GEISHA KOW­LESSAR ALON­ZO

The Gov­ern­ment’s bud­get 2027 has sparked de­bate among econ­o­mists, with con­cerns be­ing raised about the re­al­ism of its fis­cal pro­jec­tions, the sus­tain­abil­i­ty of planned spend­ing pro­grammes and the long-term im­pact of sev­er­al tax mea­sures on in­vest­ment and eco­nom­ic growth.

While the ad­min­is­tra­tion has po­si­tioned the bud­get as a blue­print for mod­erni­sa­tion, fis­cal re­pair and so­cial de­vel­op­ment, To­ba­go econ­o­mist Vanus James and Bar­ba­dos-based econ­o­mists Mar­la Dukha­ran and Bar­ba­dos-based econ­o­mist Je­re­my Stephen each high­light­ed chal­lenges that could de­ter­mine whether the bud­get’s ob­jec­tives are ul­ti­mate­ly achieved.

Dukha­ran ques­tioned some of the as­sump­tions un­der­pin­ning the Gov­ern­ment’s fis­cal pro­jec­tions not­ing that Fi­nance Min­is­ter Dav­en­dranath Tan­coo an­nounced re­vised fis­cal year 2026 fig­ures show­ing a pro­ject­ed deficit of ap­prox­i­mate­ly $7 bil­lion, based on rev­enue of $54.247 bil­lion and ex­pen­di­ture of $61.247 bil­lion.

She said Gov­ern­ment is ef­fec­tive­ly pro­ject­ing a dra­mat­ic fis­cal im­prove­ment with­in a rel­a­tive­ly short time pe­ri­od say­ing, “And it is pro­ject­ing to ba­si­cal­ly halve the deficit in one year. If these num­bers are cor­rect, which I am try­ing to fig­ure out, this could con­sti­tute a shock to the econ­o­my.”

How­ev­er, af­ter ex­am­in­ing sup­port­ing bud­get doc­u­ments, Dukha­ran said she found fig­ures that raise im­por­tant ques­tions about the prac­ti­cal­i­ty of achiev­ing those tar­gets.

“When I look at the Draft Es­ti­mates of Rev­enue, which sup­ports the Bud­get, doc­u­ments which are avail­able on the Min­istry of Fi­nance’s web­site, I am see­ing where in 2026, there was an es­ti­mat­ed lev­el of to­tal ex­pen­di­ture of $74.8 bil­lion, the high­est in our na­tion’s his­to­ry, sup­port­ed by about $20 bil­lion in bor­row­ing, $2.6 bil­lion in ex­tra­or­di­nary re­ceipts and $52.3 bil­lion in to­tal rev­enues.”

She not­ed that the cur­rent fis­cal year’s pro­jec­tions are even more am­bi­tious on the rev­enue side, poit­ing out, “In the cur­rent fis­cal year, ac­cord­ing to the same Draft Es­ti­mates of Rev­enue, the Gov­ern­ment is bud­get­ing to re­ceive $57.8 bil­lion, the high­est in our na­tion’s his­to­ry.”

At the same time, Gov­ern­ment is pro­ject­ing sig­nif­i­cant­ly low­er ex­pen­di­ture.

Dukha­ran said that com­bi­na­tion of record rev­enue col­lec­tions and sub­stan­tial­ly re­duced ex­pen­di­ture ap­pears dif­fi­cult to rec­on­cile with pre­vail­ing eco­nom­ic con­di­tions.

“And they are plan­ning to spend al­most $9 bil­lion less this year than last. Suf­fice it to say that giv­en the eco­nom­ic cli­mate and the mea­sures an­nounced by the Hon Min­is­ter, I am not con­fi­dent that we can tru­ly raise al­most $58 bil­lion in to­tal rev­enue, and more im­por­tant­ly, that we can ba­si­cal­ly cut spend­ing by TT$9 bil­lion and halve the deficit,” she said.

Her con­cerns cen­tre not on­ly on rev­enue col­lec­tion but al­so on the Gov­ern­ment’s abil­i­ty to con­tain ex­pen­di­ture while si­mul­ta­ne­ous­ly rolling out new so­cial pro­grammes and de­vel­op­ment ini­tia­tives an­nounced in the bud­get.

Mean­while James, has de­liv­ered a scathing as­sess­ment of T&T’s fis­cal tra­jec­to­ry, warn­ing that con­sec­u­tive na­tion­al bud­gets op­er­ate as “unan­chored ledgers” dri­ven by short-term po­lit­i­cal man­i­festos rather than gen­uine struc­tur­al trans­for­ma­tion.

