T&T..Mid-Year Budget Review: $9B IN RED

T&T..Mid-Year Budget Review: $9B IN RED

While there is a projected $9.67 billion deficit for the 2025 fiscal year and a loss of $556.7 million in revenue, Government’s economic rebuilding plan encompasses foreign exchange solutions - including reporting obligations for high-volume importers and enabling exporters to retain a portion of their Forex earnings.That was the word from Finance Minister Dave Tancoo yesterday, as he delivered his first Mid-year Budget Review in Parliament yesterday.“We met T&T’s economy in the intensive care unit (ICU) ... but we’ll fix it,” Tancoo said, devoting half of his address to blaming the past People’s National Movement government’s management for current problems.“We’re in crisis due to the PNM ... today we’re here to pay bills caused by the PNM administration. In this mid-year package ‘clean-up’ bill, we’re forced to supplement a PNM budget. This isn’t our shortfall. It’s the latest chapter in their long history of serial underbudgeting.”

Accusing the PNM of contracting the economy by 20 per cent, Tancoo detailed negative economic factors, including only seven and a half months left of Forex import cover.“Given the economy, we expect to fund the increase deficit principally via borrowings on the local capital market as well as by drawing down on existing multi-lateral facilities.

STATE OF THE ECONOMY—TANCOO’S DETAILS

• ↓Adjusted general Government debt increased by 92% since 2015. “Reckless borrowing” by the PNM racked up the debt to $145B billion

• ↓External debt has more than doubled from US$2 billion to US$5.48 billion over the same period

• ↓Net foreign exchange holdings have dropped by 50 per cent under the PNM from $10.5 US billion to $5.3 US billion. Today, T&T has a mere 7.5 months of import cover and Forex.

• ↓“Raiding” of the Heritage and Stabilisation Fund 11 times in nine and a half years to the tune of almost TT$20 billion

• ↓Non-energy sector collapsed by 12 per cent under the PNM

• ↓Energy sector plummeted by over 33 per cent

• ↓Agricultural output collapsed by 50 per cent

• ↓48,000 fewer persons with jobs today compared to 2015

In reply to sgtdjones

They may have to go on an IMF diet!

In reply to XDFIX

this is not news to anyone........it grabs headlines but it is not news. we are borrowing to maintain a lifestyle that is not sustainable without new sources of oil and gas. Which is why the previous administration was in negotiations with Venezuela, put limits on the salary increases public servants could get, limited GATE to the poorest people in society, reduced the gas subsidy and increased sources of taxation revenue(through Property tax, TTRA etc).

And this is not the first time we have had to borrow significantly. in fact it pales in comparison to the borrowings of the pandemic, where the deficit was 16 billion dollars in 2020, it was 12.3 billion, in 2021 . We did not once go to the IMF or devalue the currency, retrench public servants. It has increased in the last two years from 6.7 billion in 2023 to 9 billion in the last fiscal year. In budget 2023/2024, the mid year review last year indicated the deficit would over 9 billion, just like this year. The previous minister of finance indicated as much when he said last year that "For the next year or two, we’re going to have to be quite careful about how we manage our expenditure.” As i said, it grabs headlines to attract a woefully ignorant populace but that is all it does. I'm sure before the end of the year, property tax will be back and possibly with a higher percentage of the total valuation figure. the fact is that the current gas fields do not suffice. Manatee is expected to come on stream in 2027.

In reply to Jumpstart

Jumpy...

It’s difficult to accept that the former Minister of Finance in Trinidad and Tobago didn’t see the economic disaster unfolding under his watch early in his tenure. The warning signs were glaring, yet the government’s response was, at best, dismissive and, at worst, willfully negligent. The leadership was lacking for the position.

Let’s be blunt: the 92% jump in government debt, the doubling of external liabilities, and the gutting of the country’s foreign exchange reserves weren’t accidents—they were the direct result of reckless policy choices. Instead of exercising fiscal discipline, the administration seemed content to borrow and spend, almost as if tomorrow’s burdens would simply disappear or become someone else’s problem, and today it is. The repeated raids on the Heritage and Stabilization Fund—eleven times in under ten years—speak volumes about their disregard for safeguarding the country’s financial future. Then reducing the liquid assets of local banks so the government can borrow more.

The collapse of both the energy and non-energy sectors, coupled with a catastrophic 50% drop in agricultural output, should have set off alarm bells at the highest levels. Instead, the government clung to the same tired excuses: blaming global factors, promising that diversification was just around the corner, and insisting that recovery was imminent. Meanwhile, 48,000 citizens lost their jobs, and the country slid further down the path of economic dependency and vulnerability.

It is disingenuous to pretend that these outcomes were unavoidable or unforeseeable. The signs were there, and the choices were deliberate. The government had options—tighten spending, invest in genuine diversification, support struggling sectors—but chose the politically expedient path of borrowing and short-term fixes.

In the end, the former minister of finance cannot hide behind external shocks or inherited problems. Leadership requires facing harsh realities, not papering over them with borrowed money and empty assurances. The consequences of these decisions are now painfully clear, and the country is left to pay the price for years of financial mismanagement and denial.

The citizens are now left not knowing, owing to numerous NDA's, the debt burden in coming years resulting in raising taxes, which will lead to more economic problems as fiscal contraction begins. A painful decade lies ahead for the poor in T&T.

Sarge.

In reply to sgtdjones


homes.......he did. as you can see, the deficit this year is not different from last year's deficit. And it is several levels below the borrowings in fiscal 2020 and 2021

something similar happened in fiscal 2016, we budgeted fore 63 billion, and had to revise it down to 53 billion because government revenues had fallen to 37 billion, which was even less that the revenues projected for fiscal year 2009(which was a lot then).

In reply to Jumpstart

Jumpy


The government had options above; instead, they chose debt.

In the end, the