GEISHA KOW­LESSAR-ALON­ZO

T&T en­ters the fi­nal week be­fore the pre­sen­ta­tion of the 2027 na­tion­al bud­get, fac­ing mount­ing eco­nom­ic pres­sures, with econ­o­mists warn­ing that slow­ing growth, ris­ing un­em­ploy­ment, per­sis­tent for­eign ex­change short­ages and an econ­o­my still de­pen­dent on de­clin­ing en­er­gy pro­duc­tion are pos­ing se­ri­ous chal­lenges to the coun­try’s long-term prospects.

While the Gov­ern­ment could point to some suc­cess­es dur­ing fis­cal 2026, in­clud­ing low­er fu­el prices, progress on digi­ti­sa­tion, im­proved rev­enue col­lec­tion and T&T’s re­moval from the Eu­ro­pean Union tax black­list, econ­o­mists Dr Vanus James and Dr Jamelia Har­ris told the Busi­ness Guardian that many of the struc­tur­al prob­lems high­light­ed for years re­main un­re­solved.

Their as­sess­ments sug­gest that the coun­try’s eco­nom­ic trans­for­ma­tion agen­da has yet to gen­er­ate the sus­tain­able em­ploy­ment, di­ver­si­fi­ca­tion and pro­duc­tiv­i­ty im­prove­ments need­ed to re­duce de­pen­dence on hy­dro­car­bons at a time when en­er­gy pro­duc­tion con­tin­ues to weak­en.

“Ul­ti­mate­ly, while T&T boasts one of the most ro­bust, re­silient man­u­fac­tur­ing ecosys­tems in the Caribbean, none of the ini­tia­tives un­der­tak­en in the last year and a half promise mean­ing­ful tran­si­tion in­to a gen­uine­ly di­ver­si­fied econ­o­my,” James said in his fis­cal 2026 per­for­mance re­view and score­card.

“The na­tion re­mains com­plete­ly teth­ered to the shocks of glob­al hy­dro­car­bon pro­duc­tion vol­umes and in­ter­na­tion­al com­mod­i­ty pric­ing,” he added.

Growth los­ing mo­men­tum

The con­cerns come against a back­drop of slow­ing eco­nom­ic growth.

Ac­cord­ing to Har­ris, eco­nom­ic ex­pan­sion has steadi­ly weak­ened over the past three years, rais­ing ques­tions about the strength and sus­tain­abil­i­ty of the coun­try’s re­cov­ery.

“The econ­o­my grew by about 0.8 per cent in 2025. This is much low­er than pre­vi­ous years where growth was 1.5 per cent in 2023 and 2.5 per cent in 2024,” Har­ris out­lined, adding, “Growth is al­so ex­pect­ed to be 0.8 per cent in 2026, so the econ­o­my has cer­tain­ly slowed.”

James fur­ther ar­gued that the slow­down re­flects a broad­er fail­ure to trans­form the struc­ture of the econ­o­my de­spite re­peat­ed pol­i­cy an­nounce­ments and di­ver­si­fi­ca­tion strate­gies.

He point­ed to da­ta show­ing that nat­ur­al gas pro­duc­tion av­er­aged 2.428 bil­lion cu­bic feet per day dur­ing the first five months of 2026, rep­re­sent­ing a 4.3 per cent de­cline com­pared with the pre­vi­ous year.

“The pri­ma­ry cause of the stag­na­tion is the acute un­der­per­for­mance of ma­ture oil and nat­ur­al gas fields,” he said, not­ing that while man­u­fac­tur­ing, food ser­vices and con­struc­tion have shown pock­ets of re­silience, those gains have not been suf­fi­cient to off­set de­clines in the en­er­gy sec­tor, which con­tin­ues to dri­ve for­eign ex­change earn­ings and gov­ern­ment rev­enue.

James said this has left ac­tu­al eco­nom­ic per­for­mance falling well be­low ex­pec­ta­tions and has re­in­forced the coun­try’s de­pen­dence on hy­dro­car­bon pro­duc­tion de­spite years of dis­cus­sion about di­ver­si­fi­ca­tion.

