Many of the peo­ple who have com­ment­ed on the call by Emile Elias, the vet­er­an con­trac­tor and ex­ec­u­tive chair­man of NH In­ter­na­tion­al (Caribbean), for a man­aged float with an ex­change rate of $9 to US$1, are wor­ried about the im­pact of the pro­pos­al on the price of im­port­ed goods and ser­vices:

* Min­is­ter of Fi­nance, Dav­en­dranath Tan­coo, states, “A de­val­u­a­tion...has the po­ten­tial to dec­i­mate a large num­ber of small and medi­um sized busi­ness­es at a time when we need more pro­duc­tive ac­tiv­i­ty from them.  At the same time, our cit­i­zens would face high­er im­port costs, which would feed di­rect­ly in­to do­mes­tic in­fla­tion.”

* UWI St Au­gus­tine Pro­fes­sor Emir­i­tus, Patrick Wat­son, opines that de­pre­ci­at­ing the ex­change rate to $9 to US$1 could trig­ger a spec­u­la­tive spi­ral down­ward, that hoard­ing and spec­u­la­tion could re­sult and that more ex­pen­sive im­ports could hurt con­sumers. Cru­cial­ly, he ac­knowl­edges that “a de­val­u­a­tion sim­ply earns more TT dol­lars for the same US dol­lar rev­enue, with­out in­creas­ing to­tal for­eign earn­ings.”

Wat­son em­pha­sised that the lack of di­ver­si­fi­ca­tion was the re­al root of the forex cri­sis.

* Econ­o­mist In­dera Sage­wan out­lines that “a de­val­u­a­tion will make the cost of US dol­lars more ex­pen­sive and there­fore re­duce de­mand, but it will hit those who can’s af­ford...in­di­vid­ual house­holds and MSMEs re­al­ly hard...Par­ents need­ing forex for kids study­ing abroad, per­sons need­ing med­ical care abroad and, of course, the low­er mid­dle-in­come va­ca­tion­ers will have to down­size or forego that planned trip.”

* UWI St Au­gus­tine econ­o­mist, Vaalmik­ki Ar­joon, states, “At its core, the forex chal­lenge is a sup­ply is­sue,” ar­gu­ing that the re­al so­lu­tion lies in a mul­ti-pronged ap­proach.

Hav­ing read all of these won­der­ful com­ments, I am now con­vinced that few peo­ple in this coun­try re­alise what a slip­pery slope T&T is on.

The im­me­di­ate and fun­da­men­tal for­eign ex­change prob­lem is that de­mand for forex has con­sis­tent­ly out­stripped the sup­ply of it at the ceil­ing price of $6.79 to US$1.That fact has caused T&T’s net of­fi­cial for­eign re­serves to de­cline to US$4.806 bil­lion at the end of Ju­ly 2025, its low­est lev­el since May 2006.

At US$4.806 bil­lion in Ju­ly 2025, T&T’s net of­fi­cial for­eign re­serves de­plet­ed by US$935 mil­lion from US$5.741 bil­lion in Ju­ly 2024. At a de­ple­tion rate of US$935 mil­lion a year, in three years T&T’s net of­fi­cial for­eign re­serves would be US$2 bil­lion.

The ques­tion that the pop­u­la­tion needs to fo­cus on is this: With re­serves of US$2 bil­lion, would T&T be able to af­ford to ser­vice its for­eign debt and fund its US$6 bil­lion in de­mand for for­eign goods and ser­vices?

In my view, if the fun­da­men­tal for­eign ex­change prob­lem is that de­mand out­strips sup­ply at the sub­sidised price of $6.79 to US$1, it is ob­vi­ous that the im­me­di­ate so­lu­tion for T&T would be an ex­change rate that would bring de­mand and sup­ply more in­to equi­lib­ri­um. Such an ex­change rate—whether $7.50 or $8 or even $9—would re­sult in a re­duc­tion in the US$2.2 bil­lion that the Cen­tral Bank es­ti­mates that it sells to au­tho­rised deal­ers, the Ex­im­Bank, and to es­sen­tial pub­lic ser­vices to al­low the res­i­dents of T&T to live be­yond our means.

A man­aged float would sim­ply mean that mid­dle-in­come house­holds would be re­quired to ad­just, as Gov­ern­ment could use some of the TT dol­lars it re­ceives from a de­pre­ci­at­ed ex­change rate to sup­port the most vul­ner­a­ble in this coun­try.

As Ms Sage­wan point­ed out, the ad­just­ments would in­clude not be­ing able to send your chil­dren to for­eign uni­ver­si­ties, not be­ing able to af­ford for­eign med­ical care, and per­haps trav­el­ling abroad on va­ca­tion once every two years.

It is on­ly by im­me­di­ate­ly mak­ing for­eign goods more ex­pen­sive will we able to slow the de­ple­tion of our for­eign re­serves and get the pop­u­la­tion to live with­in the coun­try’s means.

Are UNC, PNM po­si­tions on T&T econ­o­my al­most iden­ti­cal?

I am a mem­ber of a What­sApp group, which op­er­ates based on the Chatham House Rule, which states that “par­tic­i­pants are free to use the in­for­ma­tion re­ceived, but nei­ther the iden­ti­ty nor the af­fil­i­a­tion of the speak­er(s), nor that of any oth­er par­tic­i­pant, may be re­vealed.”

On Tues­day af­ter­noon, I wrote the fol­low­ing in the group chat, “In very many ways, the eco­nom­ic think­ing of the cur­rent ad­min­is­tra­tion is al­most ex­act­ly the same as the pre­vi­ous one.”

