On Mon­day, the Min­is­ter of Fi­nance will present the 2027 Na­tion­al Bud­get. There will be the usu­al fo­cus on the mea­sures an­nounced, the tax­es ad­just­ed, the in­cen­tives of­fered, the pro­grammes fund­ed and the projects promised. In our en­thu­si­asm to get to these mat­ters, we of­ten for­get to an­a­lyze the econ­o­my that the min­is­ter is ac­tu­al­ly bud­get­ing for.

That ques­tion is im­por­tant be­cause any bud­get is ul­ti­mate­ly a fi­nan­cial plan built on an eco­nom­ic re­al­i­ty. The stronger the econ­o­my, the greater the room for rev­enue growth, in­vest­ment, em­ploy­ment and fis­cal flex­i­bil­i­ty. A weak econ­o­my nar­rows those choic­es and so the con­text is as im­por­tant as the con­tent.

The start­ing point for FY2027 can be framed around five ar­eas: growth, jobs, pri­vate sec­tor ac­tiv­i­ty, the ex­ter­nal ac­counts and the fis­cal po­si­tion. We will ad­dress each in turn but the most fash­ion­able place to start is with growth.

The lat­est of­fi­cial Cen­tral Sta­tis­ti­cal Of­fice es­ti­mate shows that re­al GDP con­tract­ed by 0.5 per cent in 2025. That is in con­trast to the In­ter­na­tion­al Mon­e­tary Fund es­ti­mate of growth of around 0.8 per cent for the same pe­ri­od. The point be­ing that the growth tar­get was not met.

Analy­sis shows that con­struc­tion fell sharply and trade and re­pairs weak­ened. Crude oil ex­plo­ration and ex­trac­tion de­clined while petro­chem­i­cals con­tract­ed. These were part­ly off­set by growth in nat­ur­al gas ex­trac­tion, re­fin­ing, food and bev­er­age man­u­fac­tur­ing, and trans­port and stor­age. The econ­o­my there­fore en­tered 2026 from a weak­er base than ear­li­er pro­jec­tions sug­gest­ed.

The best avail­able in­di­ca­tors for the first half of this year con­tin­ue to show weak­ness. The Cen­tral Bank’s Quar­ter­ly In­dex of Eco­nom­ic Ac­tiv­i­ty de­clined 3.6 per cent year on year in the first quar­ter and 3.2 per cent in the sec­ond. What the in­dex tells us is that cur­rent eco­nom­ic ac­tiv­i­ty re­mained soft.

By the sec­ond quar­ter, en­er­gy ac­tiv­i­ty was down 9.6 per cent while non-en­er­gy ac­tiv­i­ty was al­most flat at mi­nus 0.1 per cent. That is a use­ful di­ag­no­sis of where the econ­o­my sits to­day. En­er­gy is a sig­nif­i­cant source of weak­ness, and the non-en­er­gy econ­o­my is not yet grow­ing strong­ly enough to off­set it. There are some ar­eas of re­silience but a broad-based ex­pan­sion has yet to emerge.

Nat­ur­al gas pro­duc­tion re­in­forces the point. Out­put through May av­er­aged rough­ly 2.4 bil­lion cu­bic feet per day. That lev­el lim­its the amount of gas avail­able si­mul­ta­ne­ous­ly to LNG, petro­chem­i­cals, elec­tric­i­ty gen­er­a­tion and oth­er down­stream users. High­er pro­duc­tion from projects now un­der de­vel­op­ment could change the math but un­til those vol­umes ar­rive, to­day’s econ­o­my con­tin­ues to op­er­ate with the con­se­quences of con­strained do­mes­tic gas sup­ply.

Busi­ness ac­tiv­i­ty

Then there are jobs. The un­em­ploy­ment rate rose from 4.3 per cent in the fourth quar­ter of 2025 to 5.4 per cent in the first quar­ter of 2026. The more re­veal­ing num­bers sit un­der­neath that head­line. Em­ploy­ment fell from ap­prox­i­mate­ly 569,900 peo­ple to 564,000, a de­cline of about 5,900 jobs in one quar­ter. The num­ber of un­em­ployed peo­ple rose by around 6,200 to 31,900. The labour force it­self was al­most un­changed. That tells us that the rise in un­em­ploy­ment came with an ac­tu­al fall in em­ploy­ment. Youth un­em­ploy­ment al­so rose ma­te­ri­al­ly, from 7.7 per cent to 12.6 per cent.

