Mar­i­ano Browne

Gov­ern­ments are elect­ed for a fixed term. In this con­text, a bud­get speech mat­ters be­cause it serves as the gov­ern­ment’s pri­ma­ry fi­nan­cial roadmap, de­tail­ing how it will raise, al­lo­cate, and man­age pub­lic funds for the up­com­ing fis­cal year. It pro­vides an im­por­tant bench­mark in de­ter­min­ing whether a gov­ern­ment is meet­ing its medi­um- or long-term ob­jec­tives. Are there medi­um and long-term ob­jec­tives? How­ev­er, most cit­i­zens are pri­mar­i­ly in­ter­est­ed in how these new fis­cal mea­sures will im­pact their dai­ly life.

Gov­ern­ments rou­tine­ly make promis­es in their man­i­festos and bud­gets. Un­for­tu­nate­ly, most do not come to fruition. There are many ex­am­ples: “flood­ing would be a thing of the past; wa­ter for all; a tun­nel to Mara­cas; Galleons pas­sage. Wage in­creas­es to pub­lic ser­vants,” etcetera. In­deed, last year the fi­nance min­is­ter, bask­ing in the glow of elec­toral suc­cess, re­peat­ed­ly boast­ed “promis­es made, promis­es kept.” What does the ev­i­dence say?

First, a large por­tion of the amounts due to pub­lic sec­tor em­ploy­ees as back­pay re­mains out­stand­ing. In a high­ly un­usu­al move, the CPO, the gov­ern­ment’s chief ne­go­tia­tor, is rene­go­ti­at­ing the agree­ment with the PSA to pay 60% of the back­pay in non-cash items. A labour con­tract is much more than a promise. Yet it has not lived in ac­cor­dance with its agree­ment. Nor has the gov­ern­ment been able to ex­pand its em­ploy­ment num­bers to pro­vide “re­al jobs,” an­oth­er bud­get promise. Per­haps it was a promise to be ful­filled in the long term. Gov­ern­ment just does not have the bud­get to sup­port that grandiose promise.

In­stead, the CBTT Sep­tem­ber mon­e­tary pol­i­cy and da­ta pack con­firms the un­em­ploy­ment rate rose from 4.3% to 5.4% be­tween the last quar­ter of 2025 and the first quar­ter of 2026, i.e., be­tween De­cem­ber and March, when em­ploy­ment should be at its high­est. Re­cent an­nounce­ments by Pro­man and Nu­trien say that staff num­bers will be re­duced soon. Mul­ti­ply that im­pact by a fac­tor of five to in­clude the im­pact on ser­vice jobs which sup­port those firms.

The cur­rent pic­ture sug­gests that the econ­o­my is re­turn­ing to the weak per­for­mance of 2015 to 2021. Is this tem­po­rary? The World Bank Group Latin Amer­i­can Re­port projects a de­cline of -.2% for 2026, fol­low­ing a de­cline of -.5%, com­pared to the IMF pro­jec­tion of .08% growth for 2025 and 2026. Which pro­jec­tion is cor­rect? 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, mean­ing that all sec­tors de­clined. What mat­ters most is where growth will come from. The en­er­gy sec­tor? Shell’s CEO Wael Sawan has said that the com­pa­ny’s com­pet­i­tive ad­van­tage is Venezuela’s nat­ur­al gas. Some will ar­gue that this will work for T&T and that Exxon’s ex­plo­ration will be pos­i­tive. There is some dis­tance to trav­el to en­sure that these projects come in on time.

De­vel­op­ments in the Mid­dle East have many neg­a­tive con­no­ta­tions. The clo­sure of the Strait of Hor­muz has harmed the in­ter­na­tion­al econ­o­my. Oil prices and oil de­riv­a­tives have risen, but the world has weath­ered the storm. The key is­sue re­mains in­fla­tion, which has been ris­ing in met­ro­pol­i­tan coun­tries. Year-on-year head­line in­fla­tion across OECD coun­tries rose to 4.3% in Au­gust 2026, up from 4.1% in Ju­ly 2026, large­ly dri­ven by a sharp surge in en­er­gy in­fla­tion. In­fla­tion in T&T is cur­rent­ly less than 1%. En­er­gy prices have risen in oth­er Cari­com ter­ri­to­ries. This means the cost of the fu­el sub­sidy in T&T is ris­ing, con­strain­ing spend­ing on oth­er mea­sures. The re­al ques­tion is when the war will end and whether the GORTT will con­tin­ue to fund the fu­el sub­si­dies in­def­i­nite­ly.

In­ter­est rates are al­so ris­ing in in­ter­na­tion­al mar­kets, mak­ing debt more ex­pen­sive. Since in­ter­est rates on T&T’s debt (lo­cal and for­eign) have been high­er than the eco­nom­ic growth rate and deficits have been ris­ing, debt ser­vice pay­ments are tak­ing up an ever-larg­er share of gov­ern­ment ex­pen­di­ture. To ad­dress this sit­u­a­tion, deficits must be elim­i­nat­ed ei­ther by rais­ing tax­es or re­duc­ing ex­pen­di­ture. Un­for­tu­nate­ly, the coun­try has no ap­petite for in­creased tax­a­tion or re­duced gov­ern­ment ex­pen­di­ture. This is the same co­nun­drum faced by for­mer min­is­ter Colm Im­bert.

While for­eign ex­change re­serves are still healthy at $5.3 bil­lion, which trans­lates in­to 6.1 months of im­port cov­er, what mat­ters is the trend, and the trend is neg­a­tive. Con­tin­ued deficits ex­pand de­mand, which trans­lates in­to high­er for­eign ex­change de­mand. This is un­sus­tain­able in the cur­rent en­vi­ron­ment. While the for­eign ex­change rate has been tech­ni­cal­ly float­ing since 1993, it has been fixed in prac­tice since 2017. The so­lu­tion is ei­ther to re­duce the deficit, ad­just the ex­change rate or in­crease ex­ports.

Earn­ing more for­eign ex­change in the short to medi­um term is de­pen­dent on an in­creased sup­ply of nat­ur­al gas and buoy­ant en­er­gy prices. Petro­chem­i­cal prices have not seen the sharp in­creas­es as­so­ci­at­ed with the Ukraine war. New nat­ur­al gas projects may make a dif­fer­ence and in­crease gas sup­ply. The gas short­age start­ed in 2013 and has got­ten worse. One can­not bank on Venezue­lan gas to be the sav­iour.

Tak­en as a whole, this is a rather de­press­ing but re­al­is­tic sce­nario. Min­is­ter Dav­en­dranath Tan­coo’s pre­de­ces­sor un­der­stood the dif­fi­cul­ty well. How­ev­er, he was not pre­pared to ad­dress the prob­lem as it in­volves un­pop­u­lar poli­cies and the un­pleas­ant task of pre­sent­ing the coun­try with tough eco­nom­ic choic­es. The time for ac­tion is now. Or we could con­tin­ue wait­ing for Venezuela’s gas.

Mar­i­ano Browne is the Chief Ex­ec­u­tive Of­fi­cer of the UWI Arthur Lok Jack Glob­al School of Busi­ness