Pos­i­tive signs mixed with emerg­ing con­cerns

De­spite her con­cerns, Har­ris ac­knowl­edged that sev­er­al im­por­tant eco­nom­ic in­di­ca­tors re­main pos­i­tive.

Among them is in­fla­tion, which has re­mained be­low one per cent, help­ing to ease pres­sure on house­holds al­ready deal­ing with ris­ing liv­ing costs.

Im­port cov­er al­so im­proved to 6.1 months in Au­gust 2026 from 5.4 months dur­ing the cor­re­spond­ing pe­ri­od a year ear­li­er, pro­vid­ing a stronger buffer against ex­ter­nal shocks.

Har­ris al­so high­light­ed the re­cent thaw in diplo­mat­ic re­la­tions be­tween T&T and Venezuela.

“Re­la­tions be­tween T&T and Venezuela have thawed, which is a good sign for cross-bor­der gas deals,” she said.

Po­ten­tial de­vel­op­ments in­volv­ing the Drag­on gas field and oth­er cross-bor­der en­er­gy projects are wide­ly viewed as im­por­tant to fu­ture en­er­gy pro­duc­tion and ex­port earn­ings.

How­ev­er, Har­ris cau­tioned that the broad­er eco­nom­ic pic­ture re­mains trou­bling.

Sev­er­al in­di­ca­tors tracked by the Cen­tral Bank sug­gest weak­en­ing pri­vate sec­tor ac­tiv­i­ty and a slow­ing pace of in­vest­ment.

Con­struc­tion and busi­ness ac­tiv­i­ty weak­en­ing

One of the strongest warn­ing sig­nals, ac­cord­ing to Har­ris, is the sus­tained weak­ness in the con­struc­tion sec­tor.

“The year-on-year change in the in­dex of eco­nom­ic ac­tiv­i­ty for the con­struc­tion sec­tor has been neg­a­tive each quar­ter since Q1 2025, sug­gest­ing less ac­tiv­i­ty in con­struc­tion,” she said not­ing

“This is im­por­tant as trends in the con­struc­tion sec­tor is a lead­ing in­di­ca­tor of eco­nom­ic health. Grow­ing economies build more, slow­ing economies build less.”

She al­so point­ed to slow­ing com­mer­cial lend­ing to busi­ness­es.

Ac­cord­ing to Har­ris, the steady ex­pan­sion in busi­ness bor­row­ing ob­served since 2021 has be­gun to fade.

“There has been a slow­ing in the growth rate of pri­vate sec­tor cred­it. For ex­am­ple, com­mer­cial bank lend­ing to busi­ness­es has slowed since June 2025 af­ter steadi­ly in­creas­ing since Sep­tem­ber 2021.”

Jobs, wages and debt pres­sures

The labour mar­ket is an­oth­er area caus­ing con­cern.

Har­ris not­ed that un­em­ploy­ment has risen above five per cent for the first time since the first quar­ter of 2024, while labour force par­tic­i­pa­tion re­mains around 55 per cent, be­low pre-pan­dem­ic lev­els of ap­prox­i­mate­ly 60 per cent.

At the same time, she warned that Gov­ern­ment debt con­tin­ues to in­crease.

“Gov­ern­ment debt con­tin­ues to in­crease with­out a plan for debt sus­tain­abil­i­ty,” Har­ris said.

James al­so iden­ti­fied grow­ing fis­cal pres­sures re­lat­ed to pub­lic sec­tor wages.

While the Gov­ern­ment’s com­mit­ment to a 10 per cent wage in­crease has been wel­comed by many work­ers, he said im­ple­men­ta­tion re­mains con­tentious.

James es­ti­mates that wage set­tle­ments and back­pay oblig­a­tions across the wider pub­lic sec­tor could even­tu­al­ly cre­ate li­a­bil­i­ties of up to $25 bil­lion.

“The cur­rent pro­jec­tions are that the 10 per cent ex­pan­sion across the wider state sec­tor could bal­loon in­to a $25 bil­lion ar­rears li­a­bil­i­ty,” he said.

