.2

16.4) IPublic Utilities 17.0 18.9 21.8 25.1 26.9 28.4 31.2

7.0 LTransportation 18.1 21.3 24.9 26.9 28.6 32.4 33.8

7.3 AUholesale and Retail Trade 60.7 63.1 80.2 108.9 113.7 117.2 118.2

7.8 BGovernme.nt 51.5 57.3 58.4 63.6 68.2 76.2 81.3

5.2 LOther Activities 33.7 14.5 68.6 39.3 49.1 81.8 99.5

EGROSS DG IESTIC PRODUCTAT CONSTANT FACTOR COSTS 447.7 4 70.0 617.1_2221, 77.4 856.6 937.2 1O43---- --a 11n6-6Plus: Indirect Taxes 34.7 39.7 44*4 54.9 53.1 59.3 59.1 )Iiinus: Subsidies 13.9 10.5 6.5 6.5 7.1 6.9 8.6 ) 559 59.0 64.0 n.a.GROSS DOMESTIC PROWCT

AT CCNSTANT MARKET PRICES 468.5 499.2 654.8 770.5 823.4 918.3 987.7 1099.2 1123.0 1173.6 1231.5 8.6 5.2Source: F.B. Rampersad, "Growth and Structural Change in the Economy of Trinidad and Tobago",in Research Papers of Central Statistical Office, No.1, December 1963, and Economic Planning Division, unpublished data.

TRINIDAD AND TOBAGO: GROSS DOMESTIC PRODUCT AT CURRENT MARKET PRICES AND CURRENT FACTOR COSTS 1952-1965(million of TT$)

Prel. Prel. Estimated Average AnnualRate of Growth1952 19,54 1956 1958 1959 1960 1961 1962 1963 1964 1965 1952-1962 1963-1964 1965Private Consumption 230.6 268.7 354e3 443.7 4)S.4 555.1 588.2 622.2 652.0 693.9 740.9 10.9 5.8 6.8

Public Consumption 44.7 56.4 67.7 77.7 81.6 87.8 109.5 122.7 135.2 155.0 162.0 10.6 13.2 4.5I. Government Recurrent Expenditures (54.0) (66.6) (74.9) (94.9) (104.3) (117.3) (140.7) (149.6) (166.5) (191.7) (...) (.) () (..)ii. Other and Adjustments for National (.9.3) (-10.2) (-7.2) (,,17.2)' (-22.7) (-29.5) (-31.2) (-26.9) (-31.3) (-36.7) (..) (. ) .) (..)Accounts PurposesTOTAL CONSIMPTION 275.2 - 325.1 422.0 521.4 578.0 642.9 6977 744.9 787.2- 848.9 902.9 10.5 7.0 6.4Gross Private Fixed Capita:L Formation 63.9 69.8 102.0 162.4 200.8 221.2 211.2 >231.1 .226.'7 214.7 200.9 13.8 -3.5 -6.4i. Petroleum Industry (30.1) (35.2) (48.9). (71.7) (102.6) (101.7) (85.8) (107.3) (108.0) (107.9) (...) (13.5) (0.3) C.)ii. Sugar rin Rum Industries (1.6) (1.6) (5.1) (7.3) (6.8) (4.1) (4.6) (4.5) (4.0) (3.7) C.) (10.8) (-8.9) C.).ii Housing (9.2) (12.4) (16.1) (16.6) (19.4) (22.7) (26.0) (29.5) (36.4) (36.1) G..) (12.3) (11.2) .. )iv. Other Activities (23.0) (20.6) (31.9) (66.8) (72.0) (92.7) (94.8) (89.8) (78.3) (67.0) (...) (14.7) (-12.7) (..)GroJS Public Fixed Capital Formation 10.9 14.6 18.8 33.2 41.8 47.1 47.6 64.3 64.5 71.6 86.0 (19.5) 5.7 20.1i. Goverrnent Capital Expenditures (9.5) (16.2) (21.0) (32,5) (38.0) (38.6) (68.2) (62.9) (62.8) (63.6) (.) (.) (.) C.)ii. Other and Adjustments for National

Accounts Purposes (1.4) (-1.6) (-2.4) (0.7) (3.8) (8.5) (-20.6) (1.4) (1'7) (8.0) (...) (..) C..) (..)Change in Inventories 19.7 7.3 4.7 10.6 6.7 17.6 .2.5 2.8 -547 6.3 2.0 C..) f..) (..)GROSS DOMESTIC INVESTENT 24.5 91.7 125.5 206.2 249.3 285.9 256.3 298.2 285.5 292.6 288.9 12.1 -0.9 -1.3Exports of Goods and Services 186.4 227.4 294.1 365.9 375.4 393.2 431.2 427.2 454.1 442.2) 6 9Imports of Goods and Services 191.9 208.2 251.7 330.0 356.5 403.7 382.4 408.6 419.8 439.5) - () () ()GROSS DOMESTIC PRODUCTAT CURRENT AMA T PRICES 3I64.3 436.0 589.9 763.5 846.2 918.3 1002,8 1061.7 1107.0 1144.2 1184.9 11.5 3.9 3.6Plus: Subsidies 10.2 8.9 5.5 6.0 6.6 6.9 9.7 -10.2 12.1 14.6 16.0 - 21.6 9.6Minus: Indirect Taxes 31.1 34.4 39.1 50.1 53.7 59.3 57.7 66.2 79.4 83.5 - 89.0 7.8 13.1 6.6-GROSS DOMESTIC PRODUCTAT CIRRENT FACTOR COSTS 34.4 410.5 556.3 7139.4 799.1 865.9 954.8 1005.7 1039.7 1075.3 1111.9 11.5 3.5 3,4

Source: Central Statistical Office: The National Income of Trinidad and TobaCD, various issues;Economic Planning Division: Unpublished data.

TABLE 7TRINIDAD AND TOBAGO: GROSS NATIONAL PRODIJCT AN4D NATIO1NAL INCOME AT CURRENT PRICES 1952-1965

(million of TT$)

Preliminary Estimated1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965Gross Domestic Productat Current Market Prices 364.3 436.0 589.9 763.5 846.2 918.3 1002.8 C61l.7 1107.0 1144.2 1184.Q -Net FactTr IncomePayments Abroad 21.8 27.9 68.7 89.2 117.6 89.0 114.2 113.6 110.1 115.1 1l1.fGross National Productat Current Market Prices 342.5 408.1 521.2 674.3 728.6 829.3 888.4 948,1 996.9 ;029.1 10732.Subsidies 10.2 8.9 5.5 6.o 6.6 6.9 9.7 10.2 12.1 14.6 16..)Indirect Taxes 31.1 34.4 39.1 50.1 53.7 59.3 57.7 66.2 79.4 83.5 89,Gross National Productat Current Factor Costs )21.6 382.6 487.6 630.2 681.5 776.9 840.4 892.1 929.6 960.2 1000.'.Provision for theConsumption of Fixed Capital 29.3 37.3 53.8 63.3 72.4 93.1 98.5 1U2.7 123.4 135.5NATIONAL INCOME 292.3 345.3 433.8 566.9 609.1 683.6 741.9 779,4 806.2 824.7

Source: Central Statistical Office: The National Income of Trinidad and Tobago 1952 to 1962;Economic Planning Division: Unpublished data.

TRINIDAD AND TOBAGO: GROSS DOM'ESTIC FIXED CAPITALL FORMATION BY SECTORS 1952-1965

(million of TT$)

2 1954 1956 1958 1959 1960 1961 1962 Preliminary Preliminary Estimated1952 1963 1964 1965

1. Petroleum Industrv 30.1 35.2 48.9 71.7 102.6 101.7 85.8 107.3 108.0 107.9 NOilwell Drilling (17.5) (20.9) (31.1) (40.5) (45.4) (54.5) (48.3) (57.5) °Construction Work (2.9) (2.2) (1.9) (4.1) (3.8) (4.6) (5.9) (8.2) (TPlant, Machinery and Equipment (9.7) (12.1) (15.9) (27.1) (53.4) (42.6) (31.6) (41.6) (.) (.)

A2. Sugar and Rum 1.6 1.6 5.1 7.3 6.8 4.1 4.6 4.5 4.0 3.7 VA3. Housing 9.2 12.4 16.1 16.6 19.4 22.7 26.0 29.5 36.4 36.1 IL4. Other Sectors 23.0 20.6 31.9 66.8 72.0 92.7 94.8 89.8 78.3 67.0 AAgriculture (..) (..) C..) C.) . (6.S) (5.9) (5.5) (.) ( BManufacturing C..) C..) (..) (.) (13.1) (22.6) (22.0) ( ) LOther ) .) (.) () ,.. (73.6) (66.3) (62.3) (***) (*'°) E

TOTAL PRIVATE FIXEDCAPITAL FORMATION 63.9 69.8 102.0 162.4 200.8 221.2 211.2 231.1 226.7 214.7 200.9Changes in Inventories 19.7 7.3 4.7 10.6 6.7 17.6 -2.5 2.8 -5.7 6.3 2.0TOTAL PRIVATE CAPITALFORMATION 83.6 77.1 106.7 173.0 207,5 238.8 208.7 233.9 221.0 221.0 202 2PUBLIC SECTOR CAPITALFORMATION 10 6 18.8 33.2 41.8 47.1 47.6 64.3 64.5 716 86.o

1, General G.vernment (7.9) (10.2) (13.3) (26.7) (31.4) (30.0) (31.7) (48.9) (...) (. ) (.)C 2. Public Utilities andEnterprises (3,,G) (4.4) (5-5) (6.5) (10.4) (17.1) (15.9) (15.4) .. ,) C...)

TOTAL CAPITAL FORMATION 94.5 91.7 125.5 2C6.2 242.3 285.9 256.3 298.2 285.5 292.6 288.2Source: Central Statistical Office: The iational Incame of Trinidad and Tobago 1952 to 1962. Economic Planning Division: Unpublished Data,.

TABLE 9

TRINIDAD AND TOBAGO: FINANCIYG OF GROSS DOMESTIC CAPITAL FORMATION 1952 - 1965(million of TT$)

Preliminary Preliminary Estimated1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965Gross Damestic FixedCapital Formation 7498 84.4 120.8 195.6 242.6 268.3 258.8 295.4 291.2 286.3 286.9Change in Inventories 19.7 7.3 4.7 10.6 6.7 17.6 -2.5 2.8 -5.7 6,3 2.0GROSS DOMESTIC CAPITALFORPWATION

94.5 91.7 125.5 2X6.2 2?933 285.9 256.3 298.2 285.5 292.6 208.9Financed by:GROSS DOUMESTIC SAVINGS 67.3 83.1 98.9 150.0 149.6 184.7 184.4. 199.3 205.8 179.5 1188,6Private Savings L&2 77.4 88.4 121.1 114.3 147.4 172.6 182.9 183.9 163.3 182.2Personal Savings 23.6 34.5 25.5 32.0 28.7 43.9 67.3 60.9Business Savings 32.7 42.9 62.9 80.1 85.6 103.5 1D5.3 122.0 ... ...Undistributed Profits ofLocally-Owned Corporations (3.4) (5.6) (9.1) (16.8) (13.2) (10.4) (6.8) (9.3) ( .) (.) (.)

Depreciation (29.3) (37.3) (53.8) (63.3) (72.4) (93.1) (98.5) (112.7) (123.4) (135.5) (.)Public Savings 11.0 . 10.5 7 35.3 i2 11.8 16.4 21.9 16.2 6.4FOREIGN SAVINGS 27.2 8.6 26.6 56.2 99.7 101.1 71.7 99.0 79.7 113.1 100.3(' Current Account Balance)External Capital Account Sur.plus 31.4 58.5 43.8 68.0 107.1 47.0 54.3 82.4 110.4 75.0 )983Errors and Omissions 2.2 -18.1 -13.4 2.1 -6.2 5.6 -4.4 1.9 7.9 4.9 ) 9Increase (-) or Decreasein voreign Exchange Reserves -6.4 -31.8 -3.8 -13.9 -1.2 28.5 21.8 14.7 -38.6 33.2 2.0

Source: Central Statistical Office: The National Income of Trinidad and Tobago, various issues,and unpublished data released by the Economic Planning Division.

TABLE 1Q

TRINIDAD AND TOBAGO: GROSS INVESTMCElJT RATIO, GROSS SAVINGS RAiTIO, RESOURCE GAP, IINCREMENTALCAPITAL-OUTPUT RATIOS AND INCRE1MENTAL SAVINGS RATIO 1952 - 1965

Preliminary Preliminary Estimated1952 1954 1,56 1958 1959 1960 1961 1962 1963 1964 1965

1. GROSS DOMESTIC PRODUCT AT CURRENTFACTOR COSTS (Wil3ions of TT$) 343.4 410.5 556.3 719.4 799.1 865.9 954.8 1005.7 1039.7 1075.3 1111.9

2. GROSS DONESTIC CAPITAL FOR14ATION(millions of TT$) 94.5 91.7 125.5 206.2 249.3 285.9 256.3 298.2 285.5 292.6 288.9

3. GROSS DOIESTIC SAVINGS 67.3 83.1 98.9 150.0 149.6 184.7 184.4 199.3 205.8 179.5 188.6(millions of TT$)

4. FOREIGN, SAVINGS (millions of TT$) 27.2 8.6 26.6 56.2 99.7 101.1 71.7 99.0 79.7 113.1 100.3

5. RATE OF GROWTH OF THE GROSSDOTIESTIC PRODUCT (%) 10.0 6.3 16.8 9.1 11.1 8.4 10.3 5.3 3.4 3.4 3.4

6. GROSS INVESTME1T RATIO (%)(= 2 j 1) 27.5 22.3 22.6 28.7 31.2 33.0 26.8 29.7 27.5 27.2 26.0

7. GROSS SAVINGS RATIO C%)( 3 1) 19.6 20.2 17.8 20.9 18.7 21.3 19.3 19.8 19.8 16.7 17.0

8. RESOURCE GAP AS A PERCENTAGE OFTHE GROSS DOMESTIC PRODUCT

(= 4 * 1) 7.9 2.1 4.8 7.8 12.5 11.7 7.5 9.9 7.7 10.5 9.0

>9. RESOURCE GAP AS A PERCENTAGE OF:"'ROSS DOMESTIC CAPITAL FORMATION

(= 4 - 2) 28.9 9.4 21.2 27.3 40.0 35.4 28.0 33.2 27.9 38.7 34.7

10 INCREMENTAL CAPITAL-OUTPUT RATIO(one-year lag assumed) 2.7 3.5 1.4 2.9 2.6 3.7 3.2 5.0 8.8 8.0 8.0

311. INCREMENTAL SAVINGS RATIO 18.1 -12.1 -73.8 24.9

Ssurce: Tables 3-9 and mission Estimates.

TA:BLE 11

TRIII)AD AND TOBAGO:- TRENDS IN OIL EXTRACTIOIN, OIL EXPLORATION AND OIL REFINING 1952- 1965

1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965I. OIL EXTRACTION1. Crude Oil Production 21.3 23.6 28.9 37,4 4C.9 42.4 45.8 48.9 48.7 49.7 48.8

(millions of barrels)2. Number of Producing Wells

at Year End 2407. 2674. 2857. 3141 3210 3148 3249 3297 3230 3171 32293. Number of Wells started

during the year 187 202 263 298 290 297 287 282 226 1934. Average Daily Output

per well (barrels) 24.1 24.2 27.7 32.6 34.9 36.4 38.6 41.0 42.6 42.4 41.5II OIL EXPLORATION1. Fcotage Drilled 736.5 911.2 1110,7 1365.1 1446.6 1408.0 1426,0 1507.3 1242.8 1060.0 1058¢ 0

(thousands of Ceet)2. Average Depth of

Completed Wlells (feet) 4286 4544 4237 4604 5141 4599 5041 5379 5395III.OIL REFINING(millions of barrels)

A.Input into Refineries .2366 60.8 6902 86-5 l(A.8 113.1 121.1 128.2 137,11. Domestic Crude 19.5 20.2 25.0 35.3 37.6 37.3 41.5 44.9 44.9 45.3Crude Oil Production (21.3) (23.6) (28.9) (37.4) (40.9) (42.4) (45.8) (48.9) (48.7) (49.7) (48 8)

Crude Exports (1.8) (3.4) (3.9) (2.1) (3.3) (5.1) (4.3) (4.0) (3.8) (4.4) ..2. Crude Imports 16.8 16.4 19.6 25.5 31.6 49.2 62.5 65.2 69.8 84.53. Other Inputs. Including

Crude Inventory Changes ... ... ... 0.6 2.8 6.1 1.9

B.Output of Refineries 844.6 608 62J1 8 in 121.1 128.21. Expsrts

111.9 108.0 117.8 124.3Bunker sales (15.1) (8.1) (11u0) (15.1) N

Other Exports (96.8) (99.9) (106.8) (109.2) 0

2. Other N O T AVAILABLE 7.1 5.1 3.3 3.9 T

Sales on Local Market (2.7) (2.4) (2.4) (3.2)Own Use by Refineries and

(-9.8) (2.7) (0.9) (0.9) AChange. in Inventories of

VRefined Products

A. ISource: Ministry of Petroleum and Mines and Central Statistical Office

6-

TRINIDAD AIND TOBAGO: ECONOMIC SIGNIFICAaCE Ok' TIdE PETROLEUM INDUSTRY 19522- J,!(millio;ns of TT$)

1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 19651. CONTRIBUTION TO THE GROSS DOMESTICPRODUCTa. Gross Domestic Product

at Current Factor Costs 345.4 410.5 556.3 719.4 799.1 865M9 954.8 1CO5.7 1039.7 1t75-3 1111.9b. of which: Petroleum and Asphalt 98.3 120.1 187.1 233.3 261.4 263.4 286.3 291.5 286.6 295.4 287.0c. Petr.leum and Asphalt as

a Percentage of GDP 28.6 29.3 33.6 32,4 22.7 30.4 30.0 29-. 27.6 25.82. CONTRIBUTION TO CAPITAL FORMATIONa. Tctal Gross Domestic Capital Formation 94,5 91.7 125.5 206r2 249.3 28539 256.3 298.2 285.5 292.6 288,9b. Private Fixed Capital Formation 63.9 69.8 102.0 162.4 200.8 221.2 211.2 231.1 226e7 214.7 200.9c. Capital Formation in the

Petroleum Industry 30.1 35.2 48.9 71.7 102,6 101.7 85.8 107.3 108.o 107.9d. As a Percentage of Total

Gross Domestic Capital Formation 31.9 38.4 39.0 34.8 41,2 35.6 33.5 36.0 37.8 36.9e. As a Percentage of PrivateFixed Capital Formation 47.1 50.4 44.2 51.1 46.o 40.2 46.4 45.0 23. CONTRIBUTION TO EXPORTS

a. Total Exports 158.5 197.0 253,9 309,3 318.4 333.3 362.8 354.7 386.3 379.1b. Exports of Fuels and Lubricants 105.3 128.1 185,9 224.7 233,> 235.0 263.4 256.9 271.6 243.7 ...c. As a Percentage of Total Eports 667 65eO ZLj2 72.7 75 72.6 70-3 65.84. CONTRIBUTION TO CENTRAL GOVERNWENTCURRErT REVENUESa. Tctal G.G. Revenues 66.1 72.6 87.9 129,8 135.4 148.6 145.5 174.8 187.1 204.4 208.3b. Total Revenues Originating 23.2 22.7 30.0 53.5 44.8 48.5 48.7 53.5 54.0 56.4 57.5from the Petroleum Industry

Income Tax (16.3) (14.4) (19.6) (37.5) (27.9) (30.5) (28.8) (33.6) (32.6) (33.6) (31.4)Royal-ties (6.9) (8.3) (10.4) (16.0) (16.9) (18.0) (19.9) (19.9) (21.4) (22.8) (26.1)' . As a Percentage of Total

C.G. Current Revenues 5.1 34.3 41.2 12: 30.6 27.6Source: Central Statistical Office: The National Income of Trinidad and Tobago, various IssuesESconomic Planning Division: Unpublished Data.Reports of the Minister of Finance and the Accountant General, Ministry of Finance.

