A mission from the International Monetary Fund (IMF) ended a two week visit to Trinidad and Tobago on Friday. The mission’s leader Elie Canetti indicated the oil-rich twin island republic continues to face economic challenges. The reason for the challenges stems primarily from the sharp declines in global energy prices since 2014, combined with a fall in natural gas and oil production.
It said the economic improvement now beginning is projected to continue into the medium-term. Canetti said, “fruitful discussions were held on a number of adjustment measures to achieve the necessary fiscal consolidation.”
Weak revenue collections
“These, along with the prolonged economic stagnation, capital allowances, and challenges with tax administration have continued to contribute to weak revenue collections. This in turn, is leading to still significant fiscal deficits and rising public debt levels,” said Canetti, an advisor, Western Hemisphere Department at the IMF.
He said preliminary data shows TNT economy contracted in the first half of the year on weak energy production and spillovers to the non-energy sector. However, the economy may be starting to turn a corner because of a projected recovery in gas output. Notwithstanding, growth may still be flat or somewhat negative for the year, as a whole.
Non-energy sector expected to rebound
The Mission leader said, “Oil output is growing due to state-owned Petrotrin’s recent exploration efforts and refinery upgrade. As the energy sector recovers, the non-energy sector is expected to rebound due to positive energy-related spillovers, and as implementation of the Public-Sector Investment Program picks up.”
The IMF said the mission welcomed ongoing fiscal policy adjustments, including the government’s efforts to reform the energy tax regime and to boost domestic revenues. It also said although Trinidad and Tobago still holds healthy levels of international reserves, there has been a sharp drop in foreign exchange inflows as energy prices and volumes have both fallen.
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