Many econ­o­mists and fi­nan­cial com­men­ta­tors in Trinidad and To­ba­go have in the past spo­ken about fis­cal re­spon­si­bil­i­ty leg­is­la­tion. Yet it seems that much of the coun­try has lit­tle idea what this in­volves, which helps ex­plain why an im­por­tant pro­pos­al in the 2027 Na­tion­al Bud­get has at­tract­ed so lit­tle ex­am­i­na­tion.

Fis­cal sus­tain­abil­i­ty means that a gov­ern­ment can meet its oblig­a­tions, main­tain es­sen­tial ser­vices and in­vest in fu­ture de­vel­op­ment with­out al­low­ing debt and fi­nanc­ing costs to over­whelm its rev­enues. It al­so re­quires suf­fi­cient re­serves and flex­i­bil­i­ty to with­stand eco­nom­ic shocks. It ex­tends well be­yond hav­ing a bal­anced bud­get in any one year.

Ja­maica demon­strates how these prin­ci­ples can be trans­lat­ed in­to prac­tice and the im­pact on gov­er­nance. They in­tro­duced fis­cal re­spon­si­bil­i­ty leg­is­la­tion in 2010 and strength­ened the frame­work in 2014 through amend­ments to its Fi­nan­cial Ad­min­is­tra­tion and Au­dit Act. The leg­is­la­tion es­tab­lished a long term pub­lic debt tar­get of 60 per cent of gross do­mes­tic prod­uct, sup­port­ed by fis­cal rules, re­port­ing re­quire­ments and pro­ce­dures for cor­rect­ing de­par­tures from agreed tar­gets.

Fis­cal rules cre­ate a pub­lic bench­mark for de­ci­sions. Gov­ern­ments must ex­plain whether pro­posed spend­ing and bor­row­ing are con­sis­tent with their cho­sen debt path. When cir­cum­stances change, the re­vised course must be dis­closed. The re­quire­ment for ex­pla­na­tion makes the frame­work use­ful even when gov­ern­ments con­front un­avoid­able deficits.

Each year, Ja­maica pub­lish­es a Fis­cal Pol­i­cy Pa­per along­side its Bud­get. The doc­u­ment ex­plains the eco­nom­ic as­sump­tions, rev­enue fore­casts, ex­pen­di­ture plans and pro­ject­ed debt po­si­tion over sev­er­al years. Min­istries pre­pare plans with­in re­source lim­its, al­low­ing new com­mit­ments to be as­sessed against ex­ist­ing oblig­a­tions and even­tu­al­ly, Par­lia­ment can eval­u­ate the con­se­quences of to­day’s de­ci­sions for to­mor­row’s fi­nances.

In ad­di­tion, since Jan­u­ary 2025, an In­de­pen­dent Fis­cal Com­mis­sion has strength­ened this arrange­ment. Its task is to as­sess fis­cal fore­casts and per­for­mance, mon­i­tor com­pli­ance with the rules and pro­vide Par­lia­ment and the pub­lic with an in­de­pen­dent eval­u­a­tion. Re­spon­si­bil­i­ty re­mains with elect­ed gov­ern­ments, while de­par­tures from the agreed fis­cal path be­come hard­er to con­ceal.

This frame­work is sup­port­ed by prac­ti­cal Trea­sury arrange­ments. Ja­maica’s Ac­coun­tant Gen­er­al man­ages a Cen­tral Trea­sury Man­age­ment Sys­tem and a Trea­sury Sin­gle Ac­count at the Bank of Ja­maica. The Trea­sury ex­e­cutes pay­ments cen­tral­ly and man­ages the Gov­ern­ment’s cash more co­her­ent­ly.

Con­sid­er a min­istry with au­thor­i­ty to spend $1 bil­lion. That al­lo­ca­tion says lit­tle about when con­tracts must be paid or whether cash will be avail­able. A func­tion­ing Trea­sury sys­tem im­proves vis­i­bil­i­ty of com­mit­ments, pay­ment sched­ules and re­ceipts. It al­so helps gov­ern­ment avoid bor­row­ing un­nec­es­sar­i­ly while mon­ey re­mains idle else­where and makes fis­cal pro­jec­tions more cred­i­ble. Ja­maica still has some chal­lenges, but the val­ue is in giv­ing of­fi­cials a clear­er ac­count of where the mon­ey is go­ing, and what the Gov­ern­ment can af­ford.

The sys­tem al­so con­nects with longer term plan­ning. Ja­maica’s Vi­sion 2030 Na­tion­al De­vel­op­ment Plan is im­ple­ment­ed through suc­ces­sive medi­um term pol­i­cy frame­works with mea­sur­able ob­jec­tives. Fis­cal strat­e­gy helps es­tab­lish the re­sources avail­able for those ob­jec­tives. The Trea­sury sup­plies in­for­ma­tion on ac­tu­al ex­e­cu­tion, en­abling plans to be re­vised when cir­cum­stances change.