:'

TRIIIIDhD AND TOBAGO: PRODUCTION OF AGR

Unit ofQuantity 1952 1954 1956 1958 1959 1960 1961 1962 1963 196h 1965

Sugar 1000 long tons 137 173 161 183 181 219 248 203 230 230 247Cocoa million lbs 14z.3 :15.9 21.5 2032 17.4 18.7 15.5 16,2 16. 6 lo.8 12.0Coffee million lbs 2.3 4.8 h.3 5.4 6.5 5.3 634 5.0 9.5 1i9.4Copra million lbs 45.2 39.6 39-1 36.1 34.2 23.2 30O. 27.2 3c.6 3r)^8 28.3Bananas million lbs ... 54h0 52.7 56.0 58.1 60.1 63.6 67.0 65.0 63.0

Oranges million lbs 16.3 21.8 23.1 41.2 19.7 5137 28.0 42:3 (l0O.0 90.0I Grapefruits million lbs 65.9 62.1 62.7 94.1 453 86.8 62.1 698 9

Rico million lbs ... ... .. 21.1 23.2 2314 22.1 23,4 23.0 22.4 22.4Corn million lbs ... ... 35 3.6 3.5 3.3 .- .. *

Sweet Potatoes million lbs .. ... ... 5.3 5.5 505 ,.6 1.0 2.3 3.0 7.0

Yams million lbs ... ... ... 8.0 8.5 9.5 8.b4 ...Tomatoes million lbs 5.. .. e. 5.2 5.0 5e0 4h4 4-8 5.5 5.6 5.9Cabbages million lbs ... a . ... 5.5 5-8 5.3 4.4 ... .. ... ...Cauliflower million lbs .. 6. . .e6o9 17.7 18.0 21.2 . ...Tobacco million lbs ... ... ... ... .. ... ... 109 98 13.Pigeon Peas million lbs ... ... ... ... a 3 4 5 *

Source: Gentra"L Statistical Office: The National Income of Trinidad and Tobago 1952-1962.- Quarterly Economic Report, April-June 1965

Annual Statistical Digest 1963Unpublished Information

TABLE 14

TRINIDAD AND TOBAGO: BASIC DATA ON THE LIVESTOCK INDUSTRY 1960 - JuNE 1963

January June1960 1961 1962 1963 1964 1964 1965

CattleNumber Slaughtered 9161 8544 8380 8153 7946 3780 3726Meat Production (1000 lbs) 2790 2926 2775 2720 2651 1247 1264 -

CalvesNumber Slaughtered 1750 1372 1302 1316 1269 607 63.Meat Production (1000 lbs) 249 184 188 175 174 81 86

PigsNumber Slaughtered 21998 22988 21569 21405 22U15 10647 9902Meat Production (1000 lbs) 2565 2313 2632 2208 2078 988 960

.Sheep and GoatsNumber Slaughtered 4658 5359 4514 3755 4240 2040 2051Meat Production (1000 lbs) 102 111 109 86 124 57 47

PoultrMeat Production (1000 lbs) 8500 9500 .. 9000 14000 ..Eggs (1000)

.. .. .. .. 60000

Source: Central Statistical Office,, Quarterly Economic Report April - June 1965.

TRINIDAD AlD TOBAGO: PRODUCTION OF PRINCIPAL INDUSTRIAL PRODUCTS 1952 - JUNE 1965

Unit of Januaryr-JuneQuantity 1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1964 1965

Sugar 1000 long tons 137 173 161 188 181 219 24& 203 230 230 230 247Rum 1000 proof gallons 1165 1834 1365 1901 2236 2993 2643 1856 1720 1466 796 1254Gin 1000 proof gallons .... .... .... ... .... 6.0 7.1 6.5 104 7n.7Molasses 1000 gallons 6902 7755 7413 10689 10916 14286 17013 13012 .. *0*OCemaent 1000 tons - - 137 147 177 174 97 163 160 173 81 84Beer 1000 liq. gallons 796 596 607 1054 1476 ;"2042 1743 1603 1703 1671 T' 77t 901Stout 1000 liq. gallons 80 108 109 142 136 191 201 247 194 203 1SI 85Edible Oils 1000 gallons 1649 1671 1916 1949 1834 1813 1869 1951 2019 2044 930 980Laundry Soap 1000 lbs. 11095 10724 9254 8617 8047 9585 8658 8159 9373 8449 4074 4462Iard Substitute 1000 lbs. 1511 1521 1519 1647 1576 1723 1693 1864 2395 2525 1209 1278Raw Oil 1000 ganlons 2740 2451 2578 2672 2347 1901 2137 2361 2365 2274 1097 1006Margarine 1000 lbs. 299 1945 2605 3012 3093 3250 3280 3232 3057 3478 1615 1887Butter Substitute 1000 lbs. 395 354 254 287 269 282 261 318 383 449 216 225Toilet Soap 1000 lbs. - 26 26 40 52 280 786 996 1450 1680 689 1000Matches 1000 boxes 296 276 286 376 360 348 348 350 326 309 159 153Cigarettes 1000 lbs. 1394 1503 1734 1799 1861 1854 1856 1886 1785 1720 867 777Other Manufactured

Tobacco 1000 lbs. 44 35 36 25 22 24 26 30 22 27 9 20

Source: Central Statistical Office: The National Income of Trinidad and Tobago 1952 to 1962Annual Statistical Digest 1963Quarterly Econamic Report April-June 1965

Unpublished Information

TA 1TRINIDAD AND TOBAGO: SMi3E INDICATORS OF ACTIVITY IN £HEB CONSTRUCTION INDUSTRY 1956-1964

W1956 1957 1958 1959 1960 1961 1962 1963 1964Production of Cement (1000 tons) 137 131 147 177 174 97 163 160 173Approved Building Plans

(new buildings)

A. NumberTotal 4283 3745 273$ 4077 395 32 22 =Dwelling Houses 4025 3535 3475 3805 3722 3632 3041 3241 3349

Commercial Buildings 154 118 115 162 156 146 137 88 )Industirial Buildings 28 17 34 22 22 22 16 16 ) 109Other Buildings 74 75 111 88 61 50 63 33 68B. Floor Area (1000 square feet)

Total 3 203 2761 3063 58 25 2969 MO2k 34 ODwelling Houses 2778 2379 2412 2852 2905 2755 2505 2915 3022Commercial Buildings 224 123 168 549 530 337 298 262 )Industrial Buildings 71 82 163 78 177 . 157 59 50 ) 282Other Buildings 130 177 320 228 245 130 I1l 86 175

Source: Central Statistical Office: Annual Statistical Digest 1963.Quarterly Economic Report April-June 1965.

T'llA "TE 17

TRINIDAD MD TOBAGO: POIJER GENERATION AND DISTRIBUT ION 1952 - JUNE 1965

January January1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 June June

1964 1965

1 Naximum Capacity Generating 22 73 90 109 117 124 130 151 *... *... ***ePlalnt (100 kilowatts)Public Utilities 22 27 42 61 61 80 80 101 ....Private Plants 1/ 46 48 48 56 44 50 50 .... ...

2. Total Generated (million kilowatts) 71 259 310 384 429 468 1499 5f 621 817 4407Public Utilities 71 100 133 187 221 259 26 330 366 535Private Plants .... 159 177 197 208 209 2114 234 255 282 145 ...

3. Power Distribution by Public 71 95 138 168 208 2146 281 328 350 538 263 293Utilities (million kilowatts--'_Domestic Use 20 22 30 35 45 52 59 69 78 88 44 147Commercial Use 10 12 16 22 26 29 32 37 40 48 24 27Industrial Use 24 41 62 85 92 1 132 157 168 316 156 171Street Lighting 1 '1 2 3 1 4 4 4 6 3 3Tramuways and Trolley Buses 2 1 1 - - - - - - - -Losses in Transmission 114 18 27 23 41 47 54 61 59 80 36 45

1/ Nainly utilized for industrial purposes.7/ Includes carrent purchased from private enterprises.

Source: Central Statistical Office: Annual Statistical Digest 1963Quarterly Economic Report- April-June 1965

TA. ,, 12

TRINIDAD AND TOBAGO: TRANSPORT AND COM4MUNICATIONS 1952-1965

1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965Motor Vehicles Licensed 20149 24367 30206 34300 38289 44097 46230 47180 56331 56373 52721;1/

Private Cars 11027 13504 17353 20309 22937 26776 28771 29520 37608 35768 36644Hire and Rented Cars 3081 3956 4636 4841 5031 6251 6377 6574 7267 7427 5850Goods Vehicles, Tractors and Trailors 5047 5961 7160 7883 8970 9628 9776 9652 9976 12006 9339L ther

994 946 1057 1267 1351 144i2 1306 1434 1480 1172 888Railway OperationsN er of Passengers Carried (1000) 4147 3222 3415 4063 4286 4371 4160 4402 3728 4589Tonnage of Goods Carried (1000) 357 410 382 i.7 356 351 357 324 338 ..... .....Shipping ArrivalsNumber

5109 4895 5448 5880 6545 7083 6240 5835 6076 6065Net Registered Tonnage (1000) 15283 13568 15382 17405 21515 21739 18567 20617 20636 22859 .....Volume of Sea Cargo Handled (1000 Tons)All Ports

13688 14755 17113 17910 20570 24017 27502 29824 .....Port of Spain

975 1166 1874 7326 2073 2286 2178 2544 ..... .....Number of Telephonesotgl

17585 20973 25431 30331 30751 30872 31681 33554 35o06 36614 37395Private

664 243 10283 12536 1M405 12398 i 13M01 13666 4256 7WM/Commercial and Industrial 10921 12730 15148 17795 18346 18474 19085 20353 21394 22364 227201/

-1/ Second Quarter

Source: Central Statistical Office: Annual Statistical Digest 1963Quarterly Economic Report April-June 1965

T VL- 19

TRINIDAD AND TOBAGO EVPLOYMNT AND UNIUPLOYiMElNT 19)46, 1960 and 196)4

(in thousands of persons)

19)46 1960 19641W

Male1. Employecd2/ 148 185 2022. Unemployed,/ 1)4 19 273. Potentially Active Population 162 20)4 229

(= 1+2)4. Persons not in Labor Markpt 1)4 32 315. Population of Working Age4/ 176 236 2606. 2 as a percentage of 3 8.6 9.3 11.87. 2 as a percentageod 8.1

Female1. Employed_./ )47 67 862. Unemployed_/ 7 8 193. Potentially Active Population 5L4 75 105

(= 1+2))4. Persons not in Labor Market 123 167 1635. Population of Working Age4/ 177 2)42 2686. 2 as a percentage of 3 13.0 10.7 18.17. 2 as a percentage& of 5 40 11.9 7.1

Mlale and Female1. Employed2/ 195 252 2882. Unemployed3/ 21 27 463. Potentially Active Population 216 279 334

(= 1+2)4. Persons not in Labor M4arket 137 199 1945. Population of Working Ages/ 353 478 5286. 2 as a percentage of 3 9.7 9.7 13.87. 2 as a percentage of 5 $59 8.7

1/ ' ird Rourd of the Continuous Sample Survey of Population covering theperiod August 2 - December 31, 196)4.

2/ Persons 15 years of age and over, with a job in the week preceding thecensus or in the Survey Week.

3/ Persons 15 years of age and over, out of work but in search of employmentduring the week preceding the census or in the Survey Week.

h/ Persons 15 years of age and over.

3rc'urce: Central Statistical Office: Population Census 1946.Population Census 1960.Continuous Sample Survey of Population,Publication No. 3, 1965.

TA LE, 20

TRINIDAD AND TOBAGO: EMPLOY14ENT IN LARGE ESTABLISHMENWS 1962-1964(Excluding Agriculture)(Thousands of Persons)

Manufacturing Industries Building Transport, Other MiningPERIOD TOTAL Tlotal Food,Drink Wearing Other, and Storage 2/ Government Services and Sugarand Apparel Incl.l/ Construction and Services incl. RefiningTobacco Quarrying ConTnunic- Comnerce Factories Estatesations

1962 February 123.2 16.3 3.8 2.2 10.2 4.3 11.3 39.4 19.5 14.8 5.2 12.4May 121.0 15.9 4.0 2.1 9.8 4.6 11.9 37.9 19.6 14.6 5.2 11.4August 119.2 15.4 3.5 2.2 9.7 4.6 12.4 38.6 19.9 14.7 3o0 10.5November 121,5 15.8 3.6 2.2 10.0 4.6 12.4 41.3 21.0 14.7 3.0 8.61963 February 125.2 18.4 4.5 2.1 n.18 5.5 12.2 40.1 20.1 12.2 5.1 11.6May 127.3 19.2 4.2 2.2 12.8 5-3 12.6 40.7 19.7 3..1 5.0 1.6August 129.7 20.1 3.8 2.5 13.8 5.5 11.3 44.2 20.6 14.4 3-2 10.5November 134.4 19.2 3.6 2.8 12.8 6.3 12.4 48.3 21.3 14.7 3.1 9.1;1964 February 134.8 20.2 5.1 2.8 12.3 5.5 12.5 43.4 22.3 14.7 5.0 11.1May 133-4 17.8 3.8 2.5 11.4 5-3 13.1 44.1 22.2 1.U7 5.0 11.2August 133.6 18.1 4.0 2.7 J1.3 6.0 12.4 46.8 21.8 14.8 3.3 10.6November 142.1 19.3 4-0 2.8 12.5 6.1 12*5 53.5 22.3 14.7 3.3 10.4

Y Includes Power Generation, liater Supply and Distribution7/ Includes Trinidad Government Railways, Port Authority, National Transport Corporation,

.7A and Trinidad and Tobago Telephone Service.

Source: Central Statistical Office: Quarterly Economic Report April - June 1965.

TABLE: 21

TRINIDAD AiND TCBAGO: LABOR PRODUCTIVITY 1951-1964

1951 1960 1964Industryl/ Working2/ Output Industryl/ Working / Output Industryl! Working] OutputOutput Population Per Man Output Population Per Man Output Population Per Man(TT$ million) (thousands) (TT$) (TT$ million) (thousands) (TT$) (TT$ million) (thousands) (TT$)

Aariculture, Forestry, Huntingand Fishing 53.5 61 877 102.8 55 1869 111.7 76 1470l Petroleum Industry 93.5 16 5844 263.4 16 16462 295.4 15 19693bl4anuf!cturing (incl. Quarrying) 45.5 25 1820 113.8 43 2646 143.4 44 3259a. Sugar Refineries ( ) (.. (.) (16.8) ( 4) (4200) (18.0) ( 4) (4500)b. Otlher Mtanufacturing . ) (.) (.) (97.0) (39) (2487) (125.4) (40) (3135),onstruction 8.4 10 840 40.6 30 1353 61.2 33 1854Commerce and Banking 35.9 19 1889 137.2 35 3920 140.0 42 33333entral and Local Government 29.0 24 1208 82.5 39 2115 123.3 52 2371Other Services 46.3 40 1157 125.6 45 2791 200.3 36 5564

312.1 195 1600 865.9 263 3292 1075.3 298 3608

1/ Gross Domestic Product at current factor costs.2/ Employment figures differ from those of Table 23.

,Source: Central Statistical Office: Annual Statistical Digest 1963.Quarterly Economic Report April-June 1965.Population Census 1961.Continuous Sample Survey of Population.

TAB1E: 22TRIXIDj-D AND TOBAGO: INDEX OF R.,iTAIL PRICES 1952-June 16L

(September 1960 = ioi/)

June June1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1964 1965All Items

Invidex * 84.2 89.3 95.2 97.6 99.6 101.1 104.1 108.1 109.0 109.1 110.8Anjlual Percentage Change .. 0.6 1.0 4.4 2.5 2.0 1.5 3.0 3.8 0.0 . 1.6FoodIndex

.. 82.8 89.8 94.9 97.7 99,5 101.5 105.1 108.1 108.4 ., 111.0Annual Percentage Change .. 1.5 0.2 3.7 2.9 1.8 2.0 3.5 2.7 o.6 ..Drink and Tobacco

Index ., 85.8 85.4 99.7 100.4 100.0 100.1 108.8 122.4 122.6 . 121.3Annual Percent.,e Change .. -0.8 -0.2 16.2 0.7 -0.4 0.1 8.7 12.5 0.2

Living AccommodationIndezx 87.3 93.2 97.1 98.2 100.0 101.1 102.6 107.4 109.4 ,. 114.9Annual Percentage Change .. -1.2 3.1 2.4 1.1 1.8 1.1 1.5 4.7 1.9

1/ Linked series.

