Heritage
fund at $12B
By
Richardson Dhalai
Trinidad & Tobago Newsday
Port Spain
Petroleumworldtt.com
09 23 07
The Heritage and Stabilisation Fund, (HSF), is
expected to reach the US$2 billion mark by the
end of September, 2007.
Meanwhile
the country’s official reserves
presently stand at approximately US$6 billion.
That’s
the word from Central Bank Governor, Ewart Williams,
who delivered the feature address
at the South Trinidad Chamber of Industry and Commerce,
(STCIC), annual general meeting at Cara Suites,
Claxton Bay yesterday.
He
spoke on the topic: “Understanding the
Heritage and Stabilisation Fund.”
Williams
said the HSF, also known as the sovereign wealth
funds, was designed to “‘help
deal with boom-bust cycles” and to generate
savings for future generations.
Williams
pointed out that the energy sector accounted
for 40 percent of the nation’s Gross Domestic
Product, (GDP); 90 percent of total exports and
close to one-half of total Government revenue.
“Given our economy’s
heavy dependence on oil and gas, a sharp fall
in prices will affect
Government revenue and could require drastic cutback
in Government spending.
By
putting aside some resources for stabilisation,
the Government would have the ability to cushion
the impact on its spending and consequently on
the level of economic activity,” he said.
Deposits
in the HSF are governed by the HSF Act which
stated that a “minimum of 60 percent
of the excess between actual and budgeted revenues
must be credited to the Fund (where actual revenues
are based on long term projected prices).
Williams said a recent study conducted by the
International Monetary Fund, (IMF), noted that
given the expected trend in oil prices over the
next decade, the HSF could build assets of US$40
billion by 2020.
The HSF deposits are invested in foreign assets
with a medium to long term focus by external managers.
He said the fund under the Act, which comes up
for review every 5 years, could not be used to
directly finance capital expenditure or as collateral
for Government borrowing.
Trinidad & Tobago
Newsday
Saturday, September 22 2007
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