The International Monetary Fund’s Executive Board has completed its Article IV consultation with Trinidad and Tobago, concluding that the economy remains on a gradual recovery path but faces elevated uncertainty and persistent macroeconomic vulnerabilities. The review points to real GDP growth of 0.8 percent in 2025, inflation returning to low pre-pandemic levels, a surplus on the current account, and a well-capitalized banking system, while noting that persistent fiscal deficits have increased public debt and international reserves have continued to decline, albeit alongside liquid assets in the Heritage and Stabilisation Fund equal to about 25 percent of GDP. Executive Directors backed stronger and sustained fiscal consolidation to put debt on a credible downward path and preserve external stability. Priorities they highlighted included closing tax gaps, reducing non-priority transfers, improving the targeting of social programmes, and using higher-than-budgeted energy revenues to rebuild buffers, including by resuming deposits into the Heritage and Stabilisation Fund. Directors also encouraged a medium-term fiscal framework anchored by a fiscal rule and credible debt anchor, further steps to improve the long-term sustainability of the public pension system, and monetary tightening toward a neutral stance to narrow the negative interest rate differential with the United States and help stabilise capital outflows. They also called for measures to improve foreign exchange market functioning and, over time, greater exchange rate flexibility with supporting measures, while maintaining vigilance over sovereign-financial linkages and cyber and climate risks. The IMF projects growth to remain around 0.8 percent in 2026 before strengthening over the medium term as new energy projects come on stream and the non-energy sector maintains momentum. Inflation is expected to rise temporarily to about 3.1 percent in 2026 before stabilising around 2 percent over the medium term, and the overall fiscal deficit is projected to narrow to 4.6 percent of GDP. The authorities have consented to publication of the staff report, and the next Article IV consultation is expected on the standard 12-month cycle.
International Monetary Fund2026-05-18
International Monetary Fund completes Trinidad and Tobago Article IV review and urges stronger fiscal consolidation as public debt rises
The IMF Executive Board’s Article IV consultation with Trinidad and Tobago noted a gradual recovery, with projected real GDP growth of 0.8 percent in 2025, low inflation, a current account surplus and a well-capitalized banking system, but also elevated uncertainty, persistent fiscal deficits, rising public debt and declining reserves. Directors backed stronger fiscal consolidation, including closing tax gaps, cutting non-priority transfers, better targeting social programmes, rebuilding buffers and adopting a medium-term fiscal framework with a fiscal rule and debt anchor. They also urged monetary tightening toward neutral, improved foreign exchange market functioning, greater exchange rate flexibility over time, and vigilance over sovereign-financial linkages and cyber and climate risks.