There is no dis­pute that the T&T econ­o­my is in a state of cri­sis, with the coun­try’s net for­eign re­serves be­ing de­plet­ed at an alarm­ing pace, a dys­func­tion­al for­eign ex­change regime, an over­val­ued ex­change rate, and a 2025 bud­get that is in deep deficit and is be­ing fund­ed by bor­row­ings and draw­downs from T&T’s Her­itage Sta­bil­i­sa­tion Fund.

The facts are that the cur­rent ad­min­is­tra­tion of the Unit­ed Na­tion­al Con­gress (UNC) has been in of­fice for four months. It was pre­ced­ed by the Peo­ple’s Na­tion­al Move­ment (PNM) ad­min­is­tra­tion, which gov­erned Trinidad and To­ba­go (T&T) for ap­prox­i­mate­ly nine years and sev­en months.

Clear­ly, the do­mes­tic econ­o­my did not find it­self in its cur­rent state of cri­sis en­tire­ly as a re­sult of the poli­cies of the UNC ad­min­is­tra­tion in the last four months. But, in my view, the par­ty has done lit­tle to ease the cur­rent and fu­ture cri­sis by de­cid­ing to aban­don the prop­er­ty tax, can­cel the T&T Rev­enue Au­thor­i­ty, fail­ing to clar­i­fy its short-term rev­enue col­lec­tion poli­cies, not com­ing up with a plan to fix the for­eign ex­change prob­lem as well as its de­ci­sion to fire the Gov­er­nor of the Cen­tral Bank and its clum­sy at­tempt to force the im­me­di­ate res­ig­na­tion of the First Cit­i­zens Group CEO, Karen Dar­basie.

So, the PNM, which was in of­fice from Sep­tem­ber 2015 to April 2025, ob­vi­ous­ly has to ac­cept much of the blame for the coun­try’s cur­rent eco­nom­ic re­al­i­ties.

What did Mr Im­bert do wrong?

In de­liv­er­ing the 2016 bud­get on Oc­to­ber 5, 2025, the then Min­is­ter of Fi­nance, Colm Im­bert said, “To­tal en­er­gy ex­ports are es­ti­mat­ed at on­ly US$7.5 bil­lion in 2015, a sig­nif­i­cant de­cline when com­pared with an an­nu­al av­er­age of US$12.7 bil­lion in the pe­ri­od 2010-2014.” That means to­tal en­er­gy ex­ports in 2015 were pro­ject­ed to de­cline by close to 41 per cent com­pared with the av­er­age for the pre­vi­ous five years.

In that bud­get speech, Mr Im­bert not­ed that be­cause in­ter­na­tion­al oil and nat­ur­al gas prices de­clined through­out fis­cal year 2015, Gov­ern­ment rev­enues from the en­er­gy sec­tor were $8 bil­lion less than the bud­get­ed es­ti­mates, while ex­pen­di­tures were on­ly re­duced by $3 bil­lion. That meant the fis­cal deficit “bal­looned” to $7 bil­lion, or rough­ly 4.2 per cent of GDP; com­pared to the bud­get­ed deficit of $4.3 bil­lion or 2.7 per cent of GDP.

“Notwith­stand­ing their pub­lic de­c­la­ra­tion to the con­trary, the pre­vi­ous Gov­ern­ment took vir­tu­al­ly no ac­tion to sta­bilise the pub­lic fi­nances,” said the then min­is­ter of fi­nance. (By the way, the net of­fi­cial for­eign re­serves at the end of Au­gust 2015 amount­ed to US$10.539 bil­lion, which was 12.1 months of im­port cov­er. And the sell­ing rate of the US dol­lar was $6.3597 to US$1 at the end of Au­gust 2015).

Did Mr Im­bert sta­bilise the pub­lic fi­nances in the 2017 fis­cal year?

Well, ac­cord­ing to his 2017 bud­get pre­sen­ta­tion, rev­enue was es­ti­mat­ed to be $45 bil­lion in the 2016 fis­cal year, some $15 bil­lion less than the orig­i­nal bud­get es­ti­mate.

While the re­vised es­ti­mate of ex­pen­di­ture for 2016 was $52.2 bil­lion, which was $11 bil­lion or 17.4 per cent less than the orig­i­nal es­ti­mate, Mr Im­bert still re­port­ed a deficit of $7.2 bil­lion for the 2016 fis­cal year, ac­cord­ing to his bud­get speech.

In my view, those fis­cal deficits in 2015 and 2016, should have been enough to alert Mr Im­bert that deep­er struc­tur­al re­forms were nec­es­sary to cure T&T’s deficit fi­nanc­ing. In­stead, what we got were sev­en of the next eight bud­gets be­ing in deficit, with the on­ly sur­plus in that pe­ri­od com­ing in 2022 as a re­sult of Rus­sia’s in­va­sion of Ukraine.

What should Mr Im­bert have done?

In de­liv­er­ing his 2017 bud­get, on Sep­tem­ber 30, 2016, Mr Im­bert re­ferred to for­eign ex­change short­ages “from time to time” and that the in­ci­dence of those short­ages had been ex­ac­er­bat­ed since 2014, by changes in the forex man­age­ment regime, “which dis­turbed the long­stand­ing con­fi­dence in the sys­tem. The sit­u­a­tion was lat­er ag­gra­vat­ed by the steady de­cline in earn­ings from the en­er­gy sec­tor.

“These un­cer­tain­ties have led to in­creased de­mands for for­eign ex­change, in some cas­es for pur­pos­es of hoard­ing and cap­i­tal flight,” he said.

Just by the way, at the end of De­cem­ber 2016, ex­act­ly three months af­ter Mr Im­bert’s bud­get pre­sen­ta­tion, the av­er­age sell­ing rate of the TT dol­lar was $6.7802, just short of the $6.799 ex­change rate ceil­ing, which he must have in­spired.