Source: Central Statistical Office: Annual Statistical eigest 1963.Quarterly Economic Report April-June 1965.

TABLE 23

TRINIDAD ArtD TOBAGO: INDEX OF WAGE RATES MAY 1957-MAY 1965(February 1956=100)

1957 1958 1959 1960 1961 1962 1963 1964 1965

All Industries 103.4 109.7 116.6 123.0 143.9 163.3 177.2 t90.7 202.6Ainnual PerCentage Change 3.4 6.1 6.3 5.5 17.0 13.5 8.5 7.6 6.2

Oil and .'Asphalt 100.4 109.2 109.2 109.2 147.4 147-4 180.9 198.7 198.7Anrnual Percenta,e Change 0.4 8.8 - - 35.0 - 22.7 9.8 -

llanufacture cf Sugar 105.5 112.3 112.3 112.3 126.1 133-4 142.2 165.1 166.2Annual Pere-nntage ClYange 5.5 6-4 - 12.3 5.8 6.6 16.1 0.7

Manufacture of' Food, Drink and Tobacco 107.6 112.6 122.8 140.0 154-0 172.3 189.5 200.1 221.6Annual Percentage -hange 7.6 4.6 9.1 14.0 10.0 11.9 10.0 5.6 10.7

Other Manufacturing Industries 107.5 110.6 123.7 131.3 153 .4 176.2 191.9 206.7 215.1Annual Percentage Change 7.5 2.9 11.8 6.1 16.8 14.9 8.9 7.7 4.1

Building and Construction 108.4 114.0 119.0 131.4 142.5 167.8 170.9 180.8 205.7Arnnual Pei-centage Change 8.4 5.2 4-4 10.4 8.4 17*8 1.8 5.8 13.8Serv-ces 101.4 112.1 119.0 135.1 164.6 169.4 181.2 182.2 182.4An l Percentage Change 1.4 10.6 6.2 13.5 21.8 2.9 7.0 0.6 1.0Transport, Storage and Communications 106.2 108.9 114.9 127.0 136.6 167V3 172.9 202.6 212.9Annual Percentage Change 6.2 2.5 5.5 10.5 7.6 22.5 3.3 17.2 5.1Central and Local Governjnflt 105.5 112.3 112.3 112.3 126.1 133.4 142.2 165.1 166.2AnnualPer-centage Change 5.5 6.4 - - 12.3 5.8 6.6 16.1 0.7Sou6-ce: C*ntr3l gtatistic3l O£fice: Quarterly Economic Report April-June 1965

TABIE: 24

TRINIDAD AND TOBACO: SUMM4ARY ACCOUNTS OF THE BANKING SYSTEM 1954 -

(mminlions of TT $)

1954 1956 1958 1959 1960 1961 1962 1963 1964 1965

A. Niet Foreign Reserves 102.9 112.5 151.0 160.4 137.8 118.1 104.8 136.7 90.2 90.0B. Domestic Credit 22.1 25.6 34.8 38.9 71.3 112.8 108.5 131.5 164.1 2

1. To Government and Public -14.5 -16.7 -13.5 -28.2 -14.8 18.2 22.6 35.4 44.0 34.6Entities (net)a. Claim ( 1.2) ( 1.2) ( 1.2) ( 1.5) ( 10.8) ( 22.5) ( 49-1) ( 53-1) (67 3) ( 7b. Deposits (-15.7) (-17.9) (-14.7) (-29.7) (-25.6) (-4.3) (-26.5) ( 17.1) _-. 3) -? 43

2. To Private Sector 33.2 41-4 45.2 62.6 84.1 89.3 93*2 95.2 1095 139.93. Net Unclassified Assets 3.4 0.9 3.1 4.4 2.0 5.3 - 7.3 0.9 10.6 8.8C. Interbank Float 0.4 0.9 3.3 3.6 3.6 3.2 3.4 6.5 .22..D. Liabilities to Private Sector 125.4 139.0 189.1 202.9 212.7 234.1 216.5 27h.7

1. Money 66.3 66.1 91.5 93.8 104.2 109.5 85.6 123.4 108.5 110.7a. Demand Deposits ( 44.5) (.45.4) ( 65.0) ( 65.2) ( 73-4) ( 73.8) ( 55.9) t 81-5) ( 71 5) 74.8)b. Currency in Circulation 1/ ( 21.8) C 20.7) ( 26.5) ( 28.6) ( 30.8) ( 35-7) (29.7) ( 41-9) ( 37*0) ( 35,9)2* Time Deposits 3.7 5.8 15.3 17-3 9.1 17.1 22.9 33.8 29.3 35.73. Savings Deposits 55.4 67.1 82.3 91.8 99.4 107.5 108.0 17e5 124.9 130.6

Estimated

Source: International Monetary Fund and Central Bank of Trinidad and Tobago.

TABLE 25

TRINIDAD AND TOBAGO: ANAL1YSIS OF LOANS AND OVERDRAFTS 1963-1965

(millions of TT$)

1963 1964 1965

TOTAL ALL SECTORS 1/ 110.6 122.5 145c9

Agriculture 1.9 3.9 6.6lAning and Refining 0.7 0.1 )

(Petroleum and Asphalt) ) 0.7Other Mining and Quarrying 0.5 0.4 )Construction 5.6 4.9 5.2Nanufacturing 14.1 15.0 23.4Distributive Trades 27.3 34.1 38.9Transport, Storage and

Communication 4.4 2.9 7.2Financial Institutions 5.5 3.5 5.3Hotels and Boarding Houses 0.3 0.7 0.4Entertainment, Recreation and

Catering Establishments 0.8 2.3 1.3Business and Professional

Services 3.9 5.8 10.3Individuals 22.3 22.3 28.9Government and Other Public

Bodies 23.2 25.7 16.8

1/ An unexplained difference exists with data presented in table 24.

Source: CentraJ. Statistical Office: Quarter'ly Economiic Report April -Ji:tne 1965 and Central Bank of Trinidad and Tolbago, Uibiub'LishedInformation.

TABIETRINIDAD AND TOBAGO: CENTRAL GOVERNMENT CURRENT REVENUES 1952-1966(millions of TT$)

Revised BudgetEstimate

/ 1952 1954 1956 1958 1959 1960 196Q 1962 1963 1964 1965 1966

I. TAXES 5: .2 1021 100.6 111.2 ll 4 128.2 143.1 161.5 162.9 172-.0

A. Direct Taxes 28.5 28.5 54,8 58j8 6d.0 66.6 n2E,fi §.1 2L2

1. Income Taxe-s 27.3 27.3 35.1 57.4 53.0 56.6 57.5 63.3 69.2 79.4 76.3 78.0Petroleum Companies (16.3) (14.4) (19.6) (37.5) (27.9) (30.5) (28.8) (33.6) (32.6)3 (34.0) (31.4) (495)Other Companies (6.2) (7.6) (11.1) (11.4) (16.7) (13.9) (15.1) (15.0) (17.1) (23.6) (21.4)Individuals (4.8) (5.3) (4.4) (8.5) (8.4) (12.2) (13.6) (14.7) (19.5) (21.8) (23.5) (28.5)

2. Land and Property Taxes 0.7 0.8 0.9 1.0 1.0 1.2 1.1 2.2 1.8 1.7 1.8 2.8

3. Estate and Succession Duties 0.5 0.4 0.5 0.8 0.8 1.0 1.4 1.1 1.7 2.5 2.0 2.5B. Indirect Taxes 23.8 27.0 0 42.9 45.8 52. 61.6 70.4 72.2 82.8 8

1. Import Duties 14.2 17.6 20.7 26.9 29.1 33.4 30.8 40.0 3 43.5 46.1 48.2

2. Excise and Purchase Taxes 6.2 5.9 6.1 9.4 9.0 9.9 10.8 12.4 20.0 20.9 22.5 23.9

3. Motor Vehicle license Fee3 & Duties 1.2 1.3 1.6 3.5 4.3 5.9 5.4 5.5 7.0 7.8 8.9 10.0

4, Betting and Entertairnment Taxes - - - - - - 1.2 2.1 2.1 2.7 2.5 2.9

5. Other Licenses, Duties and Taxes 2.2 2.2 2.6 3.1 3.4 3.2 2.2 1.6 2.5 3.0 2.8 3.7II. NON-TAX REVENUES 13.8 17.1 20.4 Zz. 32A7 35.1 46i5 40 41. 41. Royalties

6.9 8.3 10.4 16.o 16.9 18.0 19.9 19.9 21.4 22.1 26.1 24.9

2. Post Office 1.2 1.3 1.6 2.2 2.5 3.0 2.8 2.9 3.2 3.2 3.4 3.6

3 Reiribursertents 2.8 3.3 3.3 2.6 3.4 3.1 2.4 3.3 1.8 1.2 1.1 1.3

4. Earnings of Government Depts. 2.0 2.4 2.8 2.8 4.1 8.4 4.6 6.1 4.0 3.6 4.4 6.o

5. Interest and Miscellaneous 0.9 1.6 2.0 2.0 2.9 4.5 4.3 4.4 7.0 5.8 4.9 3.1

6. Other - 0.2 0.3 2.2 5.0 0.4 1.1 10.0 6.6 5.5 5.7 9.6

III. TOTAL REVENUES 66.1 72.6 87.9 129.9 135.4 148.6 145.5 174.8 187.1 202.9 208.5 220.5Percent of Gross DomesticProduct at Current Factor Costs:TOTAL REVENUES 19.2 17.7 15.8 18.1 16.9 17.2 16.8 17.4 18.0 19.0 18.8TAXATION

15.2 13.5 12.1 14,2 12.6 12.8 11.6 12.7 1F3.8 15.2 14.7Percent of Gross Domestic Product(Exclusive of Oil and Asphalt)at Current Factor Cost:NON-OIL REVENUES 17.5 17.2 15.7 15,7 16.8 16.6 14.5 17.0 17.7 18.8 18.3NON-OIL TAXATION 14.7 14.2 13.0 13e3 13.5 13.4 12.2 13.2 14.7 16.3 15.9 .

Souvce: Reports of the Minister of Finance and the Accountant General; Ministry of Finance, miscellaneous sources and Mission Estimates.

TABLE 27TRINIDAD A-D TOBAGO: CENTRAL GOVTRN!ITIMCURRNT EXPENDITURES 1952 1966(millions of TT$)

F;AvisedEctimate Budget1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965 19661. General Services 11.0 18.0 16.2 21.9 21.9 28.6 40.5 i 37.0 41.7 42.4 4?.9a. Genera. Admninistration ... 11.6 8.5 13.9 12.3 18.9 29.7 21.4 22.3 24.7 24.9 29.8

b. Defense ... 0.1 0.2 0.1 0.1 02. 0.1 1.3 3.3 4.9 4.6 4.7a, Justice and Police ... 6.3 7.5 7.9 9.5 9.6 10.7 12.0 11.4 12.1 12.9 13.42. Community Services 0.9 6.6 8.2 9.2 10.6 12.2 12.6 15.4 16.4 17.2 18.1 21.4a. Roads and Waterways .. 5.1 7 6.8 7.0 8.7 9.3 9.2 7.7 9.0 8.9 9.0b. Water Suprlies .. 0.9 0.9 1.2 1.7 2.0 1.8 4.6 4.5 5.2 5,5 8.6c. Otrher Community Services o. 0.6 0.9 1.2 1.9 1.5 1.5 1.6 4.2 3.0 3.6 3.83. Sceial Services 1 ?.L 28.9 34.4 39.6 44.6 48.8 52.1 i8.3 651 697 76.4a. Education * 9.> 11.4 13.4 16.1 17.9 20.1 21.8 26.5 29.2 31.6 35.1b. Health .. 8.4 10.4 12.7 14.9 16.4 18.0 18.7 17.3 18A4 19.3 19.9c. Social Security and Special

Welfare Services .. 4.9 5.9 6.8 7.1 8.9 8.9 9.4 12.4 15.9 16.9 19e7d. Other Social Services .. 1.0 1.2 1.5 1.5 1.4 1.8 2.2 2.1 1.6 1.8 1.74. Economic Services 21.1 10.3 12.5 15.3 134 18.2 21.6 19 26.5 27 -5 ¢2a. Agriculture .. 4.0 4.9 6.1 6.0 5.8 7.0 7.6 7.1 8.9 8.6 8.6b. iiineral Resources .. 0.1 0.1 0.2 0.2 0.2 0.2 0.3 0.3 0.2 0O3 0.3c. Transport, Storage and

Coimunications 4.1 4.4 5.4 8.3 6.6 10.1 13.2 10,5 14.9 15.3 10.7d. -0ther Economic Services .. 0.7 0.9 0.8 0.8 0.8 0.9 0.5 2.0 2.6 3.3 4.15. Unallocated Expenditures 24 16.9 16.9 18. 20.6 25.8 244 46.Qa. Federal Contributions .. .. .. 3.7 3.6 5.1 4.2 6.o ..b. Public Debt Charges .1.5 21 2.5 2.4 2.4 3.3 4.1 5.4 6.9 17.1 20.3 194c. Subsidies to Local Authorities .. 5.6 7.0 9.5 9.4 9.4 11.8 13.8 13.9 17.7 17.7 18.4d. Major Building Improvements .. 0.6 0.9 0.8 1.0 0.7 0.5 o.6 ..e. Other Expenditures .. 1.1 0-9 0.5 0.5 .. .. .. ;4.1 9.9 7.9 8.9TOTAL RECURRENT EXPEND S 54.0 66.6 74.9 94.9 104.3 117.3 140.7 149.6 166.5 195.2 203,6 216.2Pergentae Rate of Increase 15.6 11.2 8.4 17.5 9.9 12.5 199 17.2 .36.2/ An unexplained difference of TT$2.3 million exists between the recurrent experditures estimates as se-t forth in tableSource: Reports of the Minister of Finance and the Accountant General; Ministry of Finance, Miscellaneous Sources.

TABLT, 28

TRINIDA-D AND TOBAGO: COMPOSITIC)11 OF PUBLIC INrESTH1M EXPENDITUJRES 1952-1966(millions of~ TT$)

Rovised DudgetEstimates1952 1954 1L956 1958 1959 1960 1961 1962 1963 1964 1965 1966TOTIAL PUBLIC INVEST-

~1-TENT MXE2fDJ2TURE 9.5 16.2 21.0 32.5 38.0 51.6 55.2 62.9 62.8 63.8 59.3 71.51. Geoierct1 Services 02 1 .L 1TT 2~T O..21 .Gerneral fdian-istration .... 1.3 b. 7 -T- b. .... .... ..Justice and Police .. 0.1 0.2 0.2 0.2 0.1 .. O. ....2. Commrnity Services 36.0 9.3 16.3 13 104 1027.6 6.5 14.3 15.5 16.Rovds and Bridges .... -% T1 7TY 539

..7 3.. -7. - 7-5-l4ater Suppliles .... 2.9 4.9 l0.6 7.9 4-.7 4.7 3.8 ... 3.3 3.0 3.4Cter.. 0.4 0.3 04 0.5 0.7 0.6 -.. . . .3. Social Services 2.9 23 1.3 4.0 4.6 9.1 18-.8 31.7 20.4 10.8 11.0 15.51Education .... -. 7 7 -3 -7:11 77.Health .... 1.5 0.5 0.6 1.6 2.6 3.5 16.5 ... 0.9 0.4 0.5Housing .... 0.6 0.5 2.2 0.6 1.7 9.4 9.2 .... 5.6 5.1 5.0Other ... 0.1 - 0.6 0.6 0.8 1.6 3.6 ... 1.7 2.2 1.44. Econonic Services 28 4.3 6.1 7.5 11.3 13.1 10.7 13.5 31.3 35.2 27.3 30.8AgRculture .... UX --- 7= 9 7. .. 7.0Fuel and Power .... 3.6 5.5 4.9 5.4 5.8 3.1 3.6 .... 20.4 10.8 8.0Transport, Storage and

4Communications ... 0.1 -0.7 3.5 2.4 2.3 3.6 ... 5.8 7.~8 12.6Other .*... 0.5 0.7 1.7 4.0 4.0 3.8 .~.2.0 1.7 1.45. Ur.alUocated Expenditures o .6 0.4 2.5 2.9 16.1 7.6 4.1 1.5 1.1 4.164L-ocal- Aut-horities 0-6 0.1 .=I9 .3 ... 291.1 -. T-Acquisition of Assets -- 0.1 0.6 0.1 13.0 2.5 0.8 ...- 2.0 5.0Other

-- 02-- 01.30.4 .... - 0.7 0.46. Capital E~nditures of

-ses1.6 2.8 -2.8 2.4 7.7 5.9 J-/./PUB3LIC DVESTr-7EnT EXPENDITURES

2AS_A_PirSNTAGE OF THE CDP 2.8 3.9 3.8 4.5 4.8 6.0 5.8 6.3 6.0 5.9 5362/`.1/ DistrIbuted among preceding categories of inivestment expenditures.mi 4Jssior' Estimate.

goumoe: Reports of the Minister of Finaioe and the Accountanrt General; Ministry of Finance Economic Planning Division, Unipublished Data.

