## IMF Staff Concludes 2017 Article IV Mission to Trinidad And Tobago

_IMF News, August 4, 2017_

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## Bibliographic details
- Published: August 4, 2017

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### Mission details and context
- Press Release No. 17/320
- Date: August 4, 2017
- IMF staff team led by Mr. Elie Canetti visited Trinidad and Tobago during July 20 - August 2, 2017 to conduct the annual Article IV consultation.
- Press officer: Andrew Kanyegirire; Phone: +1 202 623-7100; Email: MEDIA@IMF.org
- End-of-Mission press release: preliminary findings of the mission; views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

### Macroeconomic assessment and outlook
- Main drivers of recent challenges:
  - "sharp declines in global energy prices since 2014"
  - "a fall in natural gas and oil production in recent years"
  - "prolonged economic stagnation, capital allowances, and challenges with tax administration" leading to weak revenue collections
- Recent performance:
  - "preliminary data shows that the economy contracted in the first half of the year on weak energy production and spillovers to the non-energy sector"
  - "the economy may be starting to turn a corner as a result of a projected recovery in gas output, though growth may still be flat or somewhat negative for the year as a whole"
- Medium-term outlook:
  - "The economic improvement that is now beginning is projected to continue into the medium-term"
  - Drivers of recovery: "pipeline of projects that will improve the supply of natural gas to the downstream energy sector"; "Oil output is growing due to state-owned Petrotrin’s recent exploration efforts and refinery upgrade"
  - Non-energy sector: expected to rebound from energy-related spillovers and from implementation of the Public-Sector Investment Program

### Fiscal position and recommendations
- Current fiscal challenges:
  - "still significant fiscal deficits and rising public debt levels" due to weak revenues
  - One-off, non-debt creating financing options (e.g., asset sales) "will diminish over time"
- IMF staff recommendations:
  - "undertake a medium-term, modestly front-loaded fiscal adjustment to rebalance the public finances and put debt on a sustainable path"
  - Contain current expenditure as part of additional measures needed for sustainable fiscal adjustment
  - Increase capital investment "to set the stage for a lasting recovery in economic growth and for economic diversification"
  - The team "welcomed ongoing fiscal policy adjustments, including the government’s efforts to reform the energy tax regime and to boost domestic revenues"
  - Warning: "Delaying fiscal adjustments would only make it harder to arrest rising debt levels and restore confidence down the road"
  - The authorities and the team "held fruitful discussions on a number of adjustment measures to achieve the necessary fiscal consolidation"

### External sector and foreign exchange market
- Reserves and inflows:
  - "Although Trinidad and Tobago still holds healthy levels of international reserves, there has been a sharp drop in foreign exchange inflows as energy prices and volumes have both fallen"
- Market imbalance and policy guidance:
  - "This, combined with still high demand for foreign exchange, has created a notable imbalance in the foreign exchange market that has had a number of adverse consequences"
  - IMF team view: "reducing and eventually eliminating the imbalance in the foreign exchange market is of paramount importance"
  - Suggested policy mix to address imbalance includes:
    - fiscal adjustment
    - structural reforms to enhance foreign exchange earnings capacity
    - "operating the foreign exchange market with a greater degree of flexibility"

### Structural reforms and institutional recommendations
- Required wide-ranging reforms to enhance government functioning and support growth/diversification:
  - "carrying through with envisaged procurement reforms"
  - "continuing to ease the costs of doing business"
  - "modernizing financial supervision"
  - "continuing to push through reforms that will enhance, and speed-up the production of, the country’s economic statistics"

*IMF staff statement issued in Port of Spain at the end of the July 20 - August 2, 2017 mission.*

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## References

- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/08/04/pr17320-imf-staff-concludes-2017-article-iv-mission-to-trinidad-and-tobago_