The Fund's executive directors, noting that Trinidad & Tobago has enjoyed an extended period of positive growth, low inflation and a steady decline in unemployment, commended the authorities for their prudent management of the economy in recent years despite the global and regional slowdown, but noted that challenges remain, including the strengthening of the non-energy fiscal and external balances and the improvement of the performance of public enterprises.
The IMF viewed the effective use of prospective higher energy revenues as key to Trinidad & Tobago's future development and growth. It noted that the authorities' plan to achieve developed country status by 2020 through establishing a highly educated work force, and strengthening infrastructure, is a commendable objective, and would require tailoring its spending in line with the country's absorptive capacity.
The Fund encouraged the authorities to invest part of the higher oil revenues abroad through the revenue stabilization fund (RSF) to generate income for future generations. Directors supported higher spending on health, education and infrastructure, warning that attention should be paid to efficiency in spending.
Looking ahead, they encouraged the authorities to give priority to developing a well articulated medium-term macroeconomic framework underpinned by a three-year rolling budget.
They suggested that the aim of the fiscal policy should be to strengthen efforts to reduce the non-energy fiscal deficit, and curtail tax exemptions. Directors welcomed the plan to create a unified revenue authority. They also welcomed the system of pre-announced repo rates as a market benchmark. They said a deepening of capital markets through additional debt instruments would render repo rates more effective.
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