Mar­i­ano Browne

The elec­tion is long gone, and the new ad­min­is­tra­tion is ful­ly em­barked on a dif­fi­cult five-year jour­ney to solve the chal­lenges it in­her­it­ed and the new ones that will arise. The re­al­i­ties of the of­fice will clar­i­fy what is pos­si­ble. Mr Don­ald Trump, for ex­am­ple, promised many things and ex­e­cut­ed the largest num­ber of ex­ec­u­tive or­ders of any pre­vi­ous Unit­ed States pres­i­dent in the first 100 days in of­fice.

Last week, Moody’s Rat­ing Ser­vice down­grad­ed the Unit­ed States’ cred­it rat­ing. The mes­sage was clear; even the largest econ­o­my in the world can­not bor­row in­def­i­nite­ly or ig­nore fis­cal ba­sics. The US still re­tains a qual­i­ty rat­ing. Trinidad and To­ba­go does not.

The 2025 elec­tion’s tim­ing al­lows the new ad­min­is­tra­tion to com­plete the mid-year bud­get re­view and to pub­licly ad­dress the coun­try’s cur­rent fi­nan­cial af­fairs. It would be re­mark­able if the de­tails of the coun­try’s fi­nan­cial sit­u­a­tion sur­prised any­one. While in op­po­si­tion, cur­rent min­is­ters would cer­tain­ly have had ac­cess to quar­ter­ly re­ports and a cred­i­ble view of the cur­rent chal­lenges. How­ev­er, the re­al­i­ties of of­fice re­quire a more re­al­is­tic and prag­mat­ic ap­proach.

Some­times this caus­es an epiphany. For ex­am­ple, in a me­dia re­lease dat­ed Jan­u­ary 31, 2025, cur­rent Fi­nance Min­is­ter Dav­en­dranath Tan­coo, then in op­po­si­tion, crit­i­cised Colm Im­bert, the pre­vi­ous min­is­ter of fi­nance, ar­gu­ing that the amnesty ex­ten­sions “un­der­mine the in­tegri­ty of the tax­a­tion sys­tem” by fa­cil­i­tat­ing tax evaders and set­ting a “wrong prece­dent”. Yet last week, he found it pos­si­ble to ex­tend the amnesty to Au­gust 2, 2025.

The work for the 2026 bud­get should be well ad­vanced, even if the min­istries and re­spon­si­bil­i­ties were re­al­lo­cat­ed in a new min­istry struc­ture. This will re­quire changes and gen­er­ate ad­di­tion­al costs. But it al­lows this ad­min­is­tra­tion to lay out its plans in its first bud­get speech and set the tone for its term in of­fice. What are the key chal­lenges?

All or­gan­i­sa­tions, gov­ern­ments in­clud­ed, must man­age their af­fairs around their cash flow. The Gov­ern­ment’s cash flow comes from tax­a­tion, rents and roy­al­ties. The Gov­ern­ment bor­rows to fund its short-term tim­ing is­sues us­ing trea­sury bills.

Fi­nan­cial in­stru­ments with longer ma­tu­ri­ties (bonds, lo­cal or for­eign) are used to fund longer-term cash short­ages. Gov­ern­ments are giv­en a cred­it rat­ing based on their re­pay­ment abil­i­ty as mea­sured by their cur­rent and pro­ject­ed cash flow, their re­pay­ment his­to­ry, and the size of the out­stand­ing debt. T&T lacks flex­i­bil­i­ty and fis­cal space. Of the three main in­ter­na­tion­al rat­ing agen­cies (Moody’s, Fitch and Stan­dard and Poor), on­ly one gives the coun­try its low­est in­vest­ment grade rat­ing.

The graph shows T&T’s fis­cal po­si­tion for the last 25 years. Ex­pen­di­ture has ex­ceed­ed rev­enue for 22 of the past 25 years. The deficit hard­ened be­tween 2011 and 2025. Giv­en the cam­paign promis­es, po­si­tion 2026 is not ex­pect­ed to be much dif­fer­ent. The re­sult is that the debt-to-GDP ra­tio is well past the cau­tion­ary lim­it of 70 per cent and con­tin­ues ris­ing as suc­ces­sive fi­nance min­is­ters have been un­able to close the gap be­tween ex­pen­di­ture and rev­enue.

Whilst Min­is­ter Tan­coo may speak dif­fer­ent­ly, he is in the same po­si­tion as Colm Im­bert. What will he do dif­fer­ent­ly?

Some tough choic­es must be made, and the com­mu­ni­ca­tion style of ne­ces­si­ty must be bet­ter. How will the bur­den be shared? Will the 47 per cent in­crease in min­is­ters’ salaries be re­tained? What sig­nal will that send to the elec­torate? If pub­lic sec­tor salaries are al­so in­creased, the ben­e­fit will be short-term.

GORTT can­not bor­row or spend its way out of this co­nun­drum. That method­ol­o­gy did not work be­fore, and it will not work now. We can’t de­pend on en­er­gy prices to lift the coun­try’s eco­nom­ic per­for­mance.

There are four key pri­or­i­ties that the prime min­is­ter and her cab­i­net col­leagues must ad­dress. The first is fis­cal con­sol­i­da­tion. The sec­ond is to man­age the for­eign ex­change po­si­tion. The third is to grow the econ­o­my. The fourth is to im­prove na­tion­al pro­duc­tiv­i­ty. Space does not per­mit a more rea­soned elab­o­ra­tion of the al­ter­na­tives.

Each pri­or­i­ty re­quires a dif­fer­ent pol­i­cy mix, but a co­or­di­nat­ed and cal­i­brat­ed set of poli­cies. Above all else, it re­quires the will­ing co­op­er­a­tion from cit­i­zens, as noth­ing can be achieved with­out their buy-in. Fis­cal con­sol­i­da­tion will on­ly buy time. Longer-term strate­gies are need­ed to grow the econ­o­my and get the pri­vate sec­tor to grow the econ­o­my. Ad­dress­ing the for­eign ex­change po­si­tion with mar­ket-based mech­a­nisms, such as a float­ing rate, will be po­lit­i­cal­ly dif­fi­cult but nec­es­sary.

The cur­rent for­eign re­serves give ap­prox­i­mate­ly sev­en months of im­port cov­er. This ad­min­is­tra­tion has lim­it­ed time to elab­o­rate a co­gent set of poli­cies. By bud­get day, the die will be cast, as will the coun­try’s fu­ture.

Mar­i­ano Browne is the Chief Ex­ec­u­tive Of­fi­cer of the UWI Lok Jack Glob­al School of Busi­ness.