TABLE 29

TR13TIDAD AID TOBAGO: FISCAL OPERATIONS OF THE PUBLIC SECTOR 1952-1966(illions of TT$)

Revised BudgetEstimates1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965 1966Central Government Recurrent

Revenues 66.1 72.6 87.9 129.9 135.4 148.6 145.5 174.8 187.1 202.9 208.5 220.5Central Governmait RecurrentExpenditures 54.0 66.6 74.9 94.9 104.3 117.3 140.7 149.6 166.5 19808 2/ 203.6 218.5Refund Consolidated Fund .... .... .... .... .... .... . ... ...... 3.o 8Current Account Surplus T-7E 6.0 13.0 34.9 31.1 31.3 4.8 25.2 20.6 4.1 c o( 2.0)Profits of Public Bodies - 1.6 2.8 - 2.8 2.4 4.4 3.9 3.6 10.3 5,.4 2.8Other Receipts 0.9 0.7 -2.9 2.3 -1.9 -1.9 -1.1 1.6 0.7 o.6 - -Lease Payments - - - - - - - 0.1 2.8 26.o 14.0Total Available to FinanceCapital Expenditures 13-0 8.3 12.9 37.2 32.0 31.8 8.1 30.7 25.0 17.8 32.4 16.8Capital Expenditures 9.5 16.2 21.0 32-5 38.0 51.6 55.2 62.9 62.8 63.8 59.? 71n0Deficit (-) or Surpluis 3W5 -79 -8.1 4.7 -6.0 -19.8 -47.1 -32.2 -37.8 46.0 -26.S -54.2Fr-TANCFlMG OF THE DEFICIT:

1. -rin r stance 0.5 0.9 0.6 0.2 1.6 1.4 0.4 - o.6 -2. Foreign Borrowing - - -, .- 12.0 39.2 r1.0 TS.9IBRD

--612.1~arket Issue UK - 20.4 - - - - - - - - 12.7UK Treasury - - - - - - - 2.8 -jXPCHT-IIP0T BANK - - - - - - - - 6.7 7.0 4.7? 4.14Chase Marnhattan Bank - - - - - - - - 17.1 (Other - - - - - - - 8.4 - (21.9 6.o 12.53. Central Governrent Internal

rorrowig -0.3 -0.3 -0.1 - 12.1 12.6 2.0 24.7 4.5 1.8 10.0 12.5Treasury Bills - - - - - - 7. (Savings Bonds and Certificates -0.3 -0.3 -0.1 - -0.1 - 1.2 0.5 0.6 2.5 (12.51.ong-Term - - - - 12.2 12.6 2.0 3.9 - - -

(Continued)

TABLE 29TRINID0 AID TOBAGO: FISCAL OPERATIONS OF THM PUBLIC SECTOR 1952-1966 (Continued)

(Rillions of TT$)

Revised BudgetEstimates1952 1954 1956 1958 1459 1960 1961 1962 1963 1964 1965 19664. NIet Tnternal Short-Term

Borrowing by Public Bodies - - - - - - 3,3 2.0 2.6 ...5. Change in External SecurityFTol2ings and Cash Balances 3.9 -918.9 3 20.8 8.2 5.9 2.1 1.4 -5-8 (6. Cihange in Internal. Security

(3.2HolAings and Cash Baances -0.8 1-7 0.1 -9.3 -21.0 2.8 3h.-8 -11.2 -9.8 (7. Statistical Discrc-pancy and'Con-la.sh Items 0.2 4.3 -1.8 -6.6 5.1 -2.9 4.5 3.3 6.5 - **e

1/ T hese TT$2 million are not assumed to be available for the financing of capital expenditiures./ An unexplained difference of TT$3.6 million exists between the recurrent expenditure-s- estimates of table.Source: Reports of the Minister of Finance and the Accountant General and 1966 Budget Speech.

TABLE 30

TRI ITDAD AMD TOBAGO: FINA;ItCIG OF PUBLIC DThESTMENT EXPENDITURES 1952-1966(-lillions of TT$)

Revised Budget1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 Estimates 1966

1965

Total Capital Expenditures 9.5 16.2 21.0 32.5 38.0 51.6 55.2 62.9 62.8 63.8 59.3 71-5

A. INTERNAL FINANCING 11.9 9.7 12.9 46.5 23.1 47.2 49.3 46.2 22.2 16.8 16.4 14.412 -3

1. Public Savings 12.1 1T - 3J- 33.9 33.7 9.2 29.1 24.2 J7Current Account Surplus 1 2T1 4.0 25.2 32. 1.0 -

Public Bodies - 1.6 2.8 - 2.8 2.4 4.4 3-9 3.6 10.3 5.4 3.52. Central Government Internal

.3orrow ing -0.3 -0.3 -0.1 12.1 12.6 1. 24.7 4.5 1.8 10.0 10,5Treasxu Bills - -- - - - - 9. 1.0 TSavings and Treasury Bonds -0.3 -03 -0.1 -0.1 - - 1.2 0.5 0.6 2.5 6.5Long-Term - - - 12.2 12.6 2.0 3.9 - - - -

3* Short-Term Borrowing by PublicBodies - - - - - 3.3 2.0 2.6

4. Change in Internal Security Hold-ings and Cash Balances -0.8 1.7 0.1 9.3 -21.0 2.8 34.8 -11.2 -9.8 ....

5. Cther Receipts 9 0.7 9 T3 -1.9 -1.9 -1.1 TX 0.7 0.6 - -

B. EXTERNAL FINAI?CING -3.4 2.4 9.9 -20.6 9.8 7.3 2.5 13.4 34.1 43.8 42.9 54.01. Foreign Grant Assistance o;5 ;9 6 0 2 -r 76 -.; = -____ 06 02. F oreign -B i. - -- 204 12.0 39.2 L0 7 nOO

- - 5iI i -9.1

UK Market Issii - 20.4 - - - - - - - - 12.7UK Treasury - - - - - - - 2.8 - - -Export-Import Bank - - - - - - ^ - 6.7 7.0 4.7 4.4Independence Development andBetter Villages Bonds - - - - - - - - 9.0 5-0 7.5Other - 8e4 17.1 12.9 1.0 6.3

(Continued)

TABLE 30

TRINIDAD AND TOBAGO: FINANCING OF PUBLIC INVESTENTI EXPETDITURES 1952-1966 (Continued)(Millions of TT$)

Revised Budget1952 195h 1956 1958 1959 1960 1961 1962 1963 1964 Estimates 19661965

3. Change in External Security Holdingsand Cash Balances -3.9 -18.9 9,3 -20.8 8.2 5.9 2.1 1.t4 -5.8 . ... .... _4. Lease Payments - - - - - - - - 0-1 -:7 T6 i6 75. Statistical Discrepancy 1.0 4.1 -1.8 :E . 5.1 2 -2.9 65 33 1/-6. Chzange in Reserves

3.1

1/ Change in externally and internally held reserves.

Source: Reports of the Minister of Finance and the Auditor General; Iiinistry of Finance, 1966 Budget Speech andEconomic Planning Division, Unpublished Data

TABLE 31TRINIDAD AND TOBAGO: COMPOSITION OF PUBLIC INVESTEENT EXPENDITURES 1 g4 -

(millions of TT$)

Revised Total OriginallyActual Estimate Forecast Estimated Estimated Planned1964 1965 1966 1967 1968 1964-1968 1964 - 1968

1. Agriculture, Forests, and Fisheries 7.0( 8.8 15.2MAgriculture 6.8 6.6 7.8 13.4 13.2 47.8 56.3Forests 0.2 0.3 0.3 0.3 0.3 1.4 2.0Fisheries - 0.1 0.7 1.5 1.5 3.8 2.62. Industry and Tourism 0.7 0.6 5.6 3-0 1.9 11.8 iitIndustry 0.5 0.5 5c0 2.5 1.5 10.0 9.8Tourism 0.2 0.1 0.3 0.3 0.3 1.2Export Promotion - - - 0.2 0.1 0.3Petroleum -- 0.3 - - 0.33. Transport and Communications 10.7 13.2 IZ.8 19.2 16.7 Z7.6 57.7Roads and Bridges 4.9 5.4 5.2 9.1 8.8 33.4 26,oHarbours and Ports o.6 0.3 0.8 3.1 3.0 7.8 0o.0Airports 0.3 o.6 o.6 0.1 0.1 1.7 0,7Telephone Service 4.9 4.3 5.7 4.9 3.0 22.8 23B.W.I.A. - 2.4 2.0 - - 4.4Bus Transport 0.2 3.5 2.0 1.8 7.54. Electricity 20.4 10.8 8.0 8.6 14.5 62.3 6d315. Other Public Works 5.4 4.8 4.2 43 234 21.Drainage and R4clamation 1.3 1.1 0.8 1.0 1.0 5.2 5.1Public Buildings 2.4 1.4 2.1 0.7 0.8 7.4 7,6Special Works 1.7 2.2 1.4 1.5 1.5 8.3 5,OUrban and Rural Re-development - 0.1 0.4 1.0 1.0 2.5 3,6

(Continued next page)

(Continued)

TABLE 31TRINIDAD AND TOBAGO: CO7i'POSITION OFTIBLIC INVESTMIET EXPEI'IDITURS 1964 - 1968(millions of TT$)

Revised Total DriginallyActual Estimate Forecast Estimated Estimated Planned1964 1965 1966 1967 1968 1964-1968 1964 - 1968

6. Social and Economic Services 18.5 19.4 25.7 22.6 15.3 101.5Education and Training 2.6 3.3 8.6 11.0 3.7 29.2 19.8Health 0.9 0.4 0.5 0.3 0.3 2.4 2.2Sewerage 5.8 6.5 7.0 2.0 2.0 23.3 14.1lWater 3.3 3.9 3.4 2.3 2.3 15.2 15.9Housing 5.6 4.6 5.5 6-5 6.5 28.7 39.4Social and Comnunity Development 0.3 0.7 0.7 0.5 0.5 2.7 0.9Development

7. Local Goverment 1.1 1.4 1.0 1.0 1.08. Central Bank

2.0 - - - 2.0

TOTAL 638 1.26 7 1 ,6 .227M. 327.

Source: Econmic Planning Division

TRINIDAD 2 ED TOBAGO FINANCING OF PUBLIC IIiVESTIENT EXPENiDITURES 1964 - L968(NIillions of TTM;)

RevisedActual Estimate Bud et Planned Total Total To1al Percentage Contribution-9 - 1965 96 1966 19-9668 1964-65 l l8 196 6-6S 1967-68

TOTAL IVVESTIENT EX-PENDITURES

568.7 123.1 214.1 142. 100.0A. INTERNAL FIMANCING 16.8 16 4 14.4 32 T3 86.0 71& 2o 201I 402

l.Public Savings 14.4 ,21 20.8 42.89 16 .20OCurrent Account Surplus 4.1 1.0 - 10,0 12.0 5.1 22,0 22.0 4.1 - 10,3 i5.4Public Undertakings 10.3 5.4 3.5 8.7 12.1 15.7 24,3 20.13 12.8 4.9 11.3 14.6Electricity Commission (8.0) (3.6) (1.3) (6.2) (9.2) (11.6) (16.7) (15.4) (9.4) (1.8) (7.8) (10.8)Telephone Service (1.9) (1.5) (1.9) (2.2) (2.6) (3,4) (6,7) (4.8) (2.8) (2.7) (3.1) (30.4)Port Authority (0.L4) (0.3) (0.3) (0.3) (0.3) (0.7) (0.9) (0.65) (0.6) (0.4) (0.4) (0.4)2. Ot.'?r Capital Reveipts 0.6 - 0.4 1.4 1.4 2.6 3.2 2.8 5 0.6 12eN,-.Lonal Lottery - - - 0.7 1.0 - 1.7 1.7 - - 0.8 1.2P.znsing Reimbursements 0.6 - 0.4 0.7 0.4 o.6 1.5 1.1 0.5 0.6 0.7 0.83. Z:ternal Borrowing 1.8 10.0 10.5 L 10 0 11.8 36.5 26.0 9 3Treasury Bins 1.2 7.5 4.0 4.0 4.0 8.7 12.0 8.0 7.1 5. 55,6Savings Bornds 0.5 1.0 1.0 1.0 1.0 1.5 3.0 2.0 1,2 1.4 1.4 1.4Treasury Bonds 0.1 1.5 5.5 8.0 8.0 1.6 21.5 16.0 1.3 7.7 10.0 11.2B. EXTERNAL FINANCING 5042.9 1 40.8 90.2 Q%. 128.1 71.0 22 2 .1. External Lease Payents

and Loans already cc-47.o 42 2.8 231 6.0 89.9 67.1 22.2 73.0 2.9 2Chaguaramas Lease Paymentis2. 26 14.0 9.1 - 28 23.1 9.1 23.4 19.6 10.8 6.4Independence Development

and Better Village Fund 9.0 5.0 7.5 4.0 2.0 14.0 13.5 6.0 11.4 10.5 6.3 4.2EXIBANK and GENTEL 7.0 4.7 4.4 3.0 1.0 11.7 8.4 4.0 9.5 6.2 3.9 2,8UK Export Credits - 1.v 2.1 2.0 1.7 1.0 5.8 3.7 0.8 2.9 2.7 2.6IBRD Power 12.1 6.2 5.6 2.4 - 18.3 8.0 2.4 14.9 7.8 3.7 1.7Canadian GovernentLoans - - 4.2 2.8 1.3 - ~ 8.3 4.1 - 5.9 3.9 2.9

(continue d)

TABIE 2

TRIITIDAD AND TOBAGO FINEUCIN'G CF PUBLIC flV'VESTlI;NT Z.a.PENDITURES 1964 - 1968 (Cont d)(Niillions of TT;.)

RevisedActual estimate Budet Planned Total Total Total Percentage Contribution1964 195 196 1967 1968 1964-65 1966-68 1967- 19 5 1966 1966-65 1967-6

Narket Issue 12.9 - - - 12.9 - - 10.5 - -Change in Reserves 3.2 - - - - 3-2 - - 2.6 -2. Additional FinancingRequirements - 24.2 - 61.0 27e0 28.5

Sourc. Economic Planning Division and Linistry of Finance.

TRINIDAD AND TOBAGQ : -BIAMIE 6F PAYMENTS 1y52-1964(mill-ions of TT$)

1952 1954 1956 1958 1959 1960 1961 1962 1963 19641. CURRENT ACCOUNT

Exports f.o.b.lf 119.6 163.0 211.6 251.6 258.3 276.5 298.9 297*2 339-3 319.8Imports c.i.f.7/ 173.0 184.4 226.1 295.6 316.0 350.8 32l.0 343.6 361.6 378.1Trade Balance -53.4 21.4 -5 44.0 -5743 2-22-Services (net)Transportation 46.1 40.4 53.0 71.0 72.2 68.7 76.2 69.6 60.2 64.7Foreign Travel 0O1 - 0.9 0*7 0.5 04 - 1.7 - 4.1 - 5.1 - 3c3 - 3.4Investment Income - 24.6 - 31.2 - 72.6 - 94.5 -122.5 - 94.2 -120.4 -118.5 -117.9 -124.2a. Direct Investment (- 26.4) (- 34.5) ( 74.5) (- 96.5) (-126.0) (- 98.1) (-126.0) (-123.0) (-121.3) (-125.2)b. Portfolio Dnvestments ( 1-7) ( 2.1) ( 2.2) ( 3.0) ( 3.4) 4 4.1) ( 5.5) ( 5.) 5.2) C 5.2)c. Public Investirents ( 0.1) ( 1.2) ( 0-3) ( - 1.0) ( 0.1) ( - 0.2) ( 0.1)' ( -0.7) ( - 1.8) ( - 4.2)Goverrnent, n.i.e. 2.8 3.3 3-9 5.3 4.9 5.2 6.2 4.8 7.8 9.1Other Services 1.7 1.1 3.2 8.4 4.0 - 3.2 1.8 0.5 - 0.3Balance on Services 26.1 12.7 - iI8 - 9.3 41.0 - 25.2 -40.3 - 48.7 - 535 - 54.1Balance on Goods and Services 27.3 - 8.7 - 26.3 - 53.3 - 98.7 - 99.5 - 65.4 - 95.1 - 75.8 -112.4Uailateral T ansfers 0.1 0.1 - 0.3 - 2.9 - 1.0 - 1.6 - 6.3 - 3.9 - 3.9 - 0.7CURRHE ACCOT BALANCE - 27.2 - 8.6 - 26.5 - 56.2 - 997 -101.1 - 71.7 - 99.0 - 79.7 -113.1

2. CAPITAL ACCOUNT 31.4 58.5 43.8 68.0 107.1 67.0 54.3 82*4 110o4 75.031-9 37-3 L-1 66.1 106.8 69.2 54.T36^ 71.0 623Official - 0.5 21*2 - 103 1.9 0.3 - 2.2 - 0.1 15.1 39.4 12.73. ERRORS AND OMISSIOS 2.2 - 18.1 - 13.4 -21 - 6.2 5.6 - 4.4 1.9 7.9 4.94. NET F(oN RESRVE mOVEmENTS 3/ - 6.4 - 31.8 - 3.8 - 13.9 - 1.2 28.5 21.8 14.7 - 386 33.2(Increase -)

Cf. Tablej/ Cf. Table 3 73/ Cf. Table -3Source: Ceiftral 9Taatistical t$fice: Thle I;,tiunal Income of Trinidad and Tobago, various issues. Unpublished Data.

TABLE 34TRINIDAD AND TOBAGO: EXTERNAL CURRENT ACCOUhN 1952-1965

(Millions of TT$)

Provisional Estimated1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965EXPORTS OF GOODS AND SERVICFS 25747 292.7 370.4 482.0 506.5 551.7 697.7 699.2 7467 804.7 887.5Goods

190.9 22. 287.9 3677 389.1 359 569.2 3' 9 - * -Total Value Trade Returns 2 26i 330.4 4723.4 177 491.8 59 2.7 Z1.3 700.7 ....Adjustment orProcessing :ees. - - - - - - 354 34.0 37.4 31.9Other Adjustments -38.9 -34.0 -42.5 -57.7 -60.1 -56.8 -63.9 -57.5 -47.0 -50.3 0

Services 66.8 64.4 82.5 114.3 117.1 116.7 132.3 130.0 114.8 122.4 ....

Transportation 4T . b7.7 8 0.6 92.9 87 79.6 5. T -.

Foreign Travel 5.8 6.2 10.0 13.7 14.8 15.3 14.7 16.1 18.1 19.8 .0..Other

9.7 10.5 12.2 20.0 20.4 17.7 20.1 21.0 17.1 17.5 * #IMPORTS C? GOODS AND SERVICES 263.2 273.5 327.9 446.1 487.6 562.2 648.9 680.6 712-4 802.0 894.4Goods 244 2 411 447. 093 59nT 615.6 654.2 ?Wfo6

Toal Value Trade Returns 244.0 249 301.9 li. 8 44T5. W 7 5047177 '1. 57331

Adjustments 0.3 0.3 0.7 -0.7 -1.5 4.8 6.0 9.1 7.0 7.5

Services 18.9 23.8 25.3 34.4 40.5 52.9 58.4 65.0 58.2 61.4

Transportation T7 7.3 9 9.7 1 2 19. ....