The sec­tor break­down adds con­text. Em­ploy­ment in pe­tro­le­um and gas fell from 10,200 to 6,500 be­tween the fourth and first quar­ters. Con­struc­tion, elec­tric­i­ty and wa­ter em­ploy­ment al­so de­clined, as did man­u­fac­tur­ing. The weak­ness there­fore touched sev­er­al ar­eas con­nect­ed to pro­duc­tive ac­tiv­i­ty.

An econ­o­my can car­ry a mod­er­ate un­em­ploy­ment rate and still strug­gle to cre­ate enough pro­duc­tive jobs. The lev­el and di­rec­tion of em­ploy­ment is im­por­tant be­cause this is where eco­nom­ic growth meets house­hold in­come. The ques­tion for the bud­get is there­fore larg­er than whether un­em­ploy­ment re­mains in sin­gle dig­its. It is whether the econ­o­my is cre­at­ing enough pro­duc­tive em­ploy­ment to ex­pand house­hold in­come, im­prove skills and in­crease out­put. The an­swer at this point is no.

Pri­vate sec­tor ac­tiv­i­ty gives us an­oth­er view of the same econ­o­my. Busi­ness cred­it growth slowed from 3.7 per cent year on year in March to just 0.6 per cent in Ju­ly. To­tal pri­vate sec­tor cred­it con­tin­ued to grow, sup­port­ed by con­sumer and mort­gage lend­ing. Mort­gage lend­ing re­mained com­par­a­tive­ly strong.

The busi­ness com­po­nent of the pri­vate sec­tor is where the re­al ten­sion ex­ists. Busi­ness­es bor­row for work­ing cap­i­tal, equip­ment, ex­pan­sion, prop­er­ty, in­ven­to­ry and in­vest­ment. Cred­it growth by it­self can­not tell us every­thing about busi­ness con­fi­dence but a slow­down to 0.6 per cent pro­vides lit­tle ev­i­dence of an econ­o­my in the mid­dle of a strong pri­vate in­vest­ment cy­cle.

Re­tail sales de­clined 1.1 per cent year on year in the first quar­ter even though of­fi­cial in­fla­tion is ex­treme­ly low. Head­line in­fla­tion was 0.6 per cent in Ju­ly, with core in­fla­tion at 0.2 per cent. Low in­fla­tion is valu­able as it pro­tects pur­chas­ing pow­er and re­duces pres­sure on house­hold bud­gets. But very low in­fla­tion along­side weak re­tail sales, slow busi­ness cred­it growth and soft eco­nom­ic ac­tiv­i­ty can al­so re­flect sub­dued do­mes­tic de­mand. How­ev­er, stim­u­lat­ing de­mand comes with an­oth­er cost.

For­eign Ex­change

Net of­fi­cial in­ter­na­tion­al re­serves stood at about US$5.3 bil­lion in Au­gust, equiv­a­lent to 6.1 months of im­port cov­er. The coun­try al­so record­ed a cur­rent ac­count sur­plus in the first quar­ter of 2026. The re­serve po­si­tion has im­proved from the 2025 trough, but it re­mains be­low the lev­el record­ed in mid 2024, when im­port cov­er was ma­te­ri­al­ly high­er.

The di­rec­tion of for­eign ex­change gen­er­a­tion is more im­por­tant than the cur­rent bal­ance. This is where the chal­lenge rests as to­tal ex­ports de­clined in the first quar­ter and en­er­gy ex­ports fell by more than 8 per cent year on year, with gas ex­port earn­ings de­clin­ing by more than 20 per cent. Petro­chem­i­cal ex­ports al­so weak­ened. Non-en­er­gy ex­ports in­creased by about 8 per cent, which is en­cour­ag­ing, al­though they re­main much small­er than en­er­gy ex­ports.

For­eign ex­change sus­tain­abil­i­ty de­pends ul­ti­mate­ly on the coun­try’s abil­i­ty to keep earn­ing for­eign cur­ren­cy. In­ter­na­tion­al re­serves are a stock of ac­cu­mu­lat­ed for­eign as­sets. Ex­port earn­ings, for­eign in­vest­ment and oth­er ex­ter­nal re­ceipts are the flows that re­plen­ish that stock and sup­port the for­eign ex­change mar­ket.

