The IMF Mis­sions are un­der­tak­en as part of reg­u­lar (usu­al­ly an­nu­al) Ar­ti­cle IV con­sul­ta­tions. The IMF staff’s pre­lim­i­nary find­ings from its vis­it to T&T were pub­lished last week in its “Con­clud­ing State­ment.” Since the state­ment is ap­proved by the host coun­try pri­or to its re­lease, it does not gen­er­al­ly have any “sur­pris­es”. The state­ment is im­por­tant be­cause it pro­vides an im­par­tial view from an in­de­pen­dent third par­ty. The IMF can on­ly com­ment and rec­om­mend. A gov­ern­ment will de­cide which rec­om­men­da­tion it will ac­cept or ig­nore.

The GORTT is re­spon­si­ble for im­ple­ment­ing eco­nom­ic pol­i­cy to ad­dress the coun­try’s de­vel­op­ment and eco­nom­ic needs. This coun­try, T&T, has been re­cov­er­ing from the im­pact of de­clin­ing nat­ur­al gas pro­duc­tion and low en­er­gy prices in a chal­leng­ing geopo­lit­i­cal and eco­nom­ic en­vi­ron­ment. Is the coun­try’s econ­o­my re­gress­ing, re­cov­er­ing or re­vi­tal­is­ing? What is re­quired to achieve sus­tain­able growth?

To as­sess an econ­o­my, econ­o­mists look not at a sin­gle in­di­ca­tor but at a range of in­di­ca­tors, in­clud­ing pro­duc­tive ac­tiv­i­ty, labour mar­kets, de­mand, fi­nan­cial con­di­tions, and con­fi­dence. Pro­duc­tive ac­tiv­i­ty an­swers the ques­tion of whether the coun­try is pro­duc­ing more or few­er goods and ser­vices, and if the change is broad-based. Labour mar­ket con­di­tions show whether growth is trans­lat­ed in­to more jobs and high­er in­comes. De­mand-side in­di­ca­tors, such as house­hold busi­ness spend­ing, in­di­cate whether a re­cov­ery is durable and dri­ven by in­vest­ment rather than con­sumer de­mand.

Trade and ex­ter­nal com­pet­i­tive­ness are ex­treme­ly im­por­tant for a small open econ­o­my like T&T. Ex­port vol­ume (the amount ex­port­ed) counts more than an in­crease in ex­port val­ue (price). This af­fects the cur­rent ac­count (ex­ports – im­ports) and pro­vides an in­di­ca­tion of the for­eign ex­change po­si­tion. The pub­lic sec­tor and fis­cal met­rics demon­strate whether a re­cov­ery is self-sus­tain­ing or stim­u­lus-dri­ven. Tax rev­enue growth, the debt-to-GDP ra­tio, and trans­fer sub­si­dies are sup­ple­men­tary in­di­ca­tors.

Fi­nan­cial and mon­e­tary in­di­ca­tors, such as cred­it growth, as­set prices (TTSE and house prices), and liq­uid­i­ty, in­di­cate whether there is com­ple­men­tar­i­ty be­tween the fi­nan­cial sec­tor and con­fi­dence lev­els. In­creas­ing con­fi­dence leads to more in­vest­ment. Mon­i­tor­ing in­fla­tion al­so shows whether the econ­o­my is over­heat­ing (high in­fla­tion) or whether a wage-price dy­nam­ic could un­der­mine ex­ter­nal com­pet­i­tive­ness.

The state­ment notes that eco­nom­ic growth in 2026 will track 2025’s 0.7 per cent or 0.8 per cent rate, which is pos­i­tive but weak. It projects that eco­nom­ic growth will in­crease to 2.9 per cent in 2027, ris­ing to 3.5 per cent in 2028, dri­ven by the Man­a­tee project com­ing on stream. This is pos­i­tive, but the re­port cau­tions that “… The eco­nom­ic out­look is sub­ject to con­sid­er­able un­cer­tain­ty, and the bal­ance of risks is tilt­ed to the down­side in low­er oil and gas pro­duc­tion, which could re­sult from dis­rup­tions in ma­ture fields or de­lays in new projects in the near term and to the up­side in the long term.” (para­graph 5). In­fla­tion re­mains low, and un­em­ploy­ment is mod­er­ate, though the de­clin­ing labour par­tic­i­pa­tion rate is con­cern­ing.