Foreign Travel 5.7 7.1 9.3 13.2 14.4 17.0 18.8 21.2 21.4 23.2 ....Other

8.0 9.4 9.0 11.6 16.4 20.9 18.3 20.5 17.4 17.8 ....BALANCE GOOID AND SERVICES -5.5 19.2 42.5 35.9 18.9 -10.5 48.8 18.6 34.3 2.7 -6.9NET FACTOR IiCOME PAID ABROAD -21.8 -27.9 -68.7 -89.2 -117.6 -89.0 -114.2 -11347 -110.1 -115.1 -111.9Investment Income

if" -31.2 -726 b 9. -T2 .5 -120.4 -116.5 -117 .9 124.2 -12.5Government

2.G 3.3 3.9 5.3 4.9 5.2 6.2 4.8 7.8 9.1 8.6INTERNATIONAL TRANSFERS 0.1 0.1 - .3 -1.0 -1.6 -6 3 - -3.9 -0.7 18.5

Private 0.2 0.2 0.6 0.9 1.0 1.8 -2.1 -1.6 1.8 -1.1 -1.1

Governnent -O..1 -0.1 -0.9 -3.8 -2.0 -3.4 -4.2 -2.3 4.1 o.4. 19.6[CIJRRENJT ACCOULT BAIANCE -27.2 -8.6 -26.5 -56.2 -99.7 -101.1 -71.7 -99.0 -79.7 -113. 100.3urce:Ccntral Stntistical Office: The National Income of Trinidad and Tobago 1952-1962International Monetary Fund..

TABLE 35

TRINIDAD AND TOBAGO: FIrANCING OF THE CURRENT ACCOUNT DEFICIT 1952-1965 AND PROJECTIONS FOR 1968(Millions of TT$)

Provisional Estimated1952 1954 1956 1958 1959 1960 1961 1962 1963 1964 1965

CURRENT ACCOUNT ]DEFICIT 27.2 8.6 26.5 56.2 99.7 101.1 71.7 99.0 79e7 113.1 100-3A. CAPITAL ACCOUNT 31-4 58.5 43.8 68.0 107.1 67.0 54.3 82.4 110.4 75.0 98.31. Private Sector 31.9 37.3 45.1 66.1 106.8 69.2 54.4 67.3 71.0 62.3 88.9a* Tireh Investment 34.9 41.5 49.7 7116 187-9 76.0 60.5 73.4 i 67.7b. Insurance Companies -3.0 -3.2 -4.6 -5.5 -2.1 -6.8 -6.1 -6.1 -5.4 -5.4 -5.4

2. Public Sector -0.5 21.2 -1.3 1.9 0.3 -2.2 -O.l 15.1 39.4 12.7 9.4a. Loans Received - 20.0 - 1-- 42.6 36.9 ll.jb. Reimbursements - - - - - - - -1.8 -3.4 -22.2 -5-3c. Net Contributions toInternationalOrganizations - - - - - - - - 0 .4 -d. Net Appreciation ofForeign Securities -0.5 1.2 -1.3 1.9 0.3 -2.2 -0.1 3.1 0.6 -2.0

B. ERRORRS AND OMISSIONS 2.2 -18.1 -13.4 2.1 -6.2 5.6 -4.4 1.9 7.9 4.9 7.8C. NEJr FOREIGNT RESERVE

TIM asnea) -6.4 -31*8 -3.8 -13.9 -1. 2 28.5 21.8 14.7 -38.6 2a. Government -3.9 -T79 4". -. 2 5e9 271 1U :T -.- 9b. Monetary Authorities 1.3 -4.6 -2.7 -5*7 -4.3 2.4 -4.1 -2.8 -6.5 -0.4 2.6c. Cowrrcial Banks -3.4 -7.5 -lO.9 13.3 -5.3 17.0 22.9 16.8 -25.3 34.9d Post Office SavingsBank -0.4 -0.8 0-5 -0.7 0.2 3.2 0.9 -0.7 -0.1 0.5 0:8

Source: International Monetary Fund Economic P1aning Division. &nd Yj'sion -st k ates.

TABLE 36"TRINIDAD AND TOBAGO: NET FOREIGN RESERVE POSITION 1952 1965

(millions of TT$)

1952 1954 1956 1958 1959 196C 1961 1962 1963 1964 1965

1. Government Assets 36.1 53.9 36.7 50.0 41.8 35:9 33.8 32.4 39.1 40.9a. Consolidated Fund 5.1 5.3 6.1 7.5 9.0 8.7 5.0 5.3 6.3 6.1 4b Sinking Fund 5.3 8.5 11.4 16.2 16.9 17.2 18.9 22,4 26.9 28.4 31.1o c, Special Funds 3.1 4.6 5.8 6.9 4.1 4.0 4.5 4.7 3.0 2.9 3.5d. Other Funds 9.5 10.1 4.5 6.3 3.1 3.7 3.1 1.7 1.4 1.4 0.7e. IMF Gold Tranche Position - -. - - - 0.9 0.9 0.9f f. Cash Balances 13.1 29.5 8.9 13.1 8.7 2.3 2.3 -1.7 o.6 1.2 9.3

:2. Monetary Authorities 25.0 29.5 31.4 41.5 45.8 43.4 47.5 50.3 56.8 57.2 54.63. Commercial Banks 48.2 60.5 69.0 97.0 102.3 85.3 62.4 45.6 70.9 27,5- 27.6

4. Post Office Savings Bank 10.8 12.9 12.1 12.5 12.3 9.1 8.2 8.9 9.0 8.5 7.7

TOTAL 120.1 160.9 149.2 201.0 202.2 173.7 151.9 137.2 175.8 134.1 139.9

L Excuse che in h rocess of ..coUectic n. he dn ounted kto $Q. 5 m11 1964urretcksB ¶ arIDDean i.Currehcy Ihord tpntr'a1f ankt of TPrinica andio g,teta Statistical Office, Ministry of Finance.

TABLE 37

TRII'fDAD AN]D TOBAGO: IMPORTS BY MAJOR CATEGORIES 1952-1964(CIF Value, Millions of TT$)

1952 1954 16 1958 1959 1960 1961 1962 1963 196bA. ORIGINAL DATA1. Fuels and Lubricants 76.9 70.0 87.0 126.9 1441toL 171.1 271.7 278.6 302.9 370. 02. Capital Goods 46.0 48.8 66.1 96.3 97.6 106.7 91.8 98.4 113.0 lll7a. Road Motor Vehicles and Parts ( 8.6) ( 9.6) (13.9) ( 13<.' 17.f( ( 26.0) ( 20.9) ( 19.5) ( 14.5) ( 21.7)b. H-achinery ( 25-8) (28.9) (34-0) ( 596U' ( 63.i) ( 63-1) ( 52.9) ( 59.0) ( 81.1) ( 74.0)c. Other Capital Goods ( 11.6) (10.3) (18.2) ( 23.1) ( 16.8) ( 17.6) ( 18.0) ( 19.9) ( 174) ( 16.0)3. Mlanufactures (Excluding Capital Goods) 58.5 60.4 63.5 87.5 99.1 109.5 102.4 107.5 105.3 110.54. Food, Beverages and Tobacco 46.7 50.8 59.9 69.5 73.6 78.7 80.9 83.5 84.1 9o.95. Chemicals

1-.5 12.8 17.4 20.9 20.8 22.7 23.0 23.8 25-5 31.36. Raw Materials 3.2 4.6 4.7 7.1 7-5 9.0 8.1 9.5 8.5 10.47. Oils and Fats (0.l4 0.8 1.4 1.3 1.8 2.6 2.7 1.9 2.7 2.38. Miiscellaneous 0.8 1.2 1.9 2.9 3.8 4.2 3.9 3.3 5.2 5.5

Total Value Trade Returns 244.0 249.4 301.9 412.4 448.6 -50 5845 606.5 6 -7.2 733.1B. REVISED DATA1. Fuels and Lubricants 5.6 4.,7 10.5 10.8 13.3 12.6 5.2 6.6 10.3 7.5a. Total ( 76.9) (70.0) (87.0) (126.9) (144.4) (171.1) (271.7) (278.6) (302.9) (370.0)b. Less Imports of Crude Petroleum ( 71.3) (65.3) (76.5) (116.1) (131.1) (158.5) (266.5) (272.0) (292.6) (362.5)2. Capital Goods 46.0 48.8 66.1 96.3 97.6 106.7 91.8 98.4 113.0 111.7a. Road Motor Vehicles and Parts ( 8.6) ( 9.6) (13.9) ( 13.6) ( 17.7) ( 26.0) ( 20.9) ( 19.5) ( 14.5) ( 21.7)b. Machinery ( 25-8) (28.9) (34.0) ( 59.6) ( 63.1) ( 63.1) ( 52.9) ( 59.0) ( 81.1) ( 74.0)c. Other Capital Goods ( 11.6) (10.3) (18.2) ( 23.1) ( 16.8) ( 17.6) ( 18.0) ( 19.9) C 17.4) C 16.0)3. Manufactures (Excluding Capital Goods) 58.5 60.4 63.5 87.5 99.1 109.5 102.4 107.5 105.3 110.54. Food, Beverages and Tobacco 46-7 50.8 59.9 69.5 73.6 78.7 80.9 83-5 84.1 90.95. Chemicals

11.5 12.8 17v4 20.9 20.8 22.7 23.0 23.8 25-5 31.36. Raw Materials 3.2 4.6 4.7 7.1 7.5 9.0 8.1 9e5 8.5 10.47. Oils and Fats 0.4 0,8 1.4 1.3 1.8 2.6 2.7 1.9 2.7 2.88. Miseellaneous 0.8 1.2 1.9 2.9 3.8 4.2 3-9 3-3 5.2 5.59. Adjustncnts for Balance of Payments Purposes 0.3 0.3 0.7 -0.7 -1.5 4.8 6.0 9.1 7.0 7.5Total in Balance of Payments 173.0 184.4 226.1 295.6 316.0 350.8 324.0 243.6 361.6 .32-17f

SOURCE: Central Statisticai uilcee

TABIE 38TRINIDAD AND TOBAGO: VALUEF C RINCIPAL EXP(RTS 1952-196.

(milli)ns of TT $)

1952 1954 1956 1958 1959 1960 1961 L962 1963 1964

A. ORIGINAL DATA1. F'1s and Lubricants 176.6 193.14 262.4 3440.8 364.7 393.5 494.5 494.9 526.8 5714.32. Suigar / 20.3 28.1 25.1 30.4 32.1 37.4 42.4 33.5 146.6 144.3. Manufactured Goods-./ 3.2 3,6 8.2 9.8 12.2 =1.5 10.0 31.5 12.1 23.44. Chemicals 5.5 4.0 3.4 3.4 4.2 10.5 11.3 15.6 23.5 27.95, Cocoa 8.6 15.0 10.5 12.7 10.1 8.8 6.5 800 8.6 14.96. Machinery and Vehicles.2 1.5 1:8 3.7 63 7.4 5.9 5.6 5.6 6.5 5.07, Raw Materials 4.2 3.7 4.4 3.5 14.3 6.4 5.1 5,0 4.3 5.28. Food, Beverages, Tobacco, Oils

and Fats 9.9 12.7 12.7 18.5 14.5 17.8 18.5 18.6 23.1 25.3TOTC'- VALUE TRADE RETURNS 229.8 262.3 330.14 1425.4 449.5 491.8 593-9 592.7 641.5 7i..

B, REVISED DATA. Fe and Lubri-cants (a-b+c) 105.3 128.1 185.9 224.7 233.6 235.0 263.4 256.9 27.6 2143.7a, Total (176.6) (1931.D1) (262.4) (3140.8) (3614.7) (393.5) (494.5) (14949) (526*8) (5714,)b. Less Imports of Crude

Petroleaua (71.3) (65.3) (76.5) (116.1) (131.1) t58.5) (266.5) (272.0) (292.6) (362.5c. Adjustment for Valuation,Coverage, fr-cessing Fees ( -- ) ( - ) ( - ) ( - ) ( -) (35.14) (34.0) (37.7) (31.e2. Sugar 20.3 2t.l 25.1 30.4 32.1 37.4 42,.14 33.5 46.6 44.3. Manufactured Goods/ 3.2 3.6 8.2 9.8 12.2 11.5 10.0 11.5 12.1 13CL;14 Chemicals 5.5 4.o 3.4 3.4 4.2 10.5 11.3 15,6 13.5 27.95, Cocoa Bean 8,6 15.0 10.5 12.7 10.1 8.8 6.5 8.0 8.6 4.,'6. Machinery and Vehiclea/ 1.5 1.8 3.7 6.3 7.4 5.9 5.6 5.6 6.5 5.o7. Raw MLaterials 4.2 3.7 4.4 3.5 4.3 6.14 5.1 5.0 4.3 5,28. Food, Beverages, Tobacco, Oils

and Fats. 9.9 12.7 12.7 18.5 14.5 17.8 18.5 18,6 23.1 25."9, Adjustments for balance of pay-mnents 38.9 34,0 42.3 57.7 60.1 56.8 63.9 57.5 47,0 50.co r Cen aents 119.6 163.o 211.6 21.6 28.3 276.5 298.9 29;Source: Central Statistical Office.

TABLE 39

TRINIDAD AND TOBAGO: VOLUME AND UNIT VALUE OF PRINCIPAL EXPORTS 1960 1964Volume

Unit Value (US$) unit1960 1961 1962 1963 l964 1960 1961 1962 1963 i96Crude Petroleum (million bbls) 5.1 4e3 4h0 3.8 4-4 2.5 2.52 2.5 2.5 2.5 BarrelPartially Refined Petroleum

(million bbls) - 1.2 2.8 3.6 6.2 - 4.2 3.4 303 2.8 ItAviation Spirit of 100 octane

(million bbls) 1.9 1.1 0.9 l.4 2.4 6.0 6.3 601 5;7 5*4Aviation Spirit n.e.s. (million bbls) 6.6 10.5 11.2 9.6 11.5 3.6 3.3 3.2 3*2 2*9Gasoline (million bbls) 9.7 10.6 9.1 1O0. 8.8 4-4 4I5 4.3 4.1 4.3Diesolene ( t " ) - 1.9 5;8 8.1 5!8 4.0 3.4 3c4 3.5 3.3Gas Oil ( *' ft ) 9.7 10.7 8.4 8.8 11.4 3.5 3.4 3.2 3.3 3.1Diesel C2. ( " " ) 3.5 303 2.9 2.1 2.5 3.3 3.5 3.3 3.3 3.0Bunker (grade fuel)(" " ) 32.5 44.0 47.1 53.3 58.9 2.0 2.0 2.0 2.0 2.0Oher Fuel Oils 8.8 11.9 12.1 l1.2 13.2 2.0 2e2 2.2 2.2 2.2Raw Sugar (1000 metric tons) 190.6 218.7 170.8 191.6 189.8 98.0 100.0 102.0 126.0 102.0 ^ tonCocoa (1000 short tons) 7.9 6.3 6.5 7.2 5.0 0.32 0.30 0.36 0o35 0.28 lbCoffee (1000 short tons) 2.0 2.5 1.9 3.9 4.2 0517 0.16 0.16 0.21 0.32 lb

Source: Central Statistical Office: Overseas Trade, Annual and Monthly Reports.- Unpublished Data.

TABIE ho

TRINIDAD AND TOBAGO: EX71TER-.AL EIEDIUM - AND LONTG - TERI'FPUBLIC DEBTOUTSTANDING INCLUDING UNDISBURSED AS OF DECEIiBER 31, 196T

Debt Repayable in Foreign Currency(In thousands of U.S. dollar equivalents)

Debt OutstandingfDecember 31, 1965

ITEM

Net of IncludingUndisbursed Undisbursed

TOTAL EXTERNAL PUBLIC DEBT 66,238 77,4657

Publicly-issued bonds 10,996 10,996

Privately-placed debt 26,877 27,247Suppliers! credits 7 747Other 21,500 21,500

IBRD loans 17,470

U.S. Government loans(Export - Import Bank) lo,895 15,7i4

1/ Debt with an original or extended maturity of one year or more.

2/ Net of accumulated si.nking funds which amounted to US$2h,334,ooo as ofDecember 31, 1965.

Source: IBRD - Economics Department, Statistics Division.

TABLE 41

TRINIDAD ANiD TOBAGO: STIh4lATED CONTRACTUAL SERVICE PA B,G,NTS ON aXT:9.I NL MEDRITU - AIP LODXTERMPUBLIC DEBT OUTSTANDIEG IINCLUDING UNDISBUASED AS OF DECEi143ER 31, 1965 Al

Debt -,epayable in roreign Currency(In thousands of U.S. dollar equivalents)

Det outstanding during year Publicly Privately Placed Debt IBRD US Governmenincluding J Amorti- Interest Total Issued Suppliers Other Total loans loansundisbursed zation Bonds (Ex'i)(begin. of period)

9Ci 77457 5636 4588 10223 1690 439 4046 4485 2107 1911) 966 71004 6379 4482 10861 1606 582 4181 4763 2259 2232, 7 63853 6777 4200 10977 1556 1223 3671 4894 2261 22671299 51627 7036 3835 10870 1369 1175 3503 4678 2265 2558I 71 434i7 7096 3444 10539 1369 1126 3336 4462 2262 24,6l 71 40649 8227 2909 11136 2289 1078 3169 4246 2266 23351972 31654 3357 2088 5445 594 719 908 1627 2266 9571¢.73 27942 3433 1904 5337 594 689 869 1558 2266 9191974 24135 2847 1725 4572 594 - 829 829 2267 8R21975 20895 2933 1561 4494 594 - 789 789 2267 8441976 17547 3802 1158 4960 1136 - 749 749 2268 8071977 1529 2999 746 3745 - - 709 709 2267 769q7c2 10530 3099 569 3668 - - 670 670 2266 7321979 7431 2873 389 3262 - - 630 630 2267108C 4558 2385 227 2612 - - - - 2266 346

l/ Includes service on all debt listed in table 40.

