The revenue loss from the reduction of oil and gas production is hard to calculate annually because of fluctuations of various kinds. But the revenue loss is severe and finding alternative ways of making up for the shortfall is not an easy challenge.
The energy sector represents more than one quarter of government revenues and 80% of exports, which makes it the largest foreign exchange earner. The decline in energy production—oil, natural gas, and consequently petrochemicals and LNG and the consequent loss in revenue, are directly responsible for T&T’s current high level of fiscal vulnerability, its GDP decline over the last decade, its inability to replenish foreign exchange reserves the economy’s inability to achieve economic growth.
The annual revenue loss runs into the hundreds of millions and, depending on production and price fluctuations, can reach US$1 billion in any given year. In 2014, there was a US$4.3b loss in revenue. In 2020, unaudited figures show a revenue decline of 54%. But 2019 was also an unexpected windfall year.
Any assessment of the economic condition of T&T must take into account two key structural factors. This country’s heavy dependence on energy and on imports, both as inputs into the production process and simply to facilitate food and quality of life for citizens.
If you are an investor looking at T&T, there are certain things you would want to look at as indications of the country’s financial resilience and fiscal health. The condition of foreign reserves, the Heritage and Stablisation Fund (HSF) and sovereign debt would be vital.
Let’s take debt, which is now at about 70% of GDP, which is not unmanageable, but which shows a rising trend. The public debt is about 80% and additional borrowing and continuing deficits will increase it. And on the debt servicing side, about 32% of it is in foreign currency. Moreover, the 2026 Budget estimates indicate a shift to external borrowing—about TT$10.9b coming from the international market (which would translate to about US$1.4b and a higher level of debt servicing in forex).
The $4.6b reported as the net official reserves at the end of August 2025 reflects continuing decline of these reserves. That is comfortable enough for six months of import cover, but without reduced imports and more foreign exchange earnings, there will be no replenishment and quick depletion. Some economists like to refer to the Gross Foreign Assets, which includes holdings of commercial banks and the Government as further buffers, but realistically speaking, this should not be leaned upon as a source of comfort. What really matters is the stock of net official reserves (NOR), which is a dwindling, unreplenishable buffer, as of now.
The HSF now has US$5.6b. But a significant part of these are invested in equities and subject to fluctuation. And withdrawals were made by PNM Finance Minister Colm Imbert, are unlikely to be replenished by higher than budgeted oil prices anytime soon, and an increased deficit from unrealised revenue projections and unbudgeted expenditure may lead to further drawdowns by current Finance Minister Dave Tancoo.
When ratings agencies look at T&T’s financial health, they often balance off assessment of fiscal weaknesses by looking at HSF assets as a mitigating factor. Even in its current relatively weak and potentially volatile state, it does represent 51% of our fallen GDP. Standard and Poors, in their recent assessment, viewed the HSF in this way and a firm like William Blair, focused on financial analysis, has indicated the size of the fund (I suppose relative to GDP) provides solid support for T&T’s financial stability, even if one takes into account that economic fundamentals are not strong.
So, in 2025 and continuing into 2026, what we have is a still energy-dependent economy, a persistent import-dependent economy, confronting fiscal pressure from rising debt, increased foreign debt, and persistent deficits, but with reasonable buffers in terms of foreign reserves and HSF, both also facing pressure of continuing depletion or drawdowns. Objectively, I don’t see how this situation can be assessed as T&T being in a good place. Yet Standard and Poors gave T&T a BBB-/A 3 rating with a negative outlook—I think they were kind and optimistic about the change in government.
The Government should be focused on the negative outlook part of the assessment. And, we should focus on how to get out of this economic, financial and fiscal box our country is in.
In the 2026 Budget, the Government has identified five pillars: 1. economic diversification; 2. fiscal modernisation; 3. social development; 4. infrastructure; 5. crime reduction.
Structuring capacity to make these happen is where focused, intentional action should be.
Just get it done! That is the job.
