The International Monetary Fund says Trinidad and Tobago is expected to record modest economic growth of about 0.8 percent in 2026, supported by new energy projects and continued expansion in the non-energy sector.
The projection came following the IMF executive board’s completion of its latest Article IV consultation with the twin-island republic.
According to the IMF, Trinidad and Tobago’s economy continued a gradual recovery in 2025, with real gross domestic product growth moderating to 0.8 percent while inflation returned to low, pre-pandemic levels.
The Washington-based financial institution said persistent fiscal deficits, however, contributed to rising public debt, even as the country maintained a current account surplus.
The IMF noted that international reserves have been trending downward, though they continue to be supplemented by substantial liquid assets held in the country’s Heritage and Stabilisation Fund, estimated at roughly 25 percent of GDP.
The report also pointed to steady credit growth and a well-capitalized banking system, which the IMF said reflects continued resilience within the financial sector.
Looking ahead, the IMF projects inflation will temporarily rise to around 3.1 percent in 2026 due largely to global commodity price developments before stabilizing near two percent over the medium term.
The organization said the overall fiscal deficit is expected to narrow to 4.6 percent of GDP in 2026, down from 5.5 percent in 2025, while international reserves are projected to remain adequate at approximately 5.5 months of import cover.
According to the IMF, higher energy prices are expected to provide short-term support for the country’s fiscal and external balances. Officials also cited ongoing government reforms and new energy projects as factors likely to improve Trinidad and Tobago’s economic outlook over time.
Still, the IMF warned that significant uncertainty remains, including possible economic fallout linked to the ongoing conflict in the Middle East.
The executive board cautioned that delays in planned energy projects or production disruptions from aging oil and gas fields could weigh on economic growth. At the same time, it said faster implementation of reforms under the government’s Revitalisation Blueprint and sustained investment could strengthen medium-term growth prospects.
IMF directors also urged authorities in Port of Spain to continue addressing underlying macroeconomic vulnerabilities through prudent fiscal and monetary policies while pressing ahead with efforts to diversify the economy.
The board called for stronger fiscal consolidation measures, including improving revenue collection, rationalizing spending and better targeting social programs while protecting vulnerable groups.
Directors further recommended that any higher-than-expected energy revenues be used primarily to rebuild financial buffers, including through renewed deposits into the Heritage and Stabilisation Fund.
The IMF also praised the government’s efforts to strengthen fiscal institutions and reform the National Insurance System, while encouraging additional measures to improve the long-term sustainability of the public pension system.
In addition, directors supported Trinidad and Tobago’s move toward adopting a medium-term fiscal framework anchored by a fiscal rule and debt target to better manage volatile energy revenues.
The IMF said the country should also continue efforts to improve the functioning of the foreign exchange market and gradually move toward greater exchange rate flexibility over time.
The organization added that the next Article IV consultation with Trinidad and Tobago will take place within the standard 12-month review cycle.