The re­sults are sig­nif­i­cant. The IMF re­ports that Ja­maica’s pub­lic debt fell from 144 per cent of GDP in 2012/13 to 62.4 per cent in 2024/25. Sus­tained pri­ma­ry sur­plus­es, debt op­er­a­tions, ex­ter­nal sup­port and po­lit­i­cal com­mit­ment all con­tributed. Fis­cal rules, con­sis­tent re­port­ing and in­de­pen­dent scruti­ny helped sus­tain the ef­fort across ad­min­is­tra­tions. Low­er debt re­duced the ex­po­sure of fu­ture bud­gets to fi­nanc­ing pres­sures.

Ja­maica’s ex­pe­ri­ence al­so il­lus­trates re­silience judg­ing from their abil­i­ty to cope fol­low­ing Hur­ri­cane Melis­sa in 2025. The rules pro­vid­ed a pro­ce­dure for ex­cep­tion­al cir­cum­stances and a ba­sis for pub­lic ac­count­abil­i­ty.

T&T’s jour­ney

In T&T’s 2027 Bud­get, the Min­is­ter of Fi­nance said his Min­istry would ex­plore a Na­tion­al Fis­cal Re­spon­si­bil­i­ty and Re­silience Frame­work and give se­ri­ous con­sid­er­a­tion to pub­lish­ing an an­nu­al Fis­cal Strat­e­gy State­ment. This would like­ly ex­plain medi­um term rev­enue, ex­pen­di­ture, fis­cal bal­ances, debt pro­jec­tions and the risks to those fore­casts. The Min­is­ter al­so pro­posed ex­am­in­ing meth­ods to re­duce the in­flu­ence of tem­po­rary en­er­gy rev­enue fluc­tu­a­tions on ex­pen­di­ture.

The word­ing is im­por­tant as the Bud­get an­nounced an in­ten­tion to ex­am­ine these mea­sures. It es­tab­lished nei­ther bind­ing fis­cal rules nor a timetable for leg­is­la­tion. The po­ten­tial is still sub­stan­tial, par­tic­u­lar­ly when con­nect­ed to the sep­a­rate Trea­sury Mod­erni­sa­tion Pro­gramme out­lined in the Bud­get doc­u­ment. The pur­pose of this col­umn is to high­light these pro­pos­als so that the ex­pec­ta­tion changes from in­ten­tion to de­liv­ery.

The Min­is­ter re­port­ed Cab­i­net’s ap­proval of a phased pro­gramme fol­low­ing a re­view of Trea­sury process­es, to­geth­er with the pro­mo­tion or ap­point­ment of more than 120 of­fi­cers. Planned im­prove­ments in­clude wider im­ple­men­ta­tion of an In­te­grat­ed Fi­nan­cial Man­age­ment In­for­ma­tion Sys­tem, con­sol­i­da­tion of cash re­sources, few­er bank ac­counts and more time­ly vis­i­bil­i­ty of Gov­ern­ment’s cash po­si­tion.

Our cur­rent arrange­ments ex­plain why this is im­por­tant. The Ex­che­quer and Au­dit Act, the 1965 Fi­nan­cial Reg­u­la­tions and the 1965 Fi­nan­cial In­struc­tions still gov­ern much of the ac­count­ing frame­work. Gov­ern­ment al­ready pro­duces an­nu­al pub­lic ac­counts, month­ly cash-based fi­nan­cial sub­mis­sions and an an­nu­al Pub­lic Sec­tor In­vest­ment Pro­gramme, with ef­forts un­der­way to strength­en medi­um term cap­i­tal plan­ning.

The 2027 Bud­get al­so ac­knowl­edged a gap be­tween planned and de­liv­ered in­vest­ment: about TT$3 bil­lion spent against rough­ly TT$5 bil­lion bud­get­ed for cap­i­tal projects in fis­cal 2026, with fur­ther bills out­stand­ing. We have to move past ap­pro­pri­a­tion to im­ple­men­ta­tion and cash man­age­ment is a key as­pect of this.

The slow pace of re­form is a func­tion of our ex­is­tence. In May 2015, the In­ter Amer­i­can De­vel­op­ment Bank ap­proved a pro­gramme to strength­en pub­lic fi­nan­cial man­age­ment. A loan agree­ment fol­lowed in 2016, and im­ple­men­ta­tion of the new fi­nan­cial in­for­ma­tion sys­tem be­gan in Sep­tem­ber 2018. The loan fa­cil­i­ty was closed in 2022 with the project un­fin­ished, and Gov­ern­ment con­tin­ued fund­ing work through its Bud­get.