He added that labour dis­putes over how those pay­ments should be struc­tured re­main un­re­solved and could be­come a ma­jor chal­lenge for the up­com­ing bud­get.

Bud­get promis­es de­liv­ered

De­spite the con­cerns, James ac­knowl­edged that the Gov­ern­ment ful­filled sev­er­al com­mit­ments out­lined in the 2026 bud­get.

Among the most vis­i­ble was the re­duc­tion in the price of su­per gaso­line by $1 per litre.

Gov­ern­ment al­so main­tained sub­si­dies on house­hold cook­ing gas, dis­trib­uted ap­prox­i­mate­ly 18,000 lap­tops to schools and stu­dents, pur­sued rev­enue ad­min­is­tra­tion re­forms and se­cured T&T’s re­moval from the EU tax black­list.

Ac­cord­ing to James, rev­enue mod­erni­sa­tion mea­sures gen­er­at­ed an ad­di­tion­al $224 mil­lion dur­ing the first half of the fis­cal year while the fis­cal deficit nar­rowed to $7.01 bil­lion from $10.07 bil­lion.

Yet he ar­gued that some suc­cess­es came with sig­nif­i­cant costs.

The fu­el price re­duc­tion, for ex­am­ple, be­came more ex­pen­sive than an­tic­i­pat­ed af­ter geopo­lit­i­cal ten­sions pushed glob­al oil prices sharply high­er.

James es­ti­mates that the mea­sure added ap­prox­i­mate­ly $318 mil­lion to fu­el sub­sidy costs.

“The sus­tain­abil­i­ty of keep­ing this price cut ac­tive is sure­ly be­ing heav­i­ly re­viewed go­ing in­to the up­com­ing bud­get,” he said.

Di­ver­si­fi­ca­tion am­bi­tions un­der scruti­ny

Per­haps the most sig­nif­i­cant crit­i­cism raised by both econ­o­mists con­cerns di­ver­si­fi­ca­tion.

The Gov­ern­ment pro­mot­ed sev­er­al ini­tia­tives aimed at cre­at­ing sus­tain­able em­ploy­ment and re­duc­ing de­pen­dence on en­er­gy rev­enues.

Among them was the re­vi­tal­i­sa­tion blue­print, which out­lined 129 projects across 13 eco­nom­ic hubs and pro­ject­ed as many as 72,000 jobs.

James said the ini­tia­tive has failed to de­liv­er mean­ing­ful re­sults so far.

“De­spite gen­er­at­ing a mas­sive wave of ex­pres­sions of in­ter­est from lo­cal and in­ter­na­tion­al firms, no projects have for­mal­ly achieved fi­nan­cial close or bro­ken ground,” he said adding,”The ini­tia­tive re­mains most­ly on pa­per.”

Har­ris echoed those con­cerns.

“Bud­get 2026 pro­posed sev­er­al plans for di­ver­si­fi­ca­tion. It will be good to hear the gov­ern­ment re­port on this, but it should be not­ed that growth in the non-en­er­gy sec­tor slowed in Q3 and Q4 2025 and we have al­so seen busi­ness clo­sures in the non-en­er­gy sec­tor.”

She al­so ques­tioned whether the Gov­ern­ment achieved one of its stat­ed goals of sus­tain­able job cre­ation.

“Bud­get 2026 not­ed sus­tain­able job cre­ation as a tar­get for fis­cal 2026. In­stead, we have seen job loss­es and un­em­ploy­ment in­creas­ing.”

James was sim­i­lar­ly crit­i­cal of pro­grammes in­tro­duced to ab­sorb work­ers fol­low­ing the dis­man­tling of CEPEP and URP.

While gov­ern­ment al­lo­cat­ed hun­dreds of mil­lions of dol­lars to tran­si­tion ini­tia­tives and em­ploy­ment pro­grammes, he ar­gued they failed to ad­dress the root caus­es of un­der­em­ploy­ment.