How much more hoard­ing and cap­i­tal flight would have tak­en place be­tween Sep­tem­ber 30, 2016 and to­day, Au­gust 4, 2025?

I re­turn to the point that I have made in this space, and in the oth­er place, on nu­mer­ous oc­ca­sions since April 2013, when I first start­ed ad­vo­cat­ing for the man­aged flota­tion of the TT dol­lar.

A man­aged float—de­ter­mined by how much US dol­lars the Cen­tral Bank is com­fort­able sell­ing from T&T’s for­eign re­serves—would have eased the pres­sure on the fis­cal ad­just­ments the min­is­ter of fi­nance was re­quired to make; boost­ed the amount of TT dol­lars the Min­istry of Fi­nance re­ceives for the same amount of US dol­lars; part­ly cured the res­i­dents of T&T of their ad­dic­tion for for­eign goods and ser­vices; en­cour­aged the repa­tri­a­tion of US dol­lars held in over­seas back ac­counts and cur­tailed the de­ple­tion of T&T’s for­eign re­serves.,

As it stands, T&T’s net of­fi­cial for­eign re­serves amount­ed to US$4.816 bil­lion at the end of Au­gust 2025. That was 29.42 per cent less than the US$6.823 bil­lion in net of­fi­cial re­serves at the end of Au­gust 2022. That means in that three-year pe­ri­od, T&T’s for­eign re­serves de­clined by US$2.007 bil­lion or an av­er­age of US$669 mil­lion a year. If the coun­try con­tin­ues to de­plete its for­eign re­serves at that pace, by Au­gust 2028, T&T’s net of­fi­cial for­eign re­serves would be down to US$2.8 bil­lion. That would re­quire the Min­is­ter of Fi­nance to knock on the doors of the In­ter­na­tion­al Mon­e­tary Fund for a sov­er­eign bailout.

Is T&T broke?

At a po­lit­i­cal meet­ing of the Op­po­si­tion PNM last week in Mor­vant, Im­bert read from a Cab­i­net Minute dat­ed Au­gust 7, 2025, head­ed ‘Ap­proval for the trans­fer of funds, held in es­crow, for 16 Gov­ern­ment-guar­an­teed loans to the Trea­sury to as­sist Gov­ern­ment with fund­ing for the re­main­der of the fis­cal year, 2025.’

He told his par­ty’s sup­port­ers that the ad­min­is­tra­tion of the UNC had trans­ferred a to­tal of $1.3 bil­lion from Gov­ern­ment-guar­an­teed loans to State com­pa­nies in­to the ac­count of the Min­is­ter of Fi­nance, Dav­en­dranath Tan­coo, to pay manda­to­ry ex­pens­es for the months of Au­gust and Sep­tem­ber.

The pur­pose of the loans to the State com­pa­nies in­clud­ed to pay off the monies owed to con­trac­tors and to con­tin­ue crit­i­cal Gov­ern­ment pro­grammes such as the con­struc­tion of hous­es and schools, road paving and the im­prove­ment of wa­ter sup­plies to com­mu­ni­ties across the coun­try.

“No­body wants to lend them mon­ey based on cur­rent liq­uid­i­ty lev­els.

“The Gov­ern­ment of Trinidad and To­ba­go’s abil­i­ty to eas­i­ly or read­i­ly ac­cess funds on the do­mes­tic mar­ket has been se­vere­ly con­strained. That is tech­ni­cal lan­guage for the banks do not want to lend them any mon­ey...What this is not say­ing is that they can’t bor­row mon­ey. The banks don’t want to give them any mon­ey.

“So they take the whole $1.3 bil­lion, all the loans for school con­struc­tion, hous­ing con­struc­tion, road paving and they put it in­to the Gov­ern­ment’s bank ac­count. Do you know what for? It is to deal with a crit­i­cal short­fall of mon­ey for the re­main­ing two months of the year...If the banks don’t want to lend them any mon­ey, what caus­ing that? Is it that the banks have no con­fi­dence in them....They suck out all the mon­ey that the PNM gov­ern­ment had made avail­able to all these state en­ter­pris­es to deal with all of these mat­ters, and they put it in their bank ac­count. You know what to do with? Just to try and pay salaries in Au­gust and Sep­tem­ber. I know what this tells me. The gov­ern­ment is broke. The gov­ern­ment has no mon­ey.

“They trans­ferred the $1.3 bil­lion to the Gov­ern­ment’s ac­count to make manda­to­ry pay­ments, which is old age pen­sion, salaries and wages, debt ser­vice pay­ments and so on.”

T&T’s Min­is­ter of Fi­nance, Mr Tan­coo did not re­spond di­rect­ly to Mr Im­bert’s claim that the Gov­ern­ment had trans­ferred loan monies meant for State com­pa­nies to the re­cur­rent ex­pen­di­ture ac­count con­trolled by the Min­istry of Fi­nance.

“I am proud to say that this gov­ern­ment is meet­ing its oblig­a­tions to pub­lic sec­tor work­ers and will con­tin­ue to do so,” he said, be­fore ac­cus­ing Mr Im­bert of wag­ing “a cam­paign of mis­chief and mis­in­for­ma­tion.” against the Gov­ern­ment.

The T&T Gov­ern­ment is not broke, but its cash flow is­sue is clear­ly huge­ly prob­lem­mat­ic and re­quires ur­gent at­ten­tion.

But will Mr Tan­coo re­peat Mr Im­bert’s mis­take of dis­miss­ing a man­aged float, and will the 2026 bud­get in­sti­tute cuts in ex­pen­di­ture to bring the fis­cal ac­count back in­to bal­ance?