The re­port al­so iden­ti­fied ad­di­tion­al ex­ter­nal fac­tors, in­clud­ing “el­e­vat­ed glob­al un­cer­tain­ty, trade dis­rup­tions, tighter glob­al fi­nan­cial con­di­tions, and re­gion­al geopo­lit­i­cal ten­sions.” In­creased drilling ac­tiv­i­ty is not­ed (Exxon), and the re­port recog­nis­es the pos­si­bil­i­ty of pos­i­tive re­gion­al de­vel­op­ments (Venezuela). How­ev­er, it will not eval­u­ate these po­ten­tial de­vel­op­ments un­til in­vestors make a fi­nal in­vest­ment de­ci­sion. (para­graph 7)

The re­port is crit­i­cal of the con­tin­u­ing fis­cal deficits. It not­ed that the 2026 bud­get pro­ject­ed a 2.2 per cent deficit, but cal­cu­lates that the deficit will be 2.27 times larg­er at five per cent. It bases this re­cal­cu­la­tion on the cur­rent out­look for en­er­gy prices, the agreed back­pay oblig­a­tions to pub­lic sec­tor em­ploy­ees and new­ly hired pub­lic sec­tor work­ers. It rec­om­mends re­duc­ing the deficit to 3.5 per cent of GDP by im­ple­ment­ing mea­sures such as re­mov­ing VAT ze­ro rat­ings, ac­cel­er­at­ing the phase-out of un­tar­get­ed util­i­ty sub­si­dies while pro­tect­ing vul­ner­a­ble house­holds, putting state en­ter­pris­es on a sounder fi­nan­cial foot­ing, and im­prov­ing the ef­fi­cien­cy and qual­i­ty of pub­lic ex­pen­di­ture. (para­graph 9)

This im­plies that GORTT is spend­ing more than it should. As in pre­vi­ous re­ports, it ar­gues for greater fi­nan­cial dis­ci­pline and rec­om­mends “… a rules-based fis­cal frame­work” to re­in­force fis­cal dis­ci­pline and im­prove medi­um term man­age­ment of pub­lic fi­nances (para­graph 11). Fur­ther­more, it con­sid­ers the fis­cal po­si­tion the great­est risk to fu­ture sta­bil­i­ty, not­ing that al­though the fi­nan­cial sys­tem re­mains healthy and banks are well cap­i­talised, the con­tin­ued de­pen­dence on do­mes­tic banks to fi­nance the deficit has height­ened the fi­nan­cial sec­tor’s ex­po­sure to sov­er­eign cred­it and in­ter­est rate risks through val­u­a­tion, col­lat­er­al, and fund­ing chan­nels (para­graph 14).

It al­so com­ments on the ex­change rate sys­tem, not­ing that sup­port­ing the ex­ist­ing ex­change arrange­ment calls “for a sig­nif­i­cant­ly tighter macro­eco­nom­ic pol­i­cy mix” than cur­rent­ly ex­ists. It links the on­go­ing fis­cal deficits to forex short­ages and ar­gues for a “front-loaded fis­cal con­sol­i­da­tion”. In short, any re­cov­ery is not broad-based and de­pends on fis­cal stim­u­lus, al­though growth has oc­curred in the non-en­er­gy and ser­vices sec­tors. (para­graph 12)

It con­cludes that oil and gas rev­enues have un­der­pinned eco­nom­ic de­vel­op­ment and will con­tin­ue to sup­port medi­um-term growth, fis­cal rev­enue, and ex­port earn­ings. How­ev­er, T&T needs all en­gines of growth op­er­at­ing to build a more di­ver­si­fied, re­silient, and in­clu­sive econ­o­my. In the long term, achiev­ing both hor­i­zon­tal and ver­ti­cal di­ver­si­fi­ca­tion will be es­sen­tial to nav­i­gate the chal­lenges of glob­al en­er­gy-mar­ket volatil­i­ty and to lay the foun­da­tions for sus­tain­able, broad-based, and in­clu­sive growth. (para­graph 18).

To achieve sus­tain­abil­i­ty, T&T must adopt a more co­her­ent pol­i­cy mix, ad­dress its fis­cal po­si­tion and for­eign ex­change is­sues and build al­ter­na­tive sec­tors to re­duce its de­pen­dence on the en­er­gy sec­tor.

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