“De­spite the roll­out, there was noth­ing in the pro­gramme that ad­dress­es the fun­da­men­tal rea­sons for the high lev­els of un­der­em­ploy­ment,” he said.

“It is just a re­or­gan­ised make-work pro­gramme.”

Forex and re­form ques­tions re­main

James al­so iden­ti­fied the for­eign ex­change short­age as one of the coun­try’s most press­ing un­re­solved chal­lenges.

He said slug­gish en­er­gy pro­duc­tion con­tin­ues to lim­it for­eign cur­ren­cy in­flows even as de­mand for US dol­lars re­mains high.

Busi­ness­es con­tin­ue to strug­gle to ac­cess suf­fi­cient for­eign ex­change through reg­u­lar bank­ing chan­nels, cre­at­ing de­lays for im­ports and in­ter­na­tion­al pay­ments.

The econ­o­mist warned that the is­sue re­mains a sig­nif­i­cant ob­sta­cle to in­vest­ment and busi­ness ex­pan­sion.

Mean­while, Har­ris be­lieves the Gov­ern­ment must pro­vide an­swers on the sta­tus of promised in­sti­tu­tion­al re­forms.

Among the ar­eas she wants ad­dressed is the mod­erni­sa­tion of the In­land Rev­enue Di­vi­sion and Cus­toms and Ex­cise Di­vi­sion.

“Strength­en­ing these in­sti­tu­tions was one jus­ti­fi­ca­tion for scrap­ping the TTRA, and re­al­is­ti­cal­ly, bet­ter sys­tems of rev­enue col­lec­tion are need­ed in T&T,” she said.

Har­ris al­so ques­tioned whether the cen­tral theme of the 2025/26 bud­get, build­ing eco­nom­ic fair­ness through ac­count­able fis­cal poli­cies, has been ful­ly re­alised.

“The is­sue of fair­ness is im­por­tant when spend­ing cuts are made and re­sources re­al­lo­cat­ed, as the aim should be to min­imise ex­ces­sive bur­den on some groups more than oth­ers,” she said.

“Many peo­ple be­lieve this no­tion of fair­ness has not been fac­tored in to de­ci­sion-mak­ing.”

Await­ing the Fi­nance Min­is­ter’s ex­am­i­na­tion

Al­though both econ­o­mists ex­pressed con­cerns about the coun­try’s eco­nom­ic tra­jec­to­ry, Har­ris stopped short of as­sign­ing an over­all grade to the Min­istry of Fi­nance.

She ar­gued that some key eco­nom­ic da­ta cov­er­ing fis­cal 2026 is still un­avail­able and that per­for­mance should ul­ti­mate­ly be judged based on ac­tions that ad­dress deep­er struc­tur­al weak­ness­es.

“It’s dif­fi­cult to grade the Min­istry of Fi­nance for two rea­sons,” she said.

“First, the most re­cent da­ta for quar­ter­ly re­al GDP growth is for Q4 2025, which does not cov­er most of Fis­cal 2026.”

She added that the Gov­ern­ment must al­so be judged on whether it has ad­vanced re­forms ca­pa­ble of im­prov­ing rev­enue ad­min­is­tra­tion, di­ver­si­fi­ca­tion and sus­tain­able job cre­ation.

“For that I be­lieve the Min­is­ter of Fi­nance de­serves his oral ex­am­i­na­tion on Oc­to­ber 12 be­fore I pro­pose a grade.”

For James, how­ev­er, the ev­i­dence al­ready points to a trou­bling con­clu­sion. While some fis­cal tar­gets have been met and sev­er­al promis­es de­liv­ered, the econ­o­my re­mains bur­dened by de­clin­ing gas pro­duc­tion, weak di­ver­si­fi­ca­tion, per­sis­tent for­eign ex­change short­ages and grow­ing fis­cal pres­sures.

With­out sig­nif­i­cant struc­tur­al re­forms, he warned, T&T risks en­ter­ing an­oth­er bud­get cy­cle con­fronting many of the same chal­lenges that have con­strained growth for more than a decade.