VZCZCXRO3017
RR RUEHGR
DE RUEHSP #0826/01 2291124
ZNR UUUUU ZZH
R 171124Z AUG 07
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 8532
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHDG/AMEMBASSY SANTO DOMINGO 2593
RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000826 
 
SIPDIS 
 
SIPDIS 
 
SANTO DOMINGO FOR REGIONAL COMMERCIAL OFFICE 
 
E.O. 12958: N/A 
TAGS: EFIN ELAB ENGR ETRD TD
SUBJECT: TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS - JULY PART 2 
 
 
The following were notable economic issues in Trinidad & Tobago 
during the second half of the month of July. 
 
¶1.  T&T economy scores with IMF 
¶2.  Inflation continues to decline 
¶3.  Tobago inflation also down 
¶4.  Chinese labor for yet another construction project 
¶5.  Marginal increase in electricity rates 
¶6.  T&T should prepare for Africa, Middle East trade 
 
¶1.  T&T economy scores with IMF 
------------------------------- 
 
At the conclusion of the annual International Monetary Fund (IMF) 
Article IV visit, IMF mission chief Max Alier said that he was 
pleased with the overall direction of the T&T economy.  He commended 
the GOTT and the Central Bank of Trinidad and Tobago for 
successfully controlling inflation, although T&T's seven percent 
inflation currently is still higher than internationally accepted 
standards.  He said that fiscal policy needs to be tightened to help 
contain inflationary pressures, as signs indicated that the economy 
was operating at full capacity.  Additionally, Alier recommended 
removing Cost of Living Allowance (COLA) from the GOTT's wage 
agreements, prompting sharp responses from local labor activists. 
On efforts to diversify T&T's economy, Alier said that T&T was 
rightly aiming to use energy resources to reach ambitious 
development goals before oil and gas reserves were exhausted. 
 
¶2.  Inflation continues to decline 
---------------------------------- 
 
According to The Central Bank of Trinidad and Tobago (CBTT) headline 
inflation continued its decline to 7.3 percent (year-on-year) in 
June, down from 7.9 percent in May.  The Central Bank ascribed this 
to tightened liquidity conditions and more orderly market conditions 
for agricultural produce.  Food price inflation slowed to 14.7 
percent (year-on-year) in June from 17.3 percent in May, due mainly 
to declines in the price of meat, fish and vegetables, but with 
increases in the price of bread (13 percent), fruits (24.4 percent), 
and milk, cheese and eggs (13.6 per cent).  Core inflation remained 
unchanged at 4.5 percent.  The CBTT release stated that "the pace of 
inflation reduction over the next few months remains uncertain, in 
part, because the proximate causes, such as credit expansion and 
fiscal injections, are still much stronger than they should be." 
Recent increases in electricity rates and rising food prices in 
global markets impacting inflationary expectations is a continued 
concern.  Emphasis on liquidity management will be the prime focus 
of the CBTT's monetary policy stance geared towards reducing 
inflation to no more than seven percent by the end of the year.  The 
"Repo" rate remains unchanged at 8.0 percent. 
 
¶3.  Tobago inflation also down 
------------------------------ 
 
Figures from the Central Statistical Office in Tobago indicate that 
Tobago's inflation rate declined by 0.2 percentage points in June, 
from 4.9 percent to 4.7 percent.  The main contributors to the 
decline in retail price inflation were decreases in the food and 
non-alcoholic beverage and the clothing and footwear components of 
the index. 
 
¶4.  Chinese labor for yet another construction project 
--------------------------------------------- --------- 
 
Prime Minister Patrick Manning announced that Chinese labor again 
would be used to build a government project, this time a US$40 
million Academy of Performing Arts in the southern Trinidadian city 
of San Fernando.  He said that Shanghai-based contractors are 
mobilizing to begin constructing this southern branch of the Academy 
of the Performing Arts.  Also planned for the south is a US$47 
million multi-storey complex which will house government offices, a 
mall and car parks.  Manning did not indicate that Chinese would be 
constructing this complex. 
 
¶5.  Marginal increase in electricity rates 
------------------------------------------ 
 
The Regulated Industries Commission (RIC) has proposed marginal 
increases in the country's electricity rates for the period August 
1, 2007, to May 31, 2008.  According to RIC Commissioner Harjinder 
Atwal, 74 percent of customers will not be affected.  Residential 
customers consuming between 1,000 and 1,300 kWh will experience a 
0.76 percent increase, and those using 1,600 kWh will pay an 
additional 1.21 percent.  There will be no increase in energy 
charges for customers using up to 1,000 kWh and no increase in the 
US$0.95 customer charge to residences.  Commercial customers will 
experience an increase of 2.6 - 2.9 percent, and industrial 
customers an increase of no more than three percent.  Atwal said 
 
PORT OF SP 00000826  002 OF 002 
 
 
that the impact on inflation will be minimal.  Electricity rates in 
Trinidad remain the lowest in the Caribbean. 
 
¶6.  T&T should prepare for Africa, Middle East trade 
--------------------------------------------- ------- 
 
At a recent function, Dr. Patrick Edwards, T&T High 
Commissioner-designate to Uganda, with concurrent accreditation to 
Kenya and Ambassador to Saudi Arabia, Egypt and Ethiopia called on 
the T&T business community to cultivate business opportunities in 
these countries.  He said that one of his mandates was to establish 
business linkages and seek out opportunities for T&T.  He also urged 
the business community to prepare for a plethora of opportunities in 
fields like transportation, entertainment and hospitality when T&T 
hosts both the Commonwealth Heads of Government and the Summit of 
the Americas in 2009. 
 
 
RIES