The 2026 na­tion­al bud­get has ear­marked $2.96 bil­lion for To­ba­go, rep­re­sent­ing five per cent of the to­tal bud­get­ed ex­pen­di­ture of $59.23 bil­lion.

This al­lo­ca­tion falls com­fort­ably with­in the Dis­pute Res­o­lu­tion Com­mis­sion’s (DRC ap­point­ed un­der sec­tion 56 of the To­ba­go House of As­sem­bly Act, 1996) rec­om­mend­ed range of 4.03 per cent to 6.9 per cent, a frame­work de­signed to en­sure eq­ui­table treat­ment of To­ba­go with­in the na­tion­al fis­cal ar­chi­tec­ture.

But be­neath the sur­face of this ap­par­ent com­pli­ance lies a com­plex in­ter­play of de­mo­graph­ic as­sump­tions, de­vel­op­ment am­bi­tions and fis­cal risk, as econ­o­mist Dr Vanus James ex­plained to the Busi­ness Guardian.

He said the DRC’s low­er bound of 4.03 per cent was orig­i­nal­ly based on To­ba­go’s pop­u­la­tion share, in­tend­ed to guar­an­tee equal­i­ty in re­cur­rent spend­ing across both is­lands.

The up­per bound of 6.9 per cent was as­pi­ra­tional, meant to sup­port de­vel­op­ment and re­duce To­ba­go’s struc­tur­al re­liance on the Trinidad econ­o­my.

How­ev­er, James said the arith­metic un­der­pin­ning this year’s al­lo­ca­tion re­veals a trou­bling pic­ture.

“Here is the un­der­ly­ing arith­metic. Min­is­ter Tan­coo in­di­cat­ed in his bud­get state­ment that To­ba­go’s pop­u­la­tion is 60,000, well be­low the 80,000 im­plied in the THA’s own bud­get pre­sen­ta­tion.

“To re­flect the DRC’s in­tent, that would put the re­quired min­i­mum share at 4.4 per cent, leav­ing $19 mil­lion or so for de­vel­op­ment spend­ing. We have been in­formed by the sec­re­tary of fi­nance that the in­tent is to use about $2.75 bil­lion for re­cur­rent (con­sump­tion) ex­pen­di­ture and to al­lo­cate the re­main­ing $210 mil­lion for de­vel­op­ment spend­ing,” he ex­plained.

Not­ing that de­vel­op­ment, in its truest sense, is about build­ing the ca­pac­i­ty of an econ­o­my to sus­tain its liv­ing stan­dards in­de­pen­dent­ly, James said yet, when mea­sured against To­ba­go’s es­ti­mat­ed GDP of $2.27 bil­lion, the $2.96 bil­lion al­lo­ca­tion ex­ceeds the is­land’s to­tal out­put by 31 per cent.

He not­ed with a tax­able ca­pac­i­ty of rough­ly $658 mil­lion, To­ba­go could fi­nance on­ly about 18 per cent of its bud­get, mak­ing it over 80 per cent de­pen­dent on Trinidad.

“So, that puts To­ba­go’s bud­get de­pen­den­cy on Trinidad at 82 per cent or more, count­ing ad­di­tion­al spend­ing by the Cen­tral Gov­ern­ment on 6th and 7th sched­ule oblig­a­tions,” James fur­ther ex­plained.

This eco­nom­ic “ward­ship” has per­sist­ed for 127 years, a colo­nial lega­cy that even the British like­ly nev­er imag­ined would en­dure so long.

“That is, as de­fined by the law, To­ba­go has an econ­o­my that can fund no more that 20 per cent of its bud­get and is sus­pi­cious­ly close to be­ing a ‘ward’ of Trinidad when viewed in terms of its eco­nom­ic con­tri­bu­tion. This is a long sto­ry of 127 years. Even the British could not have pre­dict­ed that the sta­tus of ‘eco­nom­ic ward’ would last so long,” James said, urg­ing that clear­ly, some­thing must be done about that, adding that that some­thing is eco­nom­ic de­vel­op­ment.

This de­pen­den­cy is not just a fis­cal con­cern—it’s a de­vel­op­men­tal cri­sis, James said.

He main­tains that the THA’s per­for­mance un­der Chief Sec­re­tary Far­ley Au­gus­tine shows lit­tle ev­i­dence of eco­nom­ic trans­for­ma­tion.

“Con­sid­er­a­tion of this kind of da­ta would have put the min­is­ter in a po­si­tion to cau­tion the THA that the ev­i­dence sug­gests that the econ­o­my of To­ba­go has, at best, been achiev­ing no de­vel­op­ment in the Far­ley years,” James said.