/ lNet of accumulated sinking funds of $24,334,000.

Source: IBhD - Econo:'Iics Departmenit, Statistics Division.

ANNEX 1

LIST OF TABIES

Table No.

Population and National Accounts

1 Population Trends 1950-1980.2 Trends in Gross Domestic Product, Gross National Product and

National Income 1952-1965.3 Sectorial Origin of the Gross Domestic Product at Current

Factor Costs 1952-11965.4 Percentage Sectorial Or-.gin of the Gross Domestic Product at

Current Factor Costs 1952-1965.5 Sectorial Origin of the Gross Domestic Product at Constaint

Factor Costs and Constant Market Prices 1952-1965.6 Gross Domestic Product at Current Market Prices and Current

Factor Costs 1952-1965.7 Gross National Product and National Incoma at Current Pfices

1952-1965.8 Gross Domestic Fixed Capital Formation by Sectors 1952-19659 Financing o-' Gross Domestic Capital Formation 1952-1965.

10 Gross Investment Ratio, Gross Savings Ratio, Resource Gap,Increm.ental Capital - Output Ratios and Incremental SavingsRatio 1952-1965.

Production

11 Trends in Oil Extraction, Oil Exploration and Oil Refiniing1952-1.Q65

12 Econcmic significance of the Petroleum Industry 1952-1965.13 Production of Agricultural Commodities 1952-1965.14 Basic Data on the Livestock Industry 1960-June 1965.15 Prodi-nztion of Principal Industrial Products 1952w-June 1965.16 Some .ndicators of Activ-ity in the Constraction Indust-ty

19:56-196!!.17 Power C-eneration and Distributi on 1952-June 196518 Transport and Communications 1952-1965.

Employen t and L.abor Productivity

19 Employment and Unemploy ?.r 1n9h6 1960 and 1964.O0 Employment in Large Esta~.;ishmerits 1962-1964-21 Labor Productivity 1951-1964

Prices, Wages and Mowtary Developments

22 Index of Retail Prices 1952-June 1965.23 Index of Wage Rates May 1957-May 1965.24 Suwmmary Accounts of the Banking Systemn 1954-1065.25 Analysis of Loans and Overdrafts 1063-1965,

ANNEX 1

Table No.Public Finances

26 Central Government Current Revenues 1952 - 1966.27 Central Government Recurrent Expenditures 1952 - 1966.28 Composition of Public Investment Expenditures 1952 - 1966.

29 Fiscal Operations of the Public Sector 1952 - 1966030 Financing of Public Invrestment Expenditures 19'2 - 1966.

Revised Second Five-Year Plan

31 Composition of Public Investment Expenditures 1964 - 1968.32 Financing of Public Investment Expenditures 1964 - 1968.

External Finances and Trade

33 Balance of Payments 1952 - 1964.34 External Current Account 1952 - 1965.35 Financing of the Current Account Deficit 1952 - 1965.

36 Net Foreign Reserve Position 1952 - 1965.37 Imports by Major Categories 1952 - 1964.38 Value of Principal Exports 1952 - 1964.39 Volume and Unit Value of Principal Exports 1960 - 1964.

External Public Debt

40 External Medium and Long-term Public DebtOutstanding as of December 31, 1965.

41 Estimated Contractual Service Payments 1966 - 1980.

> RsF s tbm B .a; rst - ;s$ s .17s9;.;u'::4:s -L .>I:-bi.^sreR L )iL2 s"E.- sS 8v<r B 4 X ta1DO ..... <ba .Lsv.s^orso .PL.:v:- ................ L.d¢ at ..... , ........... .. .;.

ANNEX 2

THE PETROIEUM SECTOR

1. Trinidad and Tobagots petroleum industry has a long-datedhistory. The natural asphalt obtained from its famous Pitch Lake hasbeen used for ship calking since Sir Walter Raleigh's days and morerecently for road surfacing. But exports of natural asphalt havedeclined in the past decade due to competition from low-cost manufac-tured asphalt, a by-product of petroleum refining. Asphalt, however,is only a small part of Trinidad and Tobago's petroleum industry wahichnow includes the production of crude oil and natural gas and a largenumber of refined products. Together these now account for between25 and 30 9Percent of Trinidad and Tobago's gross domestic product, asimilar proportion of the Government's revenues, close to 40 percentof the country's gross domestic capital formation, over 50 percent ofprivate fixed investment and two-thirds of the countryts exportearnings (net of imports of crude oil). In terms ol employment, theindustry's significance is somewhat limit,ed., direct empl.oyment amountingto roughly 15,000 or about 5 percent of the countryts labor force.To sum up, the rapid development of the petroleum industry has madeit a sector of key importance in the economy of Trinidad and Tobago.

Crude Oil

2. Crude oil in commercial quantities was first discovered insouthwestern Trinidad over 50 years ago. Land production increasedfrom 2 million barrels a year in 1920 to 22 million in 1940 where itstayed until 1953. The take-over in 1956 of the British-owned TrinidadLeaseholds Ltd., by Texaco Trinidad, Inc., inaugurated a period ofintensive development on land and at sea and production rose to about49 million barrels a year in the 1962-1964 period. It was mainlyproduction from the offshore marine Soldado field in the Gulf of Paria,discovered in the early fifties that increased rapidly; production therewas sufficient to more than offset the decline since 1960 in landproduction. Crude oil production, however, has been stagnating in the1962-1964 period and declined somewhat in 1965. In the recent past,the oil companies have been devoting considerable efforts to developingtechniques of secondary recovery, and this along wit,h the discovery ofsome minor new fields has helped to improve somewhat the prospects forproduction over the next few years. In the early months of 1966production rose to an annual rate of 52-53 million barrels a year, andit now appears likely to stay at around this level at least through 1968.Thereafter, unless major new discoveries are miade, there could well besome decline.

3. At present, Trinidad and Tobago's pro-ven crude oil reservesare calculated at 500 million barrels, or 10 yearst production at thepresent rate of extraction. This reserve ratio is very low by worldstandards, and is so precarious that a high rate of investment isrequired to maintain production at its present level, the complexgeology of oil reservoirs in Trinidad and Tobago resulting in a rapiddecline in production from new wells. Therefore, a considerable number

ANNJEX 2wp---T

of development wells must be drilled each year. While some prospectsfor additional reserves lie in a more effective and intensive use ofsecondary recovery methods both on land and at sea, increasinglyfuture additions to reserves must be sought in offshore areas and onland which call for deep drillirg. Exploration for such reserves andtheir development are riskier and more costly than the shallow land-based wells on which the oil industry was originally founded, andwould thus raise production costs. At present the cost of productionis already high compared with many other producing areas of the world,owing to the small productive potentials of wells and the need forconstant remedial measures. The question, therefore, arises whetherthe oil companies will continue their search for oil in Trinidad andTobagots territory and use it for refining purposes (and, if so, whetherin fact additional reserves can be proven) or whether the companieswould increasingly base their refining operations on imported cheapercrude oil. The answer to this question is of crucial inlportance tothe future economic development of Trinidad and Tobago. It is thelevel of crude o'l production which determines the country t s grossdomestic product, its export earnings and government revenues ratherthan the levrel of refinery output which is now largely based onimported crude oil.

Refining

4. There are two large refineries in Trinidad, one at Pointe-a-Pierre and the other at Point Fortin, both owned and operated by majorinternational oil companies. The larger of the two refineries, whichbelongs to Texaco has a throughput of 325,000-350O000 barrels a dayand is one of the biggest in the world. Over three-quarters of itsoutput now comes from the processing of crude oil imported mainly fromVenezuela and the M4iddle East. Refinery output is now more than doublethe level of 1959. The Pointe-a-Pierre (Texaco) refinery is a fullyequipped plant, containing up-to-date refining facilities and designedto derive from crude oil of different origins and properties a completeline of finished pet%roleum products. The latest additions of thisrefinery were the US$27 million lubricating oil plant installed in 1964and a US$8 million normal paraffin plant in June 1965 which is one ofthe few of its kind in the world. The Point Fortin (Shell) plant isproducing a line of main petroleum products - motor gasoline, kerosine,diesel oils, residual fuel oils and bitumen. The equipment is designedfor the treatment of indigenous crude oils. In the course oL the lasttwo years this refinery was substantially enlarged and upgraded,principally through the installation of a US$6 million platformer/hydro-treater in 1965S

5. The elaborate refining industry had led Trinidad and Tobagoto remain competitive in the world markets, despite the high cost ofcrude oil production. Although the industry is in an intermediateposition (between being production and market oriented), it enjoysto some extent by reasons of geography the advantages of a '"mark-etoriented" refinery. However, in view of the present and plamned

ANNEX 2'Page _3

proliferation of refining facilities throughout the world, this

position may be impaired in the Zuture. A Commission of Enquiry into

the Oil Industry, appointed in 1964, therefore recommended to the

Government the granting of tax exemptions and other benefits derivingfrom "pioneer status" to firms undertaking the marvkfacture of petro-chemical products. In some cases, these benefits have been granted.

As a result, the several extensions which have recently been made tothe two refineries will not directly contribute much to the growthof income in Trinidad and Tobago, since profits made on their operations

are exempt from tax for periods ranging between 5 and 10 years. In anyevent, the increased refining capacity relies heavily on additionalcrude imports which are processed for a fixed fee.

Naturial Gas

6,0 In 1959 natural gas - mainly associated gas - was for thefirst time used as a raw material for the petrochemical industry inTrinidad and Tobago when W. R. Grace Ltd., through the local subsid-iary Federation Chemicals Ltd., started manufacturing ammonia, ureaand ammonium sulphate. Today, the production of natural. gas exceeds300 million cubic feet per day, and additional uses have been under-taken since, principally for pwjer generation, secondary recoverymethods and cement production. Presently proven reserves amount toabout 2,5 billion cubic feet or roughly 20 years of production at thecurrent rate of utilization. With limited supplies available andnatural gas consumption expected to go up markedly following a sub-stanti.al further expansion of Federation ChemicalsI activities andprospective increases in other uses, an expert survey needs to beundertaken to determine more precisely the country's reserve positionand to indicate optimum utilization of the natural gas supplies.

7. Federation Chemicals' main product, ammonia, is beingproduced at present at the rate of approximately 715 tons per day,of which about 100 tons are converted into ammonia sulphate and urea.The remaining ammonia, in addition to the end-products, is largelyexported to neighbouring countries, i1Torth America and Europe. Anotheramonia plant with a capacity in excess of 700 tons is due to beginoperations shortlya W4hen this plant is on stream, gross output will

be in the region of US$30 million a year. However, Federation Chemicalsalso enjoys substantial tax concessions under the Government t s taxincentive program, and its local wage and salary bill is comparativelysmall0 Consequently, the increased income accruing to Trinidad and Tobagofrom the expansion of fertilizer production will at most amount to a fewmillion dollars a year. At the moment, no further expansion of the plantis under consideration., the principal reason being the limited availabilityoL natural gas.

ANMEX 3

AGRICULTURE

1. Trinidad and Tobagols agriculture despite favorable factors

such as adequate rainfall, well-defined dry and wet seasons and adequate

land availability, has been lagging behind the high overall rate of

economic growth in the past fifteen years. While the gross domestic

product increased on the average by 8.5 percent per year in real terms

between 1952 and 1961, agricultural production rose by about 5 percent

per year (still a significant achievement). Since 1961, with the gross

domestic product increasing by about 3.5 percent per year, agriculturalproduction virtually stagnated and was in 1965 only marginally above the

1961 level. As a result of these developments, the share of agriculture

in the gross domestic product has dropped from 18 percent in 1952 to 1.0

percent in recent years. With employment in agriculture estimated at

60,ooo (or roughly 20 percent of the labor population) productivityper worker, therefore, is only half the national average. The relative

decline in agriculture has been mainly at the expense of increased exports

rather than production for the domestic market and imports of food(although high) account for a smaller proportion of inational income today

than they did fifteen years ago, reflecting the progress achieved with

import-substitution.

2. The Government of Trinidad and Tobago is concerned to promote

agricultural production in an effort to diversify the economy, to provide

employment for the rapidly rising population and to increase agricultural

exports and to reduce food imports at the same time. The achievemen' of

these aims will require considerable efforts on the part of the Government

to improve the farmerst ability to sustain a rapidly-growing and high-

productivity agricultural sector, in addition to provniding adequate

supporting institutions in the fi'elds of extension, marketing and credit.

3. Trinidad and Tobago's cultivable area is relatively small. Of

the countryts total. area of about i.3 million acres a little over one-

third is considered suitable for agriculture. About 4o percent of this

total is occupied by a large number of relatively unskilled farmers who

cultivate small plots at a low level of productivity. Unsatisfactorygrowing practices, deficient marketing arrangements and inadequate use

of agricultural credit (which, in any event, is available in limited

volume) have generally inhibited agri-cultural production increases.

Another 180,000 acres of the cultivable a±ea is occupied by the larger

farms and plantations which produce the main portion of the countrytsprincipal export crops (sugar, cocoa and citrus) and of its dairy and

meat production. Here too, possibly with the exception of the sugar

estates, productivity is relatively low and is also handicapped by the

occurrence of plant diseases, particularly affecting cocoa and coconuts.

The remaining 100,000 acres are presently largely unutilized and comprise

the cultivable portion of the Government-owned Crown Lands. The Govern-

ment of Trinidad and Tobago intends to bring these lands into full

production, thus providing the basis for an expansion of agriculturaloutput and employment in the years ahead. But the pace at which Trinidad

A NNREX 3Fa 2

and Tobago can realize this still existing potential for bringing newlands into cultivation is subject to restraints. Intensified effortsin land settlement to bring these lands into full production requireslarge public expenditures for the improvement and settlement of theselands and enlarged and improved facilities for farm credit, marketingand extension services to settlers.

4. The Crownlands development scheme is the Governint,enlts firstlarge-scale effort in land settlement. It is a project f'or the develop-ment of about 20,000 acres of government land in a number of separateblocks over the next several years at a total estimated cost of aroundTT$25 million, of which une-third would be borne directly by the Govern-ment and two-thirds financed through long-term loans to the farmersrepayable over 25 years with varying periods of grace. ,It is intendedthat approximately half the area should be devoted to livestock (dairyingand pigs, supplemented by poultry) and the other half to citrus fruit,vegetables, oilseeds, miscellaneous food crops and tobacco. AbJout 2)400families would be resettled on the land under the scheme which is nowjust getting under way after several years of preparation.

5. The project is essentially directed towards import substitution,with the relief of unemployment as another objective. The basic questionlaftfecting its viability are whether the Government will be able to providethe farmers with adequate management, technical supervision, credit andmarketing facilities, and whether the more enterprising farmers will havethe necessary incentives and assurances for the efficient developrmientof the land. The mission was impressed by the thought that has beengiven to some of the major issues. Nevertheless, the difficultiesinherent in this type of settlement scheme, which is something entirelynew for Trinidad, suggest the need for a cautious approach) so that ifanything goes wrong, the risks can be minimized.

6. The Government regards private investment in agriculture ascomplementary to the Crownlands project and recognises the need forencouragement to be given to private agricultural investment. Theseencouragements at present consist primarily of investment subsidiesdesigned to reduce agricultural production costs, some price-subsidyschemes and the provision of agricultural credit and marketing facilities.

7. The short-term credit needs of the larger f£. Iers are adequatelymet through the country's extended network of commercial banks. However,their development credit needs are presently largely uncovered; inaddition the credit requirements of the smaller fartmers have not beenfully met. The Government is now working upon the re-organization ofthe Agricultural Credit Bank so as to create an effective channel forboth short and longer term agricultural credit. The re-organization isto ensure proper credit supervision through co-operation with extensionservices, greater flexibility and decentralization of operations, withmore emphasis on the provision of medium and long-term credit. At thesame time, the commercial banks are stepping up their efforts to providemedium-term credit to the larger farmers. The expansion of theactivities of both the Agricultural Credit Bank and the commercial banksin the field of agricultural credit is constrained, however, by thelimited availability of experienced manpower.

ANN.E,X 3Page 3

8. The existing marketing arrangements for such export crops assugar and citrus and cocoa are adequate. However, the marketing arrange-ments for products mainly destined for domestic consumption are in needof improvement. The Government presently intends to establisb a CentralMarketing Agency which should be operative by June 1966. The Agency willundertake the construction of depots in the major producing centers, andprovide farmers with assured outlets of their pro,'ce by creating anefficient system of marketing and storage facilities, and, in some cases,a minimum price scheme. The proposed improvement in marketing andstorage facilities should substantially stimulate agricultural produc-tion, although there is at present the risk that these operations couldlead to sizeable losses in the years ahead. These risks could be reducedconsiderably by expanding operations on a sound commercial basis. Thelatter could be achieved by the Agency entering into production and off-take contracts with farmers, thereby assuring proper planning of operations.

9. In order to provide agriculture with an adequate supply oftrained manpower the Government rightly intends to expand education atthe medium level, through the introduction of "comprehensive schools",thereby supplying graduates of broad general background and capable ofassuming more general functions in agriculture than the techniicianspresently graduating from the high-quality Eastern (,aribbean Farm Institute.

10. While the Government is thus improving agricultureTs institutionalinfrastructure, in addition to assuming a more direct role in bringingnew agricultural lands into production, it recognizes a need to designand execute agricultural policies and programs that would maximize agricul-tural production and incomes. It is, therefore, engaged in determiningthe optimum exploitation of the country's land resources through theexecution of a Land Capabili',,y Survey, financed in part by the Oil companies.

11. Specifics on trends and prospects in the main crops are describedin report EA-148a. While the conclusions outlined there remain essentiallyunchanged, for some crops the outlook appears to have improved, principallyfor sugar, tobacco, pigeon peas and dairy products. Active governmentpolicies to promote production of these products, together with increasedprivate sector dynlamism give basis for expecting further increases inthese fields. Whether aggregate agricultural production will follow asimilar trend remains still to be determined, although if presentlyexecuted and contemplated government policies succeed agriculture shouldgrow fairly rapidly in the years ahead. With domestic consumnption ofagvicult'aral products expected to rise moderately, it is possible thatthe countryts dependence on imported foods can be somewhat reduced.