There were two im­me­di­ate re­spons­es:

* But how can this be true? And shouldn’t we wait un­til at least the first bud­get is read?

* What was the eco­nom­ic think­ing of the last ad­min­is­tra­tion....can you share with us five key points please?

In re­sponse to the first com­ment, I wrote, “You are free to wait. I based the state­ment on the ev­i­dence in front of me.”

Re­spond­ing to the sec­ond com­ment, the fol­low­ing was put for­ward to sup­port the view that the eco­nom­ic think­ing of both the cur­rent and pre­vi­ous ad­min­is­tra­tions is al­most ex­act­ly the same:

“1) Main­tain a high lev­el of trans­fers;

2) Pro­vide lip ser­vice to fis­cal con­sol­i­da­tion;

3) Fund the re­sult­ing fis­cal deficits by a com­bi­na­tion of bor­row­ing on the lo­cal mar­ket in T&T$ and with­drawals from the HSF;

4) Main­tain ex­change rate sta­bil­i­ty and bor­row US$ to do so; and

5) Main­tain pub­lic ser­vice salaries at 2014 lev­els.”

So, the five key points pro­ferred in sup­port of the the­sis that the eco­nom­ic think­ing of the cur­rent and pre­vi­ous ad­min­is­tra­tions is al­most iden­ti­cal mean:

* The cur­rent ad­min­is­tra­tion will main­tain high lev­els of trans­fers and sub­si­dies (at least above 50 per cent), as the pre­vi­ous ad­min­is­tra­tion did;

* The cur­rent ad­min­is­tra­tion will con­tin­ue to pay lip ser­vice to fis­cal con­sol­i­da­tion, which refers to the poli­cies un­der­tak­en by gov­ern­ments to re­duce their deficits and ac­cu­mu­la­tion of debt stock. For­mer min­is­ter of fi­nance, Colm Im­bert, spoke in sev­er­al bud­get pre­sen­ta­tions about the need for fis­cal con­sol­i­da­tion, but put very few mea­sures in place to achieve a re­duc­tion in T&T’s deficits and debt;

* The cur­rent ad­min­is­tra­tion will con­tin­ue to fund T&T’s fis­cal deficits by a com­bi­na­tion of bor­row­ing on the lo­cal mar­ket in T&T$ and with­drawals from the HSF;

* The cur­rent ad­min­is­tra­tion will main­tain ex­change rate sta­bil­i­ty and will con­tin­ue to bor­row US dol­lars on the in­ter­na­tion­al mar­ket to do so, as Mr Im­bert did;

* The Unit­ed Na­tion­al Con­gress (UNC) ad­min­is­tra­tion will main­tain pub­lic ser­vice salaries at 2014 lev­els. This is not com­plete­ly ac­cu­rate as some pub­lic sec­tor trade unions ac­cept­ed the pre­vi­ous ad­min­is­tra­tion’s of­fer of a four per cent wage in­crease for the pe­ri­od 2014 to 2019. More ac­cu­rate­ly stat­ed that last point should have read that the cur­rent ad­min­is­tra­tion will NOT have the mon­ey to ful­fill the ad­min­is­tra­tion’s promise to pub­lic sec­tor work­ers of salary ne­go­ti­a­tions start­ing at 10 per cent.

Do I have to wait un­til Min­is­ter of Fi­nance, Dav­en­dranath Tan­coo, reads the 2026 bud­get to know that the ad­min­is­tra­tion led by Prime Min­is­ter Kam­la Per­sad-Bisses­sar is not even go­ing to strive to re­duce T&T’s fis­cal deficit po­si­tion?

I do not have to wait be­cause the cur­rent ad­min­is­tra­tion has al­ready re­ject­ed the rec­om­men­da­tions of the Reg­u­lat­ed In­dus­tries Com­mis­sion to in­crease elec­tric­i­ty rates. The UNC ad­min­is­tra­tion has al­so said no to the prop­er­ty tax and has re­pealed the Trinidad and To­ba­go Rev­enue Au­thor­i­ty.

It suf­fices to state that there is a very high prob­a­bil­i­ty—as high as 90 per cent—that the cur­rent ad­min­is­tra­tion would be as fis­cal­ly im­pru­dent, al­so known as reck­less, as the pre­vi­ous one was, as it seeks to avoid the nec­es­sary ad­just­ments the res­i­dents of this coun­try need to en­dure.

It is im­por­tant that the con­se­quences of fis­cal reck­less­ness—mean­ing pay­ing no heed to the con­se­quences of their ac­tions in con­tin­u­ing to spend more mon­ey than the coun­try earns—be placed on the ta­ble.

The main con­se­quence of con­sis­tent, mul­ti-year fis­cal deficits is an in­crease in T&T’s to­tal debt.

Ac­cord­ing to in­for­ma­tion in the Cen­tral Bank’s da­ta cen­tre, T&T’s ad­just­ed gen­er­al gov­ern­ment debt to­talled $147.83 bil­lion as at June 30, 2025. That is an in­crease of 27 per cent in­crease from June 2020. More to the point, ad­just­ed gen­er­al gov­ern­ment debt to GDP was 84.6 per cent in June 2025.

Ad­just­ed gen­er­al gov­ern­ment debt de­scribes debt fi­nanc­ing aris­ing from the di­rect op­er­a­tions of the cen­tral gov­ern­ment as well as all gov­ern­ment guar­an­tees is­sued on be­half of state-owned en­ti­ties that do not ser­vice their own debts, ac­cord­ing to a Cen­tral Bank de­f­i­n­i­tion.