In a statement following the conclusion of an International Monetary Fund’s recent mission to Trinidad and Tobago, the head of this mission, Elie Canetti, based on available information, inclusive of job losses and constraints in the energy sector, has concluded that the country’s economy is expected to contract 1.0% this year. Declines in energy-based revenues will constrain the government’s ability to “act as an engine of growth”.
The Fund noted, however, that with substantial financial buffers, and low growth in the public debt, Trinidad & Tobago was not in a crisis. Nonetheless, the IMF added, “considering the size of the energy revenue windfalls, the country has under-saved and under-invested in its future”.
As a consequence, the imbalances that are now starting to build up could lead to uncomfortable levels of debt and external financial cushions. The new government, led by Keith Rowley, has agreed that policy adjustments are needed and has effected some difficult but necessary measures, such as, widening the tax base, cutting fuel subsidies, and cutting public expenditure.
Despite the measures, the IMF has projected a 2016 Budget deficit at some 11% of GDP.