ANNEX 4

IMUDSTRY

1. Over the past 15 years, an increasingly diversified indus-trial sector was built up in Trinidad and Tobago, which in 1964 generatedabout 14 .percent of gross domestic production. Industrial activity.I-;creased xin the average by about 9.5 percent per an-num in the period1952-1965., and, in contrast to the years prior to 1958 when productionconsisted primarily of sugar, foods and beverages, it now includes'light consumer goods, construction materials and chemicals. Though thedomestic market is small, a surprisingly wide range of manufacturingindustries has already been esta'blished. A fair amount of import sub-stitution took place in the last ten years, and more recently enterpriseshave been started that cater mainly for expor-t markets in the UnitedStates, the United Kingdom, Caznada and neighbouring islands. The latterinclude (apart from, petrochemnicls) textiles and processed agriculturalproducts, such as pigeon peas, gr-apefruit by-products, and citrus juices(international Foods). Entrepreneurial talent (and industrial finance)in the past has come mainly from abroad, but there is an active group Ofbusinessmnen, traditonally p.imarily engaged trade, who have increasinglybecome interested in investing irn industry and commercial agriculture.

20 The growth in industrial productioni has 'seen stimrulated byactive government policies to create an environment that would helpfoster industrilization so as to increase employrEnt and industrialexports and to achieve greater industrial self-suffici.ency. Since 1950,a series of industrial incentive laws were passed wYhich provide forexemption from import taxes on machinery and raw materials and tax holidaysextending up to 10 years including an unlimited carry-over of losses.In addition, in 1959 the Government established the Industrial DevelopmentCorporation which promotes the development of industry in Trinidad andTobago through its Industrial Estates building program. The IDC alsoprovides - in exceptional cases - medium-term finance for industry.In 1964 four loans were made, totalling TT$537,OOO.

3. Trinidad and Tobago possesses a well-diversified industrial basewhich has good prospects for expansion. Apart from petrochemicals andfertilizers manufactured from natural gas, industry includes:

Aluminum and steel fabricating Light engineeringBaking powder Margarine, soap, vegetable oilsBat teries iMiatche sBrewing Mletaal containersBricks and tiles Paints and varnishesCanned food and milk PharmaceuticalsCement Printing (including color)Concrete products Shirts and garmentsCorrugated paper cartons Sugar and rumDistilling Stock and poultry feedsGases (Industrial) Textiles (cotton)Glass Tobacco and cigarettes

AMNEX 4-a 7e- Z

4. In 1965 the manufacturing sector (excluding petrochemicals andfertilizers) contributed a total of TT$157 million to gross domesticproduction. Assuming a (low) capital output ratio of 2 to prevail inthe manufacturing sector, accumulated investment -in that sector can beconservatively estimated at about TT$300 million. The latter figureindicates the fair size of the manufacturing sector in a country assmall as Trinidad and Tobago.

5. Most of the industries that operate in Trinidad and Tobagoare foreign owqned 0 They are usually subsidiarie of foreign (mostlyUTS and IJK) companies. Generally financing is provided by the parentcompany. TLlose industries that are owned by foreigners who reside inTrinidad, or bv Trinidadians, are usually financed throi:gh overdraftfacilities granted by the (foreign-ownedi aJ- British-oriented) bankingsystem and through supplierst credits. Some medium-term f'inance hasrecently been made a:vailable through the banking system, some trustcompanies (Barclays-Bolam and Nova Scotia Trust Company), and Roy.eest.Its quantitative iirportance has not been substantial so far, and islikely not to become so in the near future, pending the companiestbuilding up of deposits. At present, therefore, Trinidad and Tobagodoes not possess institutions that are able to make long-term financeavailable for industrial development. It should be noted that theIndustrial Development Corporation of Trinidad and Tobago performsessentially the same functions as the Jamaica industrial DevelopmentCorporation0 It assists potential inveestors in obtaining approvedstatus under the various "Industrial incentive laws, In addition, itadvises the Goverrnment oxn the granting of these concessions. It normallydoes not provide industrial finance. Only in exceptional cases loansare reluctantly made. In 1964 only 4 loans were made from its IndustrialLoans Fund (=-ounting to TT$MT8,000 at the beginning of 106b totallingTT$537,000, on a medium-term basis, and rigid collateral requirementswe-re imposed. Contributions to the Indust.rial Loans Fund originatefrom the Central Government Consolidated Fund and are, therefore,appropriated on an annual basis, and in limited amounts. Entrepreneurs,therefore, wlho apply to the IDC for approved status under the incentivelaws, normally are to give assurances that their financing has beenarranged elsewhere,

6. Conversations with the Government of Trinidad and Tobago, theTrinidad Plwanufacturerst Association, the Industrial Development Corpora-tion and with individual entrepreneurs have convinced the mission thatthere is a need in Trinidad and Tobago for the establishment of aninstitution that can provide l1ong-term- finance for industry. In addition,Such an institution could expand its operations profitably -..nto commiercialagriculture and tourism. The; mission strongly supports thew Governmentthin-king that the institut-ion should be run on a private basis. Althoughthere are nio detailed estir-ates as tio the likely level of industrialinvestment to be undertaken in the next two to three years ahead, anevaluation of the projects that are actually being considered by theIndustrial Developinent Corporation lead to the conclusion that the annuallevel of investment to be undertaken in the next fewkT years is likely tobe substantially higher than i-n the past few years. On October 31, 1965,

ANEX hPage 3

18 industrial entefpri8es (with capital outlays exceeding TT$50,000)that were granted approved szatus under the incentive laws were underconstruction. Total investment outlays for these enterprises areestimated to total TT$7t2 mil-lion. The following items are to beproduced:

Building materials Metal FurnitureBoots and shoes PipesEnvrelopes Rk-diatorsFilters SchoolbagsFlour Stock feedsGarments TilesJewellery Vegretable fibres

Finally, on October 31, 1965, the Industrial Development Corporation wasprociessinlg applications (for approved status under the incentive laws)for the establishment of 49 enterprises (whose capital outlays exceedTT1$5OOOO) with an estimated total investment of TT$18.7 tnillion, Thislevel of investmert, compares favorably with previous vears. Itemsintended to be produced include:

Batterie-s Household utensilsBuilding materials Paper productsClay products Particle boardDetergents PlasticsFootwear RefrigeratorsGarments Transistor Radios

7. With the further development of agriculture, there should beadditional scope for profitable investment in food processing for domesticconsumption and exports. At present, there are indications that vaiiousproductive undertakings are beirg initiated i-n the field of commercialagriculture, such as live-stock and dairying, citrus, fruit and vegetableswhich could proviide a basis for the further expansion of these processingactivities. In addition, there are signs that new endeavors are beingconsidered in the fields of bananas, cocoa and coffee.

8. Promoting new industry in a small country like Trinidad andTobago depends so muich in the final analysis on political and personalfactors and on skillful public relations that it is difficult to laydown any reliable economic criteria for the guidance of industrial policy.Trinidad and Tobago offers liberal tax incentives to the private investor,and these have probably been a-n important factor in encouraging industrialexpansion in the island. How far a country in Trinidad and Tobagtosposition should go in this direction is a matter of judgment, but withneighbouring countries offering similar incentives (e.g. Puerto Rico anLdJamaica) Trinidad and Tobago can hardly afford to be much less generousthen they are. Other attractions which Trinidad and Tobago has to offerto the industrialist, in addition to political stability, are fairlycheap and plentiful power, adequate water supplies, good banking services,a supply of potentially resourceful labor and L reasonable degree offreedom from government controls and interference. The relatively high

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ANNEX 4Page L4

standard of living in the island and the diversified dema-nd for consumergoods and services are in themselves a considerable attraction, but thereis the disadvantage that labor costs are rather high and tending toincrease. The highly capital-intensive nature of the oil and petrochemi-cals industries is partly responisible for this.

9. Trinidad and Tobagc possesses a small, but well-ddiversifiedindustrial base which can serve as a point of: departure for a policydesigned to promote new exports. At present exports other than petroleum,fertilizers, asphalt, rum and bitter-s and plantation crops amount to onlyabout TT$25 million a year or about 8 percent of total exports. Cementand made-up clothing are two of the principal items: others includeprocessed foods, oils and fats. Latin American markets are at presentlargely closed to exports from Trinidad and Tobago because of discrimina-tory tariff policies, and Trinidad and Tobago aTlso faces discriminatorybarriers in urope. It enjoys, however, special preferences in theUnited Kingdom. Canada and the Unitbed States are the most promisinglonlg-term markets for exports of processed floods and manufactured goocds,but marketi;ng is a major problem for a small supplier, and there arecertain restrictions imposed to safeguard local industries which operateto Trinidad and Tobagots disadvantage (e.g. in textiles and ready-madeclothing). A larger market in the Caribbean area must, therefore (asthe Govrernment clearly realizes), continue to be one of the principalobjectives of Trinidad and Tobagots commercial policy.

ANI\TEX 5

PUBLIC FIIiAHCE

Over the past 15 years, the operations of the public sectorhave become increasingly important to the economy of Trinidad andTobago. Central Government revenues which rose steadily following theoil-sparked boom which the economy experienced during 19'2 to 1962,averaged about 17 percent of the gross domestic product in that periodand provided more than one-half of the funds for the rising rate ofpublic investment that increased. from 2.8 percent of GDP in 1952 to6.3 percent in 1962. Over the same period total government expendituresincreased from 18,5 to 21.1 percenlt of GDP. Subsequent to Independencein 1962, a series of encouraging revenue measures were taken that raisedrevenueS to about 19 percent of the gross domestic product in 1964 and1965. W.hile after 1962 public investment expenditures remained virtuallyunchanged, Central Govern1ment current expenditures increased rapidly andthus led total government expenditures to rise to abotut 24 percent ofGD? in 1964 and 1965. With the latter revenue and expenditure trends,the Central Government incurred heavy defLcits in every one of the lastfive years. The cumulative deaficit over th-is period amounted to about16 percent of total government expenditures and was roughly in equalparts financed by external and non-inflationary internal borrowing.As a result of these borrow0ings the public debt more than doubled fromless than TT$ 100 mill-ion at, the end of 1960 to about TT$ 220 millionat the end of 1965.

2. The public sector in Trinidad and Tobago consist-s of theCentral Government, the three municipalities, the county councils, thepublic utilities and other statutory boards. The latter include theTrinidad and Tobago Electricity Commission, the Trinidad and TobagoTelephone Service, the Port Authority, the Central Water and SewerageAuthority, the Public Transport Service Corporation, British WestIndies Airways, the Industrial Develcnment Corporation and a number ofstatutory boards dealing with tourism, marketing and the handling ofagricultural export products. The Central Governmrient supervises thefinancial operations of the public sector. A1l. statutory boards andmost of the public corporations are subject to Central Goverrnmentgeneral policy directives. Except for one or two public utilities, allother public bodies receive subsidies to meet deficits in their operatingexpenditures. In addition, the local governments are to a very largeextent dependent on receipts -transferred from the Central Government.These transfers and subsidies have increased rapidly over the years andamounted to roughly TT$ 30 million in 1965 or to abouit 15 percent oftotal Central Government current expenditures. The sizeable magnitudeof the subsidies and transfers has led the Central Government to considerestablishirn more rigid control over these paymnents. This would. clearlyrequire a thorough review of the financial operations of the pliblicundertaking and a clear definition of the finanicial interrelationshipsbetween the Central Government and these public bodies. In addition,the Central Government is rightly considering to subject the localauLthorities to increased control over their expendi tures.

ANNEX 5Page 2

Central Government Finances.

3. Recent fiscal developments in Trinidad and Tobago, especiallyduring the 1963-1965 period, are in sharp contrast to those 'hich thecountry w-itnessed during the 1958-1962 period when the first Five-Year

Development Plan was carried out. In this period current revenuesincreased by about 35 percent from TT$ 129.9 million in 1958 toTT$ 174.8 million in 1962, and although current expenditures increasedfaster (by 58 percent from TT$ 94.9 million in 1958 to TT$ 149.6 millionin 1962), the Central Government realized large current account surplusesthat accounted for about 20 percent of current revienues on average0These surpluses, together with gross savings of the public utilitiesprovided the finance for close to 60 percent of total public investmentexpenditures that averaged about 5.5 percent of the gross domesticproduct in that period as compared to 365 percent in the early 19501s.The remainder was primarily financed by non-inflationary internalborrowaing szo that public investment under the First Five-Year PDan wasfinanced by about 90 percent from internal sources.

4h After 1962 the fiscal situation changed rapidly. Although aseries of additional revenue measures were taken that raised totalrevenues from 16.8 percent of the gross domestic product in 1961 to

18.8 percent, in 1965 (and excluding the oi1 sector from both sides of theaccount, from 14.5 percent of the GDD in 1961 to 18.3 percent in 1965),with the net result that total revenues increased by nearly 20 percentbetween 1962 and 1965 (from TT$ 17h48 million to TT$ 208.5 million),current expenditures incre;:sed by 36 percent over the same peri-od (fromTT$ 14906 million in 1962 to TT$ 203.6 million in 1965). The net resultof these developments was a progressive erosion of public savings to

the point where in 1965 the current account surplus virtually disappearedand where the surplus, together with gross savings of the public utilities.only provided about 10 percent of the finance for public investmentexpenditures wqhich were slightly below the 1962 level in that year. Theremainder was financed from extet nal sources by over 70 percent.

5. Fiscal policy since 1962 was aimed at maintaining a level ofpublic savings that would permit a reasonable contribution tow-ards thefinancing of public investment expenditures. However, thase aims haveclearly not been achieved, priiarily because the level of currentexpenditures increased much faster than was originally envisaged,althoughthe disappointing rate of economic growtJh (and partictularly the declinein oil production and oil prices) has also been partly responsible.The large rise in current expenditures of the Central Government was duein part to the increased level of public investment expe: ditures in the1958-1962 period that brought with it increasing requirements for currentprovisions, to substantial wage increases gr.anted to public employees,to the increasing cost of social services, especially education andgeneral welfare services, to the steady increase in subsidies paid tothe public undertakings, principally for road and rail transport9andwater and sewerage and finally to the rapidly rising debt service.

ANNEX 5Page 3

Current Revenue Trend.s 1962-1965

6, Central Governmeent revenues in the 1962-1965 period increasedby just under 20 percent, from TT$ 174. 8 million in 1962 to TT$ 208.5million in 1965, primarily as a result of a series of- additional revenuemeasures that widened the tax base and provided for the increase inrevenues in the face of a considerable slowing do-w,n of economic growthin that period. Since Independence, taxation policy was designed toraise the rate of taxation to just under 19 percent of the gross domesticproduct. This aim has been lsr;gely achieved. In various fields revenueaction was undertaken:

a. In 1962, the entire tariff system was comprehensivelyreviewed with four major considerations in mind:

i, to minimize the import of non-essential commodities

ii. to provide adequate protection from foreign imports todomestic manufacturers

iii. to keep down the prices of basic foodstuffs, especiallyof those for which there were no local substitutes

iv, to mTilmnize production costs so as to encourage industryto be competitive in the small domestic market, mainlythrough exemption of plant and machinery for approvedenterprises from import duty requirements.

These Proposals inclUded the raising of import duties on non-essential articles and contribTuted substanti-ally towards the 20 percentrevenue increase in 1962,

b. in 1963, reforms of the Income Tax Legislation were intro-duced. The uniform tax rate on companies and corporations, including thepetroleum companies, was raised from 4.0 percent to 420S5 peicent ontaxable income, although the relat'ively low ratue of 15 percent applicableto insurance companies remarined unchanged. Also, the initial depreciationallowance for capital write-offs was halved from 40 percent to 20 percent,and the requirement of quarterly prepa-yment of company income taxes wasintroduced., along with the satne requirements for sell-employed individualtax payers. In addition, the deduction allowance for rersulnal incometax purposes (income taxes are collected at the source) was reduced. fromTT$ 1200 to TT.$ 1000 (a relatively low exemption limit). These incometax reforms caused a substantial increase in collec-tions especially fromindividuals and the non-petroleum companies.

c. Finally, in 1963 additional precautions were taken for thestrenigthening of the balance of payments , through the introduction of apurchase tax, that yielded TT$ 5 million in 1963 (and close to TT$ 6 millionin 1965), primarily on non-essential imports,, and increases in variousfees and licenses were introduced.

ANNEX 5Page 4

do With these substantial revisions in the tax structure in1962 and 1963, the emphasis in 1964 and 1965 was on the strengthening ofthe machinery for tax collections. In addition, preparations were madefor an additional change in taxation, the larger part of which has goneinto effect in 1966. (see paragraphs 13 and 14).

7. While the net results of these revenue measures were for afairly rapid rise in current revenues up to 1964., in 1965 the rate ofincrease levelled off, primarily due to the reduced rate of economicgrowth in that year and to a decline in income tax collections fromthe petroleum and non-petroleum companies. Collections Lrom thepeturoleum companies declined by about TT$ 2.6 million, caused by thedecline In petroleum prices and thus of the companies! profits, and, theTT$ 2.2 million decline in income tax collections fErom the other companieswas primarily due to the rapid reduction in the sugar companies, profitsas a result of falling sugaw prices. Another reason for the somewhatdisappointing performance of the companies income taxes (and also in thefield of import duties) is the impact that the substantial tax concessionisgranted to new and expanding enterprises have on the growth of thesecollections. These concessions are granted under the aid to PioneerIndustries Ord:inancaas part of the Government'S policy for attractingnew industries. It is estimated that, at present, the tax revenue fore-gone on this account has risen to about TT$ 25 million a year, and someTT$ 15 million of this amount probably represents income tax relief.The G-overnment has been reconsidering the whole structure of theseconcessions, but is doubtful whether material changes can be introduced,particularly since other countries in the Caribbean offer similar andin some cases even more generous tax concessions to new industries.

