Economic decline returns, with fury…Part 3. Local, foreign experts weigh in on TT prospects.

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The fortunes of Trinidad and Tobago have attracted no end of commentary from experts both at home and abroad.

Be it out of worry for an economy with a window closing on its tremendous potential, or anxiety over time, energy and finances already invested, the prospects for this country have taken on a fairly negative tone in the past months.

Why all the worry?

And who can blame the experts? Coming out of the 2008 Global Financial Crisis, an economy awash with revenue was suddenly plunged into deficit and collapsing GDP, and forced to face the reality of falling oil production since 2005, agriculture struggling out of neglect, stalled diversification and numerous billion dollar projects incomplete and over budget.

By the time Governments changed in 2010, the incoming People’s Partnership Administration faced no end of challenges, yet managed to fire up a sputtering economy into one that became competitive and increasingly sought after as an investment destination.

Borrowing remained a fixed staple of economic recovery, and a budget deficit continued into the life of that administration leaving a debt to GDP ratio of 46%, up from 31.2% in 2011.

A change in Government again in 2015 brought a turnabout in numerous fiscal measures with harsh strategies to raise revenue and rein in Government spending. Some of those measures either missed the intended target, or failed altogether as was seen plainly in part two of this series.

Concerns were expressed with the former Administration’s increased expenditure and a Central Bank overdraft being left behind. The overdraft was due to be managed by incoming revenues of $4 Billion of TGU, $1.5 Billion from the NGL IPO, $6 Billion from taxes, but the new Government through its Finance Minister denied the former Administration’s assertions.

A total of $11.5 Billion in revenue became a source of contention. However, by the mid-year review, the Finance Minister admitted: “In addition, having already received US$300 million (TT$1.9 billion) from TGU, we expect to collect a further US$255 million (TT$1.7 billion) from TGU in the second half of this fiscal year.”

Regrettably, the media never called the Finance Minister out on his contradiction, or asked whether revenue from one fiscal year was brought forward and ploughed into a later fiscal year.
By early 2016 alarm bells were being sounded as Trinidad and Tobago’s economy hit serious skids for a second time in a decade, and as we approach 2017, most experts are still waiting for practical economic plan to redirect the economy to recovery, growth and sustainability.

Experts at home speak out

The change of fortunes for Trinidad and Tobago sparked debate in the local fraternity with former Ministers and Economy Experts voicing strong reservations.

A former Minister of State in the Ministry of Finance, Mariano Browne said Government would be best advised to cut expenditure for 2017, and ominously predicted that Government will again resort to the Heritage and Stabilisation Fund (HSF) for financing.

The Central Bank of Trinidad and Tobago, in its Economic Bulletin of July 2016 stated: “Provisional estimates from the Central Bank’s Index of Real Quarterly GDP indicate that domestic economic activity declined by 5.2 per cent (year-on-year).”

The Bulletin also stated: “The contraction in the domestic economy is slowly impacting the labour market, as the unemployment rate trended upwards and the labour force participation rate declined.”

At the University of the West Indies, St Augustine, Economist Anthony Birchwood said: “We will have to make serious adjustments just as the rest of the world has been doing to cope with the difficulties arising from shortfalls in fiscal revenue. We have to attack our current situation aggressively in order to treat with the new economic realities.”

Other Economists were blunter in their forecasts, suggesting higher food prices, loss of investor confidence and a worsening of the country’s already bleak foreign exchange situation.

Their pessimism centred on the Foreign Account Tax Compliance Act (FATCA) legislation which Economist Vaalmikki Arjoon suggested was “one of the most significant pieces of financial regulations in history.”

Economist Indera Sagewan Alli stated: “Without compliance any US transaction would be subject to a 30 per cent withholding tax. That is when what you the customer have to pay. So if you want to wire transfer US$100 you will have to pay 30 per cent on that. Does that make any sense?”

Worst slump in 33 years…

Bringing current economic perils down to brass tacks was UWI Economist Roger Hosein who described the current slump as the worst in 33 years, saying in a daily newspaper: “The real economic growth rate in Trinidad and Tobago in 2016 in the first quarter was -5.4 per cent and in the second quarter, -8 per cent. I have roughly estimated based on the various economic facts floating around for the second half of 2016, including platform shutdown, declining production of oil and gas and subdued prices of the same, that the average growth rate in 2016 can fall to as low as -6 per cent. If this scenario unfolds, then 2016 would be the sharpest contraction of the T&T economy since 1983. What is of concern is that there seems to be no major plans in stream, that can reverse these tendencies.”

Royal Bank of Canada (RBC) Caribbean Group Economist, Marla Dukharan, estimated that the T&T economy contracted by -6 per cent in 2016.

And global agencies weigh in

As Trinidad and Tobago experts urge a better direction for fiscal policy and economic management, there has been no shortage of advice, caution and action from the global rating and lending agencies.