“More­over, the ev­i­dence al­so sug­gests that al­lo­ca­tions to To­ba­go were jus­ti­fied more by the law than by the mer­its of eco­nom­ic de­vel­op­ment to which were added more than a lit­tle faith that the pro­posed de­vel­op­ment agen­da of the THA makes eco­nom­ic de­vel­op­ment sense.

“Af­ter all, we can all agree out of hand that no well-de­signed de­vel­op­ment pro­gramme that re­sponds to the fun­da­men­tal prob­lems of To­ba­go and the coun­try can be pur­sued if scaled at $210 mil­lion,” he added.

Com­pound­ing this fragili­ty is the bud­get’s re­liance on op­ti­mistic en­er­gy price fore­casts—US$73+ per bar­rel for oil and US$4.25+ per MMB­tu for gas. Should these prices fail to ma­te­ri­alise, the coun­try’s im­port cov­er, al­ready tee­ter­ing at 5.4 months, could erode fur­ther, James ar­gues.

To­ba­go’s $750 mil­lion con­sump­tion boost would then be­come a fis­cal li­a­bil­i­ty, with se­ri­ous so­cial and eco­nom­ic con­se­quences.

This back­drop of fis­cal un­cer­tain­ty makes the Gov­ern­ment’s par­al­lel push for labour mar­ket re­form—par­tic­u­lar­ly the over­haul of CEPEP and URP—all the more con­se­quen­tial, es­pe­cial­ly in To­ba­go where po­lit­i­cal sen­si­tiv­i­ties and le­gal con­straints col­lide.

James not­ed that the pro­posed elim­i­na­tion of CEPEP and URP, re­placed by full-time jobs fund­ed by a $475 mil­lion Em­ploy­ment Fund and $310 mil­lion from the Un­em­ploy­ment Fund, is a bold move aimed at crime con­trol and eco­nom­ic re­struc­tur­ing.

He ad­vised that the so­lu­tion to CEPEP and URP in Trinidad is the same as in To­ba­go: eco­nom­ic di­ver­si­fi­ca­tion as these pro­grammes were born out of wide­spread un­der­e­d­u­ca­tion and un­der­em­ploy­ment—is­sues that plague both is­lands.

James cit­ed the lat­est CSO labour force sur­vey which in­di­cat­ed that 60 per cent of Trinidad’s work­force has four or few­er CXC pass­es, while To­ba­go’s fig­ure stands at 68.3 per cent, not­ing that this un­der­e­d­u­ca­tion fu­els de­pen­dence on im­ports and ex­ac­er­bates the for­eign ex­change con­straint, es­pe­cial­ly when glob­al en­er­gy mar­kets fal­ter.

The path for­ward lies in pro­duc­tion and trade re­struc­tur­ing based on com­par­a­tive ad­van­tage. Di­ver­si­fi­ca­tion must fo­cus on pro­fes­sion­al ser­vices—from ed­u­ca­tion to the cre­ative in­dus­tries—which of­fer low-hang­ing fruit for ex­port-led growth.

“So, if the PM man­ages to put her fin­ger on the right so­lu­tion, the THA could on­ly re­sist to the per­il of To­ba­go and the na­tion. Giv­en its cur­rent state of de­pen­den­cy, it makes no sense for Trinidad to move ahead and solve the CEPEP/URP prob­lem and leave To­ba­go in the rain. The record is clear. Un­der­e­d­u­cat­ed To­bag­o­ni­ans would sim­ply move to Trinidad.

“Fur­ther­more, if the PM gets it right, the so­lu­tion would al­so in­clude the set of changes in na­tion­al pol­i­cy and pol­i­cy­mak­ing that are re­quired to es­tab­lish nec­es­sary con­di­tions for the suc­cess of tourism or de­vel­op­ment of To­ba­go – the de­vel­op­ment of ex­ports of the pro­fes­sion­al ser­vices – the same as the re­quire­ments for na­tion­al eco­nom­ic di­ver­si­fi­ca­tion,”James added.

Such a pol­i­cy, he said, would rec­on­cile nice­ly with a 10 per cent pay in­crease to pub­lic ser­vants, be­cause the for­eign ex­change gen­er­at­ed by suc­cess­ful long run di­ver­si­fi­ca­tion would even­tu­al­ly more than ad­dress the grow­ing de­mand for im­ports that the pay in­crease would trig­ger.

If han­dled prop­er­ly, James main­tained, it would al­so in­cen­tivise pro­duc­tiv­i­ty growth in the tar­get­ed sec­tors like ed­u­ca­tion and health­care, big chunks of which are op­er­at­ed by the State.