The In­ter­na­tion­al Mon­e­tary Fund (IMF) yes­ter­day pro­ject­ed that the T&T econ­o­my would grow by 0.8 per cent in 2026, and that in­fla­tion is ex­pect­ed to rise tem­porar­i­ly to around 3.1 per cent this year.

In its Ar­ti­cle IV Con­sul­ta­tion on T&T, which was com­plet­ed on Fri­day but pub­lished yes­ter­day, the IMF said the high­er in­fla­tion re­flect­ed glob­al com­mod­i­ty price de­vel­op­ments.

The staff mis­sion of the Wash­ing­ton DC-based in­ter­na­tion­al fi­nan­cial in­sti­tu­tion said the coun­try’s over­all fis­cal deficit is ex­pect­ed to de­cline to 4.6 per cent of GDP in 2026 (from 5.5 per cent in 2025), and in­ter­na­tion­al re­serves are ex­pect­ed to re­main ad­e­quate around 5.5 months of im­ports.

“High­er en­er­gy prices are ex­pect­ed to sup­port fis­cal and ex­ter­nal bal­ances in the near term, while the au­thor­i­ties’ on­go­ing rev­enue and ex­pen­di­ture re­forms, and new en­er­gy projects com­ing on stream, un­der­pin a grad­ual im­prove­ment in the fis­cal and ex­ter­nal po­si­tions over the medi­um term,” said the IMF.

The Fund said the out­look for T&T is sub­ject to “sig­nif­i­cant un­cer­tain­ty,” in­clud­ing due to the im­pact of the war in the Mid­dle East.

“De­lays in new en­er­gy projects or dis­rup­tions to pro­duc­tion from ma­ture fields could weigh on growth, while faster im­ple­men­ta­tion of re­forms un­der the Re­vi­tal­i­sa­tion Blue­print and sus­tained in­vest­ment could lift medi­um-term growth prospects,” ac­cord­ing to the in­sti­tu­tion.

In its as­sess­ment, the ex­ec­u­tive board of the IMF said it agreed with the thrust of the staff ap­praisal.

The IMF di­rec­tors agreed that T&T’s eco­nom­ic out­look is sub­ject to el­e­vat­ed un­cer­tain­ty, in­clud­ing through the im­pact of the war in the Mid­dle East.

They wel­comed T&T’s con­tin­ued eco­nom­ic re­cov­ery, low in­fla­tion, and healthy bank­ing sys­tem and “en­cour­aged the au­thor­i­ties to ad­dress un­der­ly­ing macro­eco­nom­ic vul­ner­a­bil­i­ties through pru­dent fis­cal and mon­e­tary poli­cies and per­se­vere in di­ver­si­fy­ing the econ­o­my and strength­en­ing its re­silience to shocks.”

The di­rec­tors not­ed that per­sis­tent fis­cal deficits had led to an in­crease in pub­lic debt and they wel­comed the au­thor­i­ties’ re­cent steps to strength­en the fis­cal po­si­tion—in­clud­ing by en­hanc­ing rev­enue mo­bil­i­sa­tion, ra­tio­nal­is­ing spend­ing, and im­prov­ing in­vest­ment ef­fi­cien­cy. The di­rec­tors em­pha­sised that a stronger sus­tained fis­cal con­sol­i­da­tion ef­fort, while pro­tect­ing the most vul­ner­a­ble, is need­ed to place pub­lic debt on a cred­i­ble down­ward path and pre­serve ex­ter­nal sta­bil­i­ty, the di­rec­tors said.

As a re­sult, they em­pha­sised the im­por­tance of clos­ing tax gaps, re­duc­ing non-pri­or­i­ty trans­fers, and im­prov­ing the tar­get­ing of so­cial pro­grammes.

“They stressed that high­er-than-bud­get­ed en­er­gy rev­enues should be pri­mar­i­ly used to re­build buffers, in­clud­ing through re­sumed de­posits in­to the Her­itage and Sta­bil­i­sa­tion Fund,” said the IMF di­rec­tors.

They con­curred that mon­e­tary and fi­nan­cial sec­tor poli­cies should con­tin­ue to sup­port sta­bil­i­ty, but in­di­cat­ed sup­port for high­er in­ter­est rates.

“They gen­er­al­ly sup­port­ed mov­ing the pol­i­cy rate to­ward a neu­tral stance to re­move the neg­a­tive in­ter­est rate dif­fer­en­tial with the Unit­ed States and sta­bilise cap­i­tal out­flows.

“Against the back­ground of de­clin­ing re­serves, di­rec­tors al­so called for ef­forts to im­prove the func­tion­ing of the for­eign ex­change mar­ket and, over time, move to­ward greater ex­change rate flex­i­bil­i­ty with ap­pro­pri­ate sup­port­ing mea­sures. They en­cour­aged con­tin­ued vig­i­lance over the grow­ing sov­er­eign fi­nan­cial nexus and emerg­ing cy­ber-se­cu­ri­ty and cli­mate risks,” said the di­rec­tors.

They al­so wel­comed the T&T au­thor­i­ties’ ef­forts to strength­en fis­cal in­sti­tu­tions and ad­dress fis­cal risks.

“They com­mend­ed the au­thor­i­ties for the coura­geous re­forms to the Na­tion­al In­sur­ance Sys­tem, and called for fur­ther steps to im­prove the long-term sus­tain­abil­i­ty of the pub­lic pen­sion sys­tem. Di­rec­tors al­so en­cour­aged the au­thor­i­ties to adopt a medi­um-term fis­cal frame­work an­chored by a well-de­signed fis­cal rule and a cred­i­ble debt an­chor to man­age volatile en­er­gy rev­enues and en­sure in­ter­gen­er­a­tional eq­ui­ty.”

The di­rec­tors, as well, em­pha­sised that struc­tur­al re­forms will be crit­i­cal to raise po­ten­tial growth and re­silience, and en­cour­aged fur­ther ef­forts to im­prove the busi­ness en­vi­ron­ment and in­vest­ment cli­mate, in­clud­ing by re­mov­ing ex­ces­sive red tape and ob­sta­cles to trade, pro­mot­ing more flex­i­ble labour mar­ket poli­cies, and har­vest­ing dig­i­tal­i­sa­tion and AI.

Fur­ther im­prove­ments in sta­tis­ti­cal ca­pac­i­ty and trans­paren­cy should al­so re­main a pri­or­i­ty.