A cargo of gas can be sold only once. A modern port, a reliable water system, a well-trained technician, a stronger national balance sheet or a more productive business can create value for decades. That distinction should guide Trinidad and Tobago’s preparation for the next improvement in energy revenue.
In my previous article, I argued that projects such as Manatee should be treated as bridges to economic transition, not substitutes for diversification, and that the country should consider a fiscal rule that saves windfalls, restrains recurrent expenditure and rebuilds reserves. The next question is practical: when additional energy income arrives, what permanent national capacity should remain after it has been spent?
This is not an argument against using energy revenue. Oil and gas have financed infrastructure, education, healthcare, social protection and industrial development. Energy will continue to be important. The challenge is to distinguish income that can support recurring commitments from revenue that is temporary, volatile or derived from a depleting asset.
T&T’s natural-gas expansion previously underpinned foreign-exchange earnings, tax revenue, skilled employment and industrial infrastructure, demonstrating what the sector can contribute when revenue and productive capacity reinforce each other.
The present numbers make that distinction important. The International Monetary Fund estimated Trinidad and Tobago’s central government deficit at 5.5 per cent of GDP in fiscal 2025. The non-energy primary deficit was 15 per cent of non-energy GDP, while public-sector debt reached 84.2 per cent of GDP. Gross official reserves stood at US$5.37 billion, equivalent to 6.1 months of prospective imports.
At the same time, Heritage and Stabilisation Fund assets were valued at 24.5 per cent of GDP, providing the country with a substantial buffer.
The IMF also welcomed recent measures to strengthen revenue mobilisation, rationalise spending and improve investment efficiency. Its recommendation was forward-looking: use higher-than-budgeted energy revenue primarily to rebuild buffers and develop a medium-term fiscal framework supported by a well-designed rule and credible debt anchor.
One comparison deserves attention. In the IMF’s fiscal table, central-government current expenditure amounted to 30.2 per cent of GDP in fiscal 2025, compared with capital expenditure of 2.1 per cent. The categories are not interchangeable, and recurrent spending includes essential services.
Nevertheless, a ratio of more than fourteen to one suggests an opportunity to rebalance gradually towards productive investment while protecting those services.
The Heritage and Stabilisation Fund is one of T&T’s important institutional achievements. Its assets stood at US$6.38 billion in February 2026. The IMF reported that US$411 million was withdrawn during fiscal 2025, yet strong investment returns still increased the fund’s balance by approximately US$250 million. That illustrates both the fund’s value and the policy tension it must manage: stabilising the budget today while preserving national wealth for tomorrow.
The case for clearer rules is empirical, not ideological. An IMF study covering 57 commodity exporting countries from 1976 to 2021 found that fiscal rules reduced the tendency of public spending in oil exporters to rise and fall with the terms of trade. The study also found that such rules improved non-resource primary balances, particularly during commodity upswings. Design and compliance mattered: rules that were frequently changed, weakly enforced or poorly integrated into the budget delivered less.
International practice does not point to a single formula that every country should adopt. It does, however, offer useful principles. Norway’s framework allows petroleum revenue to enter the budget gradually; over time, spending is linked to the expected real return on its sovereign fund, currently estimated at three per cent. This helps preserve the Fund’s real value and shields the annual budget from short-term oil-price movements.
Chile uses a different mechanism. Independent expert committees estimate long-term copper prices and track economic growth trends, helping the Government calculate a structural rather than purely cash-based budget balance. The lesson for T&T is not to import either system wholesale. It is to separate budget planning from the optimism of the moment and subject the assumptions governing resource revenue to independent scrutiny.
The global benchmark for sovereign wealth fund governance is also clear. The Santiago Principles comprise 24 accepted practices covering governance, accountability, transparency, investment and risk management. The IMF’s Fiscal Transparency Code similarly treats resource revenue management as a central pillar of sound public finance.
T&T can build on its existing HSF reporting framework by integrating it more fully into a transparent medium-term fiscal strategy.
A useful caution comes from Timor-Leste, another small, resource-dependent state. Its Petroleum Fund held US$18.3 billion at the end of 2024, equivalent to 939 per cent of its non-oil GDP. Yet petroleum production ceased in 2025, and the IMF warns that continued large withdrawals could deplete the fund by the end of the 2030s. The lesson is powerful: even a sovereign fund many times larger than the domestic economy cannot permanently substitute for spending discipline, productive investment and a broader revenue base.
What, then, could a T&T framework contain?
First, the annual budget should be based on conservative reference assumptions for energy prices and production. Those assumptions could be reviewed by an independent technical panel and published with an explanation of the risks. Revenue above the benchmark would be treated as exceptional rather than immediately available for permanent expenditure.
Second, the framework should combine two anchors. A non-energy primary-balance path would show whether day-to-day public expenditure is becoming less dependent on energy. A credible public-debt anchor would protect fiscal space and borrowing capacity. Neither target should demand abrupt adjustment. They should operate over several years, with defined escape clauses for recessions, natural disasters and genuine national emergencies, followed by a published route back to the rule.
Third, above-benchmark energy revenue should enter predetermined national “buckets”: rebuilding reserves and the HSF, reducing expensive debt, and financing a limited pipeline of high-quality capital projects. The precise shares should be determined through transparent modelling and periodic review. The essential principle is that temporary income should not automatically create permanent recurrent obligations.
Fourth, capital spending must be protected by better project selection. Projects should qualify based on credible economic or social returns, transparent procurement, realistic completion schedules, and funded maintenance.
Water reliability, ports, drainage, digital public infrastructure, schools, health facilities and industrial utilities can improve both quality of life and private-sector productivity when properly designed and maintained.
Fifth, the country should publish an annual national balance sheet alongside the budget. Citizens should be able to see not only revenue and expenditure, but also public debt, guarantees, State enterprise risks, financial assets, infrastructure condition and the expected cost of major long-term commitments. A small, technically independent fiscal council could assess assumptions and report on compliance without determining policy. Its role would be to strengthen public confidence and continuity across political cycles.
This agenda should not be assigned solely to the government. Parliament provides scrutiny. Public institutions execute projects. Businesses must co-invest, innovate and expand productive capacity. Financial institutions should support viable long-term investment.
Universities and training bodies must align skills with emerging industries. Citizens, too, should judge national progress by the assets, services and opportunities created, not simply the size of annual expenditure.
Clear rules can also protect policymakers. They make it easier to save during good years, resist unsustainable commitments and explain why some revenue must be preserved. They can turn fiscal discipline from a politically difficult choice into an established national practice.
T&T is not starting from zero. It possesses a substantial sovereign fund, valuable infrastructure, deep energy expertise, capable institutions and a private sector with regional reach. The objective is to convert future periods of stronger energy income into a more resilient economy before the opportunity passes.
This is not a choice between saving and development. It is a choice about the quality and durability of development. The next energy dollar should be judged twice: first by what it finances today, and again by what remains for the country after that dollar and the resource that produced it are gone.
