- The Executive Board of the International Monetary Fund concluded the 2026 Article IV consultation with Trinidad and Tobago.
- The economy continues to recover toward pre-pandemic levels, supported by resilient non-energy sector activity. Higher global energy prices are providing near-term support to external and fiscal positions, providing an opportunity to rebuild policy buffers.
- A policy mix that combines stronger fiscal consolidation while protecting the most vulnerable, closing the interest rate differential with the US to stabilize capital outflows, and a gradual move towards greater exchange rate flexibility, is needed to address macroeconomic imbalances, safeguard macroeconomic stability, and strengthen resilience to shocks.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Trinidad and Tobago.[1] The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]
Economic activity continued its gradual recovery in 2025, with real GDP growth moderating to 0.8 percent and inflation returning to low, pre-pandemic levels. At the same time, persistent fiscal deficits led to an increase in public debt. The current account balance remained in surplus, and while international reserves are trending downwards, they are supplemented by substantial (25 percent of GDP) liquid assets in the Heritage and Stabilisation Fund (HSF). Credit growth remained steady and the banking system stayed well-capitalized, underscoring continued financial sector resilience.
Looking ahead, growth is projected to remain at around 0.8 percent in 2026, and to strengthen over the medium term supported by new energy projects and continued momentum in the non-energy sector. Inflation is expected to rise temporarily to around 3.1 percent in 2026, reflecting global commodity price developments, before stabilizing around 2 percent over the medium term. The overall fiscal deficit is expected to decline to 4.6 percent of GDP in 2026 (from 5.5 percent in 2025), and international reserves are expected to remain adequate at about 5.5 months of imports. Higher energy prices are expected to support fiscal and external balances in the near term, while the authorities’ ongoing revenue and expenditure reforms, and new energy projects coming on stream underpin a gradual improvement in the fiscal and external positions over the medium term.
The outlook is subject to significant uncertainty, including due to the impact of the war in the Middle East. Delays in new energy projects or disruptions to production from mature fields could weigh on growth, while faster implementation of reforms under the Revitalization Blueprint and sustained investment could lift medium-term growth prospects.
Executive Board Assessment[3]
Executive Directors agreed with the thrust of the staff appraisal. They welcomed Trinidad and Tobago’s continued economic recovery, low inflation, and healthy banking system. Directors agreed that the economic outlook is however subject to elevated uncertainty, including through the impact of the war in the Middle East. They encouraged the authorities to address underlying macroeconomic vulnerabilities through prudent fiscal and monetary policies and persevere in diversifying the economy and strengthening its resilience to shocks.
Directors noted that persistent fiscal deficits have led to an increase in public debt. They welcomed the authorities’ recent steps to strengthen the fiscal position—including by enhancing revenue mobilization, rationalizing spending, and improving investment efficiency—and emphasized that a stronger sustained fiscal consolidation effort, while protecting the most vulnerable, is needed to place public debt on a credible downward path and preserve external stability. In this regard, Directors emphasized the importance of closing tax gaps, reducing non‑priority transfers, and improving the targeting of social programs. They stressed that higher-than-budgeted energy revenues should be primarily used to rebuild buffers, including through resumed deposits into the Heritage and Stabilization Fund.
Directors welcomed the authorities’ efforts to strengthen fiscal institutions and address fiscal risks. They commended the authorities for the courageous reforms to the National Insurance System, and called for further steps to improve the long-term sustainability of the public pension system. Directors also encouraged the authorities to adopt a medium-term fiscal framework anchored by a well-designed fiscal rule and a credible debt anchor to manage volatile energy revenues and ensure intergenerational equity.
Directors concurred that monetary and financial sector policies should continue to support stability. They generally supported moving the policy rate toward a neutral stance to remove the negative interest rate differential with the United States and stabilize capital outflows. Against the background of declining reserves, Directors also called for efforts to improve the functioning of the foreign exchange market and, over time, move toward greater exchange rate flexibility with appropriate supporting measures. They encouraged continued vigilance over the growing sovereign‑financial nexus and emerging cyber-security and climate risks.
Directors congratulated the authorities for their successful removal from the EU list of non-cooperative tax jurisdictions. They emphasized that structural reforms will be critical to raise potential growth and resilience, and encouraged further efforts to improve the business environment and investment climate, including by removing excessive red tape and obstacles to trade, promoting more flexible labor market policies, and harvesting digitalization and AI. Further improvements in statistical capacity and transparency should also remain a priority.
It is expected that the next Article IV consultation with Trinidad and Tobago will be held on the standard 12‑month cycle.
read more: https://www.imf.org/en/news/articles/2026/05/18/pr26159-trinidad-and-tobago-imf-executive-board-concludes-2026-article-iv-consultation