The au­tho­rised deal­ers con­tin­ue to re­quire Cen­tral Bank in­ter­ven­tion to help meet cus­tomer de­mand for for­eign ex­change, a re­flec­tion that the un­der­ly­ing im­bal­ance re­mains. The Her­itage and Sta­bil­i­sa­tion Fund pro­vides an­oth­er sub­stan­tial sov­er­eign as­set buffer. It is sep­a­rate from in­ter­na­tion­al re­serves and should be treat­ed that way.

Then we come to the fis­cal po­si­tion. The FY2026 Bud­get be­gan with a pro­ject­ed deficit of ap­prox­i­mate­ly $3.9 bil­lion, equiv­a­lent to about 2.2 per cent of GDP. The lat­est Gov­ern­ment re­vised es­ti­mate puts that deficit at ap­prox­i­mate­ly $7.0 bil­lion, or 4.0 per cent of GDP. The IMF projects a deficit of about 4.6 per cent.

Those num­bers use dif­fer­ent as­sump­tions but they point in the same broad di­rec­tion: the fis­cal po­si­tion en­ter­ing FY2027 is weak­er than orig­i­nal­ly an­tic­i­pat­ed one year ago.

The debt po­si­tion re­in­forces that con­straint. Ad­just­ed gen­er­al gov­ern­ment debt stood at ap­prox­i­mate­ly 86.5 per cent of GDP at June 2026. In­ter­est ex­pen­di­ture is ap­proach­ing TT$7 bil­lion. Trans­fers and sub­si­dies ac­count for more than half of Gov­ern­ment ex­pen­di­ture and the nonen­er­gy fis­cal deficit re­mains sub­stan­tial.

T&T still has mean­ing­ful op­tions through sov­er­eign as­sets, bor­row­ing ca­pac­i­ty, es­tab­lished in­sti­tu­tions and a project pipeline with re­al po­ten­tial but these must be re­al­ized quick­ly as the fis­cal num­bers al­so make clear that room for ma­noeu­vre has be­come more valu­able.

Which then leads us to the cen­tral is­sue be­fore Mon­day. There are cred­i­ble op­por­tu­ni­ties ahead. Man­a­tee, Aphrodite, Co­conut, Gin­ger and oth­er up­stream de­vel­op­ments can im­prove nat­ur­al gas pro­duc­tion, ex­port earn­ings, down­stream util­i­sa­tion and Gov­ern­ment rev­enue. Ex­plo­ration ac­tiv­i­ty can cre­ate fur­ther op­por­tu­ni­ties. Oth­er pri­vate in­vest­ments can add to that mo­men­tum. Some of these projects are al­ready gen­er­at­ing de­vel­op­ment ex­pen­di­ture. Their larg­er pro­duc­tion and rev­enue ef­fects lie main­ly ahead, par­tic­u­lar­ly from 2027 on­ward.

The fu­ture op­por­tu­ni­ty is re­al but the cur­rent eco­nom­ic per­for­mance is al­so re­al. This means there is a lot of work still to be done. Re­cov­ery is not a giv­en.

To­day’s num­bers show an econ­o­my with weak mo­men­tum, a soft­er labour mar­ket, sub­dued busi­ness bor­row­ing, con­tin­u­ing de­pen­dence on en­er­gy for for­eign ex­change earn­ings and a fis­cal po­si­tion that has de­te­ri­o­rat­ed from the as­sump­tions made in the last Bud­get.

That is the start­ing line.

On Mon­day, the bud­get will tell us how the Gov­ern­ment sees the path for­ward.

The use­ful score­card is al­ready avail­able so view the Bud­get and try to an­swer the fol­low­ing ques­tions:

* Does the bud­get es­tab­lish a cred­i­ble path to­ward stronger sus­tain­able growth?

* Does it cre­ate the con­di­tions for high­er pro­duc­tive em­ploy­ment?

* Does it im­prove the en­vi­ron­ment for pri­vate in­vest­ment?

* Does it in­crease ex­ports and sus­tain­able for­eign ex­change earn­ings?

* Does it move the fis­cal po­si­tion to­ward greater sus­tain­abil­i­ty?

There is one oth­er mat­ter that I was not able to touch on to­day. How does it set up T&T for the Longevi­ty Econ­o­my, a top­ic which I high­light­ed with­in weeks of the cur­rent ad­min­is­tra­tion com­ing in­to of­fice.

Let’s see what Mon­day brings.

Ian Nar­ine is a fi­nan­cial con­sul­tant who spent the week bud­get­ing for the bud­get. Please send your com­ments to ian@ian­nar­ine.com