Current Expe-nditure Trends 1962-1965

8. While in the 1962-1965 period current revenues were raised ina conscious effort to increase the overall rate of taxationi to close to19 percent of GDP, and although the rise in current e;-penditures wasintended to bear a fairly constant relationship to GDP, current expendi-tures nevertheless increased much faster than was originally foreseenand rose by 36 percent in the 1962-1965 period, from TT$ 149.6 millionin 1962 to TT$ 203.6 million in 19656 Five main causes can be disting-uished to have contributed to the rapid rise in cu-.rent expenditures.

a. Repercussions of the rapidly_risen puiblic investmentexpenditures undertaken in the 195b-19 2 period when Trinridad and Tobago'sFirst Five-Year Plan was carried out. While prior to 1958 the annual levelof public investment expenditures did not surpass TT$ 30 million, by theend of the Plan period these expenditures had risen to over TT$ 60 million,necessitating increased provisions for the operation and maintenance ofthe new facilities created.

ANNMEX 5Page 5)

b. Increases in wages and salaries of public employees. After

having lag,ged behind the overall rate of increase in wages till 1960,

pressures to increase salaries of the public employees started to build

up, and an average wage increase of 12 percent was granted in 1961.

This adjustment, and subsequent ones in 1962 and 1963, were generally

below the average level of wage increases which the country experienced

in that period. In 1964, therefore, an average 16 percent increase was

granted that contributed heavily to the rapid rise in current expenditures

in that year.

c. The increasing cost of social services, particularly in the

fields of education and other social welfare services. Total current

provisions for sodial services increased by 30 percent in the 1962-lQ65

period (the total increase amounting to TT$ 17.6 million). The larger

part of the increase was due to the nearly doubling of educational

expenditures; expenditurcs for health services remained virtually unchanged.

d. A rapidly rising debt. service. Public debt charges increased

nearly fourfold between 1962 anad 196 T rom TT$ 5L-4 million in 1962 to

TT$ 20.3 million in 1965., when tuhese charges amounted to about 10 percentof current revenues.

e. The rapid rise in grants and subventions to public under-

takings to cover their operating deficits. In l965 these sibventionsand grants amounted to close to TT$ 15 million. By far the most importarntsubventions went for road and rail transport (TT$ 7.7 million) and Waterand Sewerage (TT$ 6 million), British West Indies Airways (TT$ 18 million)

and the Port Autlhority (TT$p 1.3 million to cover the operating deficitsof the inter-island launch service). The main cause of these deficitswas an inadequate rate charged to the final users of these facilities,which failed to take into account the rising level of wages and salaries,

9. Public investment expenditures during the 1962-1965 periodremained virtually unchnanged and averaged about TT$ 62 million or about 5*)

percent of the gross domestic product. Their financing, however, wasin sharp contr3st with the 1958-1962 period when public investment wasby about 90 percenit financed fronm internal sources (and by about 60 percentby public savings). With the current revenue and expenditure trends notedabove, public savings declined progressively after 1962 from TT$ 29.1

million to only TT$ 6.7 million in 1965 and financed only 10 percent ofpublic investment expenditures in that year. Central Government irnternalborrowing which yielded TT$ 24.7 million in 1962 (a record, caused by theextraordinary placement of TT$ 19.6 million in Treasury Bills with thecommercial banks) amounted to only TT$ 10 million in 1965, so that inthat year public investment was by only 28 percent financed from internalsources, as compared to 73 percent in 1962. The remainder was financedby foreign borrowing and payments by the f.S.Government for lease of theChaguaramas Base.

10. Foreign borrowing after 1962 consisted of a total of TT$ 30.9

million in drawings on the US$ 23.5 million IBRD loan for power e-pansionsigned in 1961, a TT$ 2.8 million loan from the U.K. Treasury, a total of

TT$ 18.4 million in drawings on loans from the Export-Import Bank and an

ANN3EXPage 6

American supplier for the expansion of the telephone and the seweragesystem, a total o.f TT$ 31 -million in Independence Developmerint andBetter Village Bonds, taken up by foreign companies operating in thecountry(some of which is ultimately-Y repayable in foreign currency) anda US$ 10 million short term loan (TT$ 17 million) obtained from theChase Manhatt,-i Bank in 1963, in anticipation of a longer term placementin the U.S. market in 196'. In that year TT$ 29 million was raised ofwhich TT$ 17 million went for the amortization of the above-mentionedloan. Finally, about TT$ 29 million of the original TT$3, 51 million ofLease Payments for the Chaguaramas Base was taken up to finance generaldevelopment projects. The latter funds are equivalent to programassistance in that their use is not in general tied to specific projects0

The Outlook for; the 1966-1968 Period.

11. The Government of Trinidad and Tobago is concerned at thedecline in public savings and recognizes the urgent need for measures toreverse this trend. Preliminary projections indicate that unl esscorrective action is being taken, the current account balance by 1960would be negative by about TT$ 5 million. At the same time, investmentexpenditures are to go up to about TT$ 70 m.illion annually during thenext three years. The need for corrective action is all the more urgentsince drawings on foreign loans and lease payments are likely to beprogressively reduced over the next few years.

12. The Government is now giving consideration to possibilitiesof further increases in texation, improvements in tax administration,reductions in the operating costs of the public undertakings and highercharges for their services. In addition to these measures, the Govern-ment initends to encourage the flows of private savings in various waysand plans to build institutions that would help to tap a part of thesesavings for the financing of public investment in the years ahead.However, the 1966 Budget does not contemplate any net increases intaxation; in addition, current expenditures are to rise by 6 percent(stimulated by further wages increases in the public sect,or), thusvirtually wiping out the elntire current account surplus, and totalpublic savings are expected to decline further to about TT$ 3.5 millionthat would finance only 5 percent of total public investment. The bulkof corrective measures, therefore, is now planned to be introduced in1967 and 1968.

The 1966 budget.

130 The 1966 budget contains a nmumber of addit:otial reven'ie proposalsthat were prepared in earlier years. These proposals consist of:

a. A new system of taxation of companies, whereby corporationsare treated as entities distinct from their shareholders,which would have the effect of making the former liable forthe company income tax and the latter for the personal incometax on their dividend earnings.

ANNTE SDag,e 7

b. The uniform 42,5. percent rate of cornpany income taxwill be raised to 44 percent, with special allowancesfor exports and employment.

c. An expansion in the system of taxation at source by theintroduction of a withholding tax of 15 percent on thedistributions of resident corporations and residentpartnerships.

d. A provisional 30 percent withholding tax on the distribu-tions of non-resident corporations and non-residentpartnerships, subject to modification through doubletaxation agreements that may be concluded in 1L966.

e. A new capital gains tax levied on gains from the sale ofassets held for a period of twelve months and over.

f. An increase in excise and import duties on rum and beer,that will probably yield about TT$ 350,000 in additionalrevenues in 1966.

14 The net effect of these measures in 1966 is likely to benullified by the introduction of two measures affecting collections ofthe personal income tax:

a. The maximum individual income tax rate has been reducedfrom 90 percent to 75 percent.

b. Individual income tax payers are allowed to redu.ce theirchargeable income (derived from wages and salaries) forthe assessment of income taxes by 10 percent.

15,, With current expenditures budgeted to increase by about 6 percentin 1966, the current account surplus is likely to disappear and despite a

30 percent increase in telephone rates the gross savings of the publicutilities are expected to decline by close to 30 percent over 1965, fromTT$ 5.7 million tG TT$ 3..5 million, thus financing only 5 percent of 1966investment expenditures that are planned to increase to TT$ 71 million.If no further action is talken, public investment in 1966 will have tobe almost entirely financed from domestic borrowing and from externalgrants and loans. Local borrowjing is assumed to yield about TT$ lOa,5million (from the issue of Treasury Bills, Savings and Treasury Bonds).A further TT$ 7n5 million is available locally from loans made to theGovernment by the foreign oil coropanies; however, sirnce these are ultimatelyrepayable in foreign exchange, they should be treated as an externalresource. Trinidad expects to receive the equivalent of TT$ 14 millionin 1966 as the penultimate instalmnent of the payments being made by theU,,%Government for the use of the Chaguaramas Base. Di sbursements out offoreign loans already negotiated for particular projects are estimatedto yield about TT$ 16 million, leaving a gap of about TT$ 19 million tobe covered from Lresh external borrowing. The Government e.,xpects to fillthis gap in part by approaching the London and/or New York capital mr:-rket.

A NE;X 5Page E

As a financing pattern emerges from the 1966 budget that does not show animprovernent in the Government s financing effort over previous years, theGovernment intends to take f.iscal action in 1967 and 1968 that wouldreverse the financial deteriorat"on of the recent past.

16. Government officials informed the mission that it would be amajor objective of policy in 1967 and 1968 to mobilize additional savingsthroughout the budget. The Governmentfs goal is to achieve budget surDlLsesof at least TT$ 10 million in 1967 and TT$ 12 million in 1968. Althoughmeasures already taken or being taken in 1966 are e-pected to yield somerevenue increases, officials -stated that the Government was aware thatadditional measures might prove necessary to achieve this end. Dependingon how oil revenues develop over the next three years, this could requirea program of fiscal action yieldiang anything from TT$ 15 - 20 million ayear in the way of additional revenues, in addition to a substantialreduction in the operating deficits of some of the public undertakings.At the same time, measures already taken or under consideration are expectedto increase the gross savings of public utilities (electricity, telephoneand port) from an estimated TT$ 3>5 million in 1966 to over TT$ 8"5 millionin 1967 and TT$ 12 million in 1968.

17. If all these measures are taken, public savings would be raisedfrom under TT$ 5 million in 1966 to TT$ 24 million in 1968, when theywould be sufficient to cover over one-third of proposed public investmentexpenditures of around TT$ 70 million. About TT$ 13 million a year isexpected from government borrowing locally through the sale to the publicof Treasury Bills, Savings Bonds and. Treasury Bonds. This estimaue isconsistent with past performance and wsith the trend in national income,and the mission would not expect it to have inflationary consequences.Scope for local borrowing will be increased as a result of legislationto be introduced shortly, under which insurance companies will be requiredto invest a certain proportion of thAir premium income in domestic securities.

18. The public investment program contemplates total expenditures ofTT$214 million over the three years 1966-1968. It looks, however, as ifinvestment expenditures may have to be held back in 1966 for lack of funds.In the remaining two years, against pr'cjposed investment expenditures ofaround TT$ 140 million, the Government plans to finance half out of domesticsavings and to raise the remaining TT$ 70 million from e.:ternal sources.Towards this TT$ 70 million of external finance, the final payment by theUnited States for the Chaguaramas Base will contribute TT$ 9 million(in 1967) and another TT$ 6 million can be expected from loans promisedby foreign oil and sugar companies for the purchase of Independence Develop-ment and Better Village Bonds. Disbu-rsemeints from existing project loansshould yield approximately another TT$ 15 million during the two years,leaving TT$ 40 million (US$24 million) to come from new project loans andborrowing in private capital markets abroad.

19. Provided that the additional domestic savinc-s referred to aboveare mobilized, at least half of the public investment program in 1967 and

ANNTEX 5age9

1968 can be financed from domestic sources. To cover the other halfand to bridge the uncovered gap in the investiment budget for 1966,totalborrowing abroad of the order of US$4j0- 50 million over the next threeyears is c,alled. for, of which up to US$20-25 million might come fromthe IBRD and the remainder from other sources, including possible marketissues in London and New York.

ANNEX 6

EXTERNAL FINANCES AND TRADE

1. Balance of payments developmentus in the past 15 years reflectthe rapid expansion of the economy of Trinidad and Tobago, which waslargely stimulated by foreign investments in the export sector (petroleum,petrochemicals and sugar) and by local and foreign investments in thei:mport-substituting sector. Thus, while imports and exports of goodsand services (excluding crude oil for processing purposes) more than

doubled in the 1952-1965 period and the economyr experienced a persistentcurrent account deficit (primarily determinred by the magnitude of iinvest-ment income remittances), the countryts foreign exchange reserves at theend of 1965 were somewhat above the 1952 level. With the progress achievedin import.-substitution the economy became less dependent upon externaltrade. Imports accounted for 40 percent of the gross domestic productin 1965 as compared to 55 percent in 1952.

2. The main determinant of Trinidad and Tobago's rapidly risingexports (from TT$ 11906 million in 1952 to TT$ 378.1 million in 1964,i.e. excluding the imported crude oil component from the value of exports

of final petroleum products and after making some balance oL paymentsadjustments) was the sharp rise in crude oil production in the lI)5O's anda trebling of refining activity between 1952 and 196L". Exports of fuelsand lubricants rose from TT$ 105.3 million in 1952 to TT$ 243 0 7 millionin 1964 and accounted for two-thirds of the country's merchandise exportearnings in 1964. At the same time, however, exports of other products,such as sugar, chemicals (principally fertilizers), foods, beverages,tobacco, oils and fats and manufactures (textiles) increased rapidly.

Fuels and Lubricants.

3. Exports of fuels and lubricants more than doubled between 1952and 1961 following the rapid rise in crude oil production in this period.All but 10 percent of domestic crude production is refined by two oilrefineries producing final products for exporto With a trebling ofrefining capacity domestic crude has increasingly been supplemented bycrude oil imports from the I'hiddle East and Venezuela, refining cf whichis undertaken. at a processing fee. Two-thirds of ref'inery output nowcomes from the processing of imported crude. WIith domestic crude oilproduction stagnating since 1962 and petroleum prices declining, thevalue of exports of fuels and lubricarts hardly increased between 1961 and

1963 and declined somewhat in 1)6)4, despite the 20 percent growth inrefinery output in this period. The contribution which processing feesmake to the countryts export earnings is relatively small. The primedeterminant of Trinidad and Tobago's export earnings on account of fuelsand lubricants, therefore, is not the level of refinery output, but ratherthe level of domestic crude oil prciuction and international petroleumprices.

uther Exports.

4. D3etween 1952 and 1964 exports of products other than oil rosefrom TT$ 53.2 million to TT$ 12,6L4 million. ExDorts of chemicalsincreased nearly five-fold to TT$ 27.9 million in 1964 and conEist

A':HEXiD 6Page 2

primarily of fertilizers. A petrochemical plant (Federation Chemicals),which came into production in 1960, convrerts natural gas into ammoniaand solid fertilizers for export to neighboring countries, North Americaand Europe. Exports of sugar more than doubled betwreen 1952 and 1964,following the rapid rise in production from 137,000 tons in 1952 to230,000 tons in 1964.D Most of Trinidad and Tobagols sugar is exportedto the United Kingdom and Canada under the Commonwealth Sugar Agreement,and thus led to only a marginal drop in sugar export earnings in 196)4,when world prices dropped rapidlyc Exports of cocoa,while remainingfairly constant over the 1952-1963 period dropped by near!y 50 percentin 1964, caused by a reduction in production and by a sharp decline inprices. The remainder of exports apart from manufactures, machinery andvehicles (a large part of which are, however, merely re-exports toneighbouring islands) consists of exports of textiles, (primarily ready-made clothing), citrus products, some other foods, beverages, edibleoils and fats and tobacco, Their quantitative significance, however,is not important: exports of fuels and lubricants, sugar, ferti lizerand cocoa account for over 85 percent of total merchandise export earnings.

In the 1952-1965 period, with the gross domestic product atcurrent market prices rising nmore than threefold, merchandise imports(excluding crude oil for processing purposes) increased less, by about2.5 times, reflecting the progress made in import substitution. Importsnow account for about hO percent of the domestic product, as comparedto 55 percent in 1952. A fair amount of import substitution took placein manufacturing (light consumer goods, building materials) and inagriculture. Imports of foods account for a smaller proportion of nationalincome today than they did fiLteen years ago. Over the years, the compo-sition of imports changed somewhat: while between 1952 and 1960 theproportion of imports of raw materials and capital goods rose from 39 to45 percent of total imports, reflecting Trinidad and Tobago's high andrising level of investment and GDP, the proportion declined to about)42 percent by 1964, reflecting the fairly rapid growth in consumptionexpenditures in this period. While imports of private automobiles in1962 and 1963 declined sharply following corrective fiscal action, importsof cars and other luxury items picked up sharply in 196h and 1965.

6. With the indicated trends in merchandise trade, Trinidad andTobago (with the exception of 1960) experienced a regular surplus ontrade in goods and ser-vices, but imports have been rising f'aster thanexports since 1963, with the result that the surplus has been progressivelyreduced in 1964 and has disappeared in 1965. Receipts and payments oncurrent account, excluding investment income, have been mlore or less inbalance in 1964 and 1965 Payments of investment income abroad (principallyremit'ced by the oil companies and the petrochemical plant), however, haverisen fourfold to about TT$ 110 million in 1965 and determine the magnitudeof the deficit on current account (about 10 percent of GDP).

7. Trinidad and Tobago t s current account deficit has been financedin part by the reinvestment of profits and other long-term capitalinflowis (principally again by the oil companies, and the petrochemicalplant, but also by the sugar companies), partly by official grants and

ANNEx 6Page 3

loans (especially between 1962 and 196l), and partly also in 1964by a sizeable reduction in the foreign assets of the commercialbanks. Durirng the 1950ts when Trinidad and Tobago was in regularsurplus on trading account, the commercial banks accumulated substan-tial balances abroad, their net overseas assets rising from TT$ 48million in 1952 to TT$ 102 million at the end of 1959. Since 1960the trend has been reversed, and by the end of 1965 these assets hadbeen reduced to TT$ 28 million. Apart from the holdings of thecommercial banks,net foreign assets of the Government and monetaryauthorities amounted at the end of 1965 to TT$ 112 million. Theseassets were mostly held as cover for the currency or in the form ofspecial funds earmarked for specific purposes (sinking funds etc.).

#1i

TRINIDAD AND TOBAGO+-.-§ 4-~-'-- Railways 0-4 I-I Oil pipelines . Sugar cane Citrus fruits Plyhout/

Main roads . Oil refineries- co Coffee

Oilfield areas Boundaries of areas

under marine licenses Coconuts Bananas

CnaPoint Afrfeld Ugh M ARC

b/ 0 5 0 15 20 BMatelotMtLES

THE WEST INDIES

@> .OOM. te ero.a~c

LeseT\POR-T*''-----'*''---- -OF-SPAI. AAAC A r[ein es( eO

MAY 1966 D3RDl-1i3Z3R