News day / The findings come from an IMF staff team, led by Elie Canetti, which visited this country during July 20 to August 2 to conduct the annual Article IV consultation.
Canetti in a statement said: Trinidad and Tobago continues to face economic challenges stemming primarily from the sharp declines in global energy prices since 2014, combined with a fall in natural gas and oil production in recent years.
These, along with the prolonged economic stagnation, capital allowances, and challenges with tax administration have continued to contribute to weak revenue collections, leading to still significant fiscal deficits and rising public debt levels. He said that although preliminary data showed 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. He said the economic improvement that is now beginning is projected to continue into the medium- term, notably given a pipeline of projects that will improve the supply of natural gas to the downstream energy sector. He also said oil output is growing due to Stateowned Petrotrins recent exploration efforts and refinery upgrade.
As the energy sector recovers, the non-energy sector is expected to rebound due to positive energy-related spillovers, and as implementation of the Public-Sector Investment Programme picks up. Canetti said the team welcomed ongoing fiscal policy adjustments, including the Governments efforts to reform the energy tax regime and to boost domestic revenues.
Nonetheless, it cautioned that sustainable fiscal adjustment will require additional measures (including containment of current expenditure) to rebalance the public finances, especially as one-off, non-debt creating financing options such as asset sales will diminish over time. The team urged the authorities to undertake a medium-term, modestly front-loaded fiscal adjustment to rebalance the public finances and put debt on a sustainable path.
TRINIDAD Y TOBAGO: IMF: Economy may turn a corner
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