revenues are more than 10 per cent below budgeted revenues. they could draw 60 per cent of the shortfall subject to a maximum. in order to avoid the excess or shortfall from being manipulated, the law specifically defines the basis on which “ budget revenues ” are to be projected, i. e. using an eleven - year projected price of oil and gas to be obtained from a defined independent source such as the imf or other independent sources. also there is the valid argument that a sustained decline in oil prices would trigger a depletion of the fund to sustain expenditures. the legislation seeks to deal with this eventuality by imposing a capital of us $ 1billion beyond which no drawings could be made. the intention is to adjust this capital over time. minister enill also spoke about the governance structure of the fund which is specified in law. this structure provides for four main actors : • parliament ; • the minister of finance ; • the board of the hsf ; and • the central bank. roles and responsibilities 1. parliament - has passed the enabling legislation that would continue to have oversight of the fund exercised through review of annual reports and audited financial statements. 2. 3. 4. minister of finance - advises the president on the appointment of the board in accordance with the legislation ; - makes deposits to hsf according to formula prescribed in the legislation ; - makes withdrawals from the hsf in accordance with the legislation. - annual reporting to the parliament. the board - is basically responsible for the arrangement of the fund but has delegated some of the functions to the central bank ; - within this context it will decide on the investment objectives and strategic asset allocation ; - reviews the performance of the hsf ; - reports quarterly and annually to the minister of finance ( who in turn will report to the parliament ). central bank - responsible for day - to - day management of the fund ( to meet investment objectives of the board ) ; - reports quarterly and annually to the board. the public also a role to play in the oversight of the fund. before expanding a bit on the nature of these responsibilities, let me clarify that currently the central bank has responsibility for the management of the country ’ s foreign exchange reserves. excluding the hsf, these reserves currently amount to us $ 5. 4 billion. but, there is a difference in the management philosophy underlying of the central bank reserves ( official reserves ) and the management of oil funds, like the hsf. the objective of central bank

ewart s williams : the heritage and stabilization fund of trinidad and tobago address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the heritage and stabilization fund forum, port - of - spain, 2 may 2007. * * * why the forum? the hsf is a most important national asset. it is a sizable sum which, in principle, could become a very significant sum of money over time. these sums are to be held in trust for future generations. accordingly, it requires constant oversight of all stakeholders, starting with the parliament but including civil society, business and all those who have an interest in the country ’ s economic development. viewed from this perspective, the main objectives of this public information programme are : 1. to create a better understanding of the workings of the fund and ensure transparency of the process ; 2. to foster compliance with the new laws, procedures and policies ; 3. to create social ownership ; and 4. to avoid misinformation and to create realistic expectations. what are the objectives of the fund? the fund has two primary objectives. firstly, to insulate fiscal policy and the economy from swings in international oil and gas prices ( let ’ s call this the stabilization objective ). secondly, to accumulate savings from the country ’ s exhaustible assets of oil and gas for future generations. the future generation will not benefit from these savings through annual cheques as was done by alaska but through government ’ s ability to maintain expenditures over the long term when oil and gas revenues are gone. while not a specific objective, the fund, by holding resources abroad, could provide a cushion to monetary policy in the face of volatile external flows. why should the fund cover stabilization? as you know, we ended up with a hybrid fund to cover stabilization and savings for future generations. the simple answer is because of our heavy dependence on the energy sector. while the sector accounts for a mere 3 per cent of total employment, as is shown in the slide, the sector accounts for 45 per cent of gdp ; 91 per cent of merchandise exports and 62 per cent of fiscal revenues. specifically, in respect of the budget, 43 per cent of every dollar of expenditure is financed by energy sector revenues. thus, let ’ s say oil and gas revenues decline by one - half, in the absence of a stabilization fund, expenditures would need to be reduced by 21 per cent. sudden sharp reductions in government expenditures ( of this magnitude ) could have serious adverse effects on