A report from the Economic Commissioner for Latin America and the Caribbean (ECLAC) estimates that the T&T economy declined by 4.5 per cent this year.

ECLAC said the economic slowdown has shown its severity in the economy’s labour force statistics. Unemployment rose from 3.5 per cent in the fourth quarter of 2015 to 3.8 per cent in the first quarter of 2016, and then to 4.4 per cent in the second quarter.
On the day before Christmas 2015, Standard and Poors revised to negative its outlook on the T&T economy.

Its rationale was clear: “The change in outlook to negative from stable reflects an at least one-in-three chance that prolonged low energy prices and potentially poor GDP growth prospects could result in a steadily rising debt burden, leading to a downgrade in the next two years.”

In April 2016, Moody’s Investors’ Service downgraded Trinidad and Tobago’s creditworthiness to one notch above “junk” lowering Trinidad and Tobago’s ratings to Baa3 from Baa2 and assigning a negative outlook.

Part of the justification for the move by Moody’s read like an indictment on the Trinidad and Tobago economy, stating: “There is a high likelihood that the policy response to the commodity price shock will not be as timely and effective as required due to lack of macroeconomic data and weak policy execution capacity.”

Barely a week later, Standard and Poor’s Ratings Services (S&P) weighed in again and lowered T&T’s ratings to four notches above junk. T&T’s new rating at S&P is “A-/A-2”.

Adding their voice to the state and prospects for Trinidad and Tobago was the World Bank who said forthrightly that ‘doing business in Trinidad and Tobago has gotten tougher in the past year’.

Following a 12-point improvement in the World Bank’s Ease of Doing Business Ranking 2015 report, Trinidad and Tobago tumbled four notches in the latest index, becoming the world’s 96th “easiest” place to do business, out of 190 nations.

IMF in the shadows

The International Monetary Fund (IMF) has been suspected of being well connected to the present Government since taking office, with the Finance Minister admitting to having invited a team of IMF experts to advise on measures in the 2016 budget.

The IMF tends to inspire dread in the hearts of the working men and women of the population because they are associated with harsh measures that directly impact families and livelihoods.

In March of 2016, follow its Article IV Consultation, the IMF stated: “Structural reforms remain key to unlocking the country’s growth and diversification potential.”

The IMF also stated: “The mission welcomes the continued emphasis on improving the business environment and streamlining Government “make-work” programs to help alleviate shortages of less-skilled labor. The Government has initiated a much needed review of GATE, which we trust will better focus the educational system.
Procurement reform, a key Government priority, is needed to assure contractors of an even playing field and reduce perceptions of corruption.”

Later on by 29 June 2016, following another Article IV Consultation with the Trinidad and Tobago Government, this is what was posted at its website:

  1. The economic output of Trinidad and Tobago has continued to shrink;
  2. The longstanding current account surplus turned into a 5.4 percent of GDP deficit in 2015;
  3. The significant terms-of-trade shock implies that the real effective exchange rate has become more overvalued. Risks to growth are tilted to the downside, and much will depend on the authorities’ ability to navigate the transition to the lower energy price environment.”

But the IMF didn’t stop there. It was reported in the local print media that the nation needs more Value Added Tax (VAT), adding: “…priority should be given to broadening the revenue base with a comprehensive VAT reform.”

The IMF also described Government’s Budget assumptions as “over-optimistic” and predicted a fall in Gross Domestic Product (GDP) by 2.7 percent.

Despite the grim outlook, and regular reports of the agency having to adjust its growth forecasts downwards, the IMF predicted economic turnaround by 2017 on 30 June 2016, suggesting: “A 600 basis point jump in economic growth from -2.7 per cent in 2016 to 2.3 per cent in 2017.”

The IMF further projected economic growth of 3.6 per cent in 2018; 3.2 per cent in 2019; 1.2 per cent in 2020, and 1.2 per cent in 2021.

What’s left to be seen is whether the IMF will be allowed to fully entrench itself in the Trinidad and Tobago economy to pursue 1986-esque type structural reforms to achieve these results, or if the seemingly ambitious forecasts will experience downward revisions in the coming months.

What is also left to be seen in 2017 is whether fears of further food price increases, property tax, and fuel cost increases will materialize, adding even more burden to an already weary population.


Budgets 2011 to 2015


TOTAL REVENUE (projected rev)

(proj exp)


(proj def)


(Winston Dookeran)

$47.5 billion ($41.3B)

$51.5 billion ($49B)

$3.99B ($7.7B)


(Winston Dookeran)

$49.23 billion ($41.3B)

$52.8 billion ($54.6B)

$3.5B ($7.6B)


(Larry Howai)

$52.76 billion ($50.7B)

$57.9 billion ($58.4B)

$5.2B ($7.67B)


(Larry Howai)

$59.9 billion ($55.04B)

$64.8 billion ($61.4B)

$4.9B ($6.4B)


(Larry Howai)


($64.7 billion)


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