Re­view­ing the ad­min­is­tra­tion’s per­for­mance across fis­cal 2026 and ex­am­in­ing the new­ly pre­sent­ed 2027 pack­age, James high­light­ed that the na­tion re­mains deeply trapped in an en­clave econ­o­my mod­el.

De­spite head­line ex­pen­di­ture swelling to $63.368 bil­lion against pro­ject­ed rev­enues of $59.729 bil­lion, the cap­i­tal de­vel­op­ment squeeze is wors­en­ing.

“The re­cur­rent-to-de­vel­op­ment ra­tio has de­te­ri­o­rat­ed to 13.6 to 1,” James not­ed, point­ing out that means that for every dol­lar in­vest­ed in long-term eco­nom­ic di­ver­si­fi­ca­tion, the state spends over $13 mere­ly to main­tain its rigid ad­min­is­tra­tive ma­chin­ery, pub­lic sec­tor wages and debt ser­vic­ing.

James em­pha­sised that flag­ship ini­tia­tives from the pre­vi­ous fis­cal cy­cle—such as the heav­i­ly mar­ket­ed 129-project “Re­vi­tal­i­sa­tion Blue­print” pro­ject­ed to gen­er­ate 72,000 peak jobs—re­main com­plete­ly stalled in pre­lim­i­nary pro­cure­ment phas­es with­out a sin­gle project reach­ing fi­nan­cial close.

Mean­while, ma­jor shifts like the piv­ot from pub­lic-sec­tor da­ta cen­tre frame­works to mul­ti-bil­lion-dol­lar pri­vate ar­ti­fi­cial in­tel­li­gence agree­ments with Amer­i­can firms have trig­gered se­vere pub­lic back­lash over hid­den util­i­ty and wa­ter re­source drains.

Ad­dress­ing macro­eco­nom­ic vul­ner­a­bil­i­ties, James crit­i­cized the gov­ern­ment’s re­liance on a $77 per bar­rel oil price base­line. With glob­al crude trad­ing near $100 per bar­rel due to geopo­lit­i­cal ten­sions in the Mid­dle East, the coun­try faces a volatile dual im­pact.

While up­stream en­er­gy rev­enues re­ceive a tem­po­rary buffer, the clo­sure of the Pointe-a-Pierre re­fin­ery forces the state to im­port re­fined fu­els at high glob­al costs. Com­bined with the gov­ern­ment’s $1.00 per litre price re­duc­tion on su­per gaso­line in Oc­to­ber 2025, this has trig­gered an ex­plo­sion of a fu­el sub­sidy, erod­ing fi­nan­cial gains.

“With­out an in­te­grat­ed plan to en­sure that every rise in the lo­cal stan­dard of liv­ing is backed by a cor­re­spond­ing rise in non-en­clave ex­port ca­pac­i­ty, bud­get­ing re­mains a dan­ger­ous game of hop­ing the en­er­gy sec­tor can sur­vive its struc­tur­al de­cline,” James warned.

Widen­ing rev­enue base

Stephen sees the 2027 bud­get­through a some­what dif­fer­ent lens.

Ac­cord­ing to Stephen, one of the clear­est ob­jec­tives of the bud­get is the mod­erni­sa­tion of T&T’s tax sys­tem and the broad­en­ing of the coun­try’s tax base.

Stephen not­ed that many of the mea­sures an­nounced mir­ror re­forms im­ple­ment­ed else­where in the Caribbean, in­clud­ing Bar­ba­dos.

“Some of the tax ra­tio­nal­i­sa­tion and mod­erni­sa­tion fea­tures are re­flect­ed in Bar­ba­dos. There are some ini­tia­tives that we’ve gone af­ter, widen­ing the tax base. The rea­sons are ac­tu­al­ly quite sim­i­lar,” he said adding that the Gov­ern­ment ap­pears fo­cused on cre­at­ing greater rev­enue sta­bil­i­ty by ex­pand­ing the range of tax­able eco­nom­ic ac­tiv­i­ty,” he out­lined.

He not­ed it is very clear Gov­ern­ment wants the econ­o­my to mod­ernise for the pur­pos­es of en­sur­ing the sta­bil­i­ty of rev­enue through widen­ing the tax base pri­mar­i­ly and al­so re­mov­ing oth­er forms of in­ef­fi­cien­cies.

Tack­ling forex leak­age

Stephen al­so be­lieves an­oth­er ma­jor ob­jec­tive of the bud­get is re­duc­ing for­eign ex­change out­flows.