The Au­di­tor Gen­er­al’s 2024 re­port iden­ti­fied de­fi­cient over­sight, de­lays in fi­nal­is­ing the new chart of ac­counts and pay­ment of the ven­dor’s full con­tract­ed amount de­spite out­stand­ing de­liv­er­ables. One ex­pen­di­ture mod­ule fi­nal­ly went live in one Min­istry of Fi­nance ac­count­ing unit in Feb­ru­ary 2025, with wider roll­out still be­ing pre­pared. The 2025 Au­di­tor Gen­er­al re­port­ed ap­prox­i­mate­ly TT$110 mil­lion in ex­pen­di­ture on the project across 2016 to 2025.

The next stage

We should be past the stage of talk. The im­me­di­ate pri­or­i­ty is de­liv­ery with ac­count­abil­i­ty. Gov­ern­ment should pub­lish a timetable show­ing when min­istries will join the sys­tem, how bank ac­counts will be ra­tio­nalised and when cash fore­casts will be­come re­li­able.

The fis­cal frame­work al­so needs a clear de­sign. Medi­um term plan­ning along­side a medi­um term debt ob­jec­tive with cred­i­ble ex­pen­di­ture ceil­ings and trans­par­ent en­er­gy rev­enue as­sump­tions are now crit­i­cal. Fur­ther reg­u­lar re­port­ing of fis­cal risks would cre­ate a ba­sis for eval­u­at­ing pol­i­cy. A non en­er­gy pri­ma­ry bal­ance com­pares rev­enue out­side the en­er­gy sec­tor with ex­pen­di­ture ex­clud­ing in­ter­est, ex­pos­ing the un­der­ly­ing de­pen­dence of pub­lic fi­nances on oil and gas re­ceipts. In­de­pen­dent re­view would test the fore­casts and ex­pose de­vi­a­tions from the in­tend­ed path, an ap­proach that may be more prac­ti­cal than just fo­cus­ing on pro­cure­ment.

The stakes are al­ready con­sid­er­able. The IMF es­ti­mat­ed Trinidad and To­ba­go’s pub­lic sec­tor debt at 84.2 per cent of GDP in fis­cal 2025. The Min­is­ter’s Bud­get state­ment re­ferred to ap­prox­i­mate­ly TT$70 bil­lion of debt falling due over the fol­low­ing five years. These fig­ures re­veal the claims that re­fi­nanc­ing and debt ser­vice will make on fu­ture rev­enue, in­vest­ment ca­pac­i­ty and fis­cal flex­i­bil­i­ty.

If oil and gas pro­duc­tion and rev­enue im­prove, the op­por­tu­ni­ty should be man­aged de­lib­er­ate­ly. This would be in stark con­trast to our es­tab­lished norms. A pub­lished mul­ti year plan would show how the com­pet­ing pri­or­i­ties of the HSF, re­duc­ing debt and fi­nanc­ing pro­duc­tive cap­i­tal in­vest­ment are bal­anced. It would al­so pro­tect the coun­try from turn­ing a short lived in­crease in en­er­gy earn­ings in­to per­ma­nent re­cur­rent oblig­a­tions.

Di­ver­si­fi­ca­tion ben­e­fits from the same dis­ci­pline. Busi­ness­es in­vest when in­fra­struc­ture, reg­u­la­tions and pub­lic com­mit­ments are pre­dictable. Mul­ti-year ap­praisal and main­te­nance bud­gets would sup­port projects in ed­u­ca­tion, lo­gis­tics, tech­nol­o­gy and ex­port ca­pac­i­ty across changes in com­mod­i­ty prices and gov­ern­ments. The fis­cal frame­work should there­fore as­sess the qual­i­ty and dura­bil­i­ty of ex­pen­di­ture along­side the debt tra­jec­to­ry.

In the short term, bet­ter Trea­sury in­for­ma­tion can im­prove cash man­age­ment, pay­ment re­li­a­bil­i­ty and ear­ly warn­ing of fis­cal pres­sures. Con­trac­tors gain greater pre­dictabil­i­ty, and bor­row­ing de­ci­sions can re­flect the cash ac­tu­al­ly avail­able. Over the medi­um term, cred­i­ble rules and dis­ci­plined choic­es can strength­en buffers, re­duce bor­row­ing costs and sus­tain in­vest­ment in the non en­er­gy econ­o­my. Those gains re­quire reg­u­lar pub­lic re­port­ing of per­for­mance, fol­lowed by cor­rec­tive ac­tion when tar­gets are missed.

The bud­get has opened a con­se­quen­tial dis­cus­sion that has large­ly been ig­nored. As usu­al we want to achieve sta­ble eco­nom­ic de­vel­op­ment but in­stead we fo­cus on the pol­i­tics of ex­pen­di­ture, sub­si­dies and hand outs. In oth­er words, the op­po­site of what we say we want to achieve.

Ian Nar­ine is a fi­nan­cial con­sul­tant who un­der­stands we need to get phys­i­cal be­fore we can get fis­cal. Please send your com­ments to ian@ian­nar­ine.com