First Citizens chairman Anthony Smart, second from left, shakes hand with Finance Minister Larry Howai after the bank’s annual breakfast meeting at Fiesta Plaza, MovieTowne.
Finance Minister Larry Howai defended his projection of $80 a barrel for oil in his budget presentation. He said U$80 per barrel oil price on which the 2014/15 budget is pegged is a reasonable conservative estimate given the level of prices in the global market.
He said in 2008 the price of oil was US$140, the following year the price dropped to US$40. “We are in an environment where we use the best estimate and good judgment in terms of what we think is likely to happen as far as prices of these very critical variables for our budgeting and fiscal position,” he said. “In terms of the international economy, we are starting to see growth in the United States. “The rate of growth is not as robust as it used to be say two decades ago. We are in a situation, particularly some of the Asian countries, China and India, have been facing slow downs.”
Howai said there might be two or may be three per cent growth in the global economy but not at the level as it was in previous years. This could have implications for pricing, he said. “Our projection on average, is that we see prices averaging out somewhere about where they are now—between US$90 and US$95—and gas prices would average out above the US$2.75 position we normally would budget for. Going forward for the short-term we are in a relatively stable mode as far as those prices are concerned.”