Geisha Kowlessar-Alonzo
Government’s decision to settle long-outstanding wage obligations to public sector workers, alongside a request for an additional $2.93 billion in supplementary spending, is intensifying concerns among economists about how those commitments will be financed, with strong warnings that increased borrowing could deepen fiscal pressures.
The development comes as the administration moves to honour years-old industrial agreements, even as T&T faces a high debt burden.
While economists broadly agree that workers deserve the long-delayed payments—particularly after inflation eroded real incomes—they caution that the larger issue is whether the State has the financial capacity to sustain those commitments.
Financial expert and former public utilities minister Robert Le Hunte said the request for supplementary funding is not surprising, noting that there were early doubts about whether the original deficit projection of $3.865 billion fully captured the Government’s true expenditure obligations.
“The latest request for additional funding appears to validate some of those concerns,” he said.
Le Hunte warned that the additional spending effectively doubles the size of the fiscal deficit, noting that based on the original revenue projection of $55.367 billion, he estimates the deficit has now widened from about seven per cent of projected revenue to roughly 12.2 per cent.
“By any reasonable measure, that is a significant increase and one that warrants careful scrutiny,” he said.
Economists Ronald Ramkissoon and Mariano Browne shared similar concerns.
Ramkissoon said the wage payments themselves are justified, stressing that many workers have waited years for compensation while facing rising living costs.
“The payment to workers cannot be faulted,” he said.
However, he stressed that the key concern is how those payments would be financed, pointing to the lack of clarity from the Government.
With public sector debt already estimated at about 84 per cent of GDP, he warned that there is limited fiscal space to absorb additional spending without consequences.
Browne was more direct, arguing that borrowing is effectively unavoidable.
“They have no choice but to borrow it. They don’t have the revenue to be able to do it,” he said, describing the State’s financial position as fragile.
He added that political decisions on wage increases ultimately translate into national costs.
“Every political promise is paid for by the taxpayer and ultimately affects the national situation.”
While higher oil and gas prices could generate increased earnings, particularly amid global geopolitical tensions, both Browne and Ramkissoon cautioned against overreliance on that possibility.
“You have a fixed amount of natural gas… the only thing that could change is the price,” Browne explained, noting that production levels have not increased. As a result, any additional revenue would depend on price movements, which are volatile and difficult to predict.
Le Hunte echoed that concern, pointing out that no updated revenue projections have yet been provided. Without that information, he said, it is difficult to determine whether any gains from the energy sector would be sufficient to offset the surge in expenditure.
“What is clear is that expenditure continues to grow at a time when GDP growth projections remain relatively flat,” he said, adding that structural challenges—including foreign exchange shortages and constrained activity in key sectors—remain unresolved.
For Ramkissoon, the risk is that any financing gap would ultimately be filled through borrowing, increasing debt servicing costs and crowding out other priorities.
“Government must find more money to service the debt—money that could have been spent elsewhere,” he warned.
Browne added that even if borrowing begins domestically, there are limits, and continued reliance on local financing could create additional pressures.
He also cautioned that international ratings agencies are closely monitoring the country’s fiscal performance, with the risk of a downgrade if a credible path to deficit reduction is not demonstrated. (See more on Page 12)