He point­ed to the new­ly an­nounced tax mea­sures af­fect­ing dig­i­tal ser­vices and im­port­ed con­sump­tion as ex­am­ples.

“Most im­por­tant­ly, it is seem­ing­ly meant to re­duce the leak­age of for­eign ex­change.”

“A very clear piece of ev­i­dence of that is what I will term the Net­flix tax.”

The econ­o­mist said mea­sures de­signed to cap­ture tax­es on pre­vi­ous­ly un­taxed dig­i­tal trans­ac­tions re­flect broad­er ef­forts to pre­serve scarce for­eign ex­change and im­prove tax com­pli­ance.

He al­so point­ed to the de­ci­sion to move se­lect­ed items away from ze­ro-rat­ed sta­tus. “I would say, al­so en­sur­ing that they were mov­ing se­lect­ed items from ze­ro-rat­ed sta­tus is a clear sign of widen­ing the tax base.”

Ac­cord­ing to Stephen, those mea­sures in­di­cate a de­lib­er­ate ef­fort to im­prove rev­enue col­lec­tion with­out re­ly­ing sole­ly on high­er tax rates.

“They def­i­nite­ly want to widen the tax base and en­sure that they have a bet­ter han­dle on the leak­age of for­eign ex­change.”

De­spite ac­knowl­edg­ing some pos­i­tive as­pects of the re­forms, Stephen ex­pressed con­cern that cer­tain tax mea­sures could un­der­mine in­vestor con­fi­dence.

“There are some ini­tia­tives that are very an­ti-in­vestor in my opin­ion, par­tic­u­lar­ly where it per­tains to tax mat­ters.”

Stephen said in­vestors typ­i­cal­ly place sig­nif­i­cant weight on tax cer­tain­ty and pre­dictabil­i­ty when mak­ing long-term de­ci­sions.

Any changes that re­duce the abil­i­ty of busi­ness­es to re­cov­er past loss­es could po­ten­tial­ly in­flu­ence fu­ture in­vest­ment de­ci­sions, par­tic­u­lar­ly at a time when Gov­ern­ment is at­tempt­ing to at­tract new busi­ness ac­tiv­i­ty and di­ver­si­fy the econ­o­my.

Im­ple­men­ta­tion chal­lenges

Stephen al­so sug­gest­ed that sev­er­al mea­sures an­nounced in the bud­get ap­pear de­signed to de­liv­er po­lit­i­cal ben­e­fits.

How­ev­er, he not­ed that ini­tia­tives in ar­eas such as ed­u­ca­tion, child­care and fam­i­ly sup­port could still gen­er­ate pos­i­tive so­cial out­comes if prop­er­ly im­ple­ment­ed.

Stephen said the re­al chal­lenge lies in ex­e­cu­tion, as he stressed, “Most of the is­sues they find with these ini­tia­tives are im­ple­men­ta­tion.”

He al­so ques­tioned whether the Gov­ern­ment would be able to rapid­ly fi­nance and im­ple­ment ma­jor pro­grammes while si­mul­ta­ne­ous­ly pur­su­ing fis­cal con­sol­i­da­tion.

“It would be rather sur­pris­ing how quick­ly, es­pe­cial­ly giv­en how strapped the econ­o­my has been, how quick­ly, with­out bor­row­ing from cap­i­tal mar­kets, they would be able to im­ple­ment these ini­tia­tives at the na­tion­al care and sup­port pro­gramme,” he said.

Stephen al­so point­ed specif­i­cal­ly to the pro­posed Na­tion­al Care and Sup­port Pro­gramme and oth­er so­cial spend­ing com­mit­ments say­ing pol­i­cy­mak­ers would have to strike a del­i­cate bal­ance be­tween fund­ing new pro­grammes, main­tain­ing fis­cal dis­ci­pline and gen­er­at­ing the ad­di­tion­al rev­enues re­quired to meet bud­get tar­gets.

“With­out ham­per­ing some of the ad­di­tion­al rev­enue gen­er­a­tion and sta­bil­i­sa­tion mea­sures that are be­ing brought on stream,” he said.

For that rea­son, he said the bud­get’s suc­cess can­not be judged sole­ly by the poli­cies an­nounced adding, “So it will be in­ter­est­ing to look at that.”

As Bud­get 2027 moves from pol­i­cy to prac­tice, the econ­o­mists say the true test will be whether Gov­ern­ment can si­mul­ta­ne­ous­ly raise rev­enues, con­trol spend­ing, mod­ernise the tax sys­tem, fund new so­cial pro­grammes and de­liv­er the eco­nom­ic growth need­ed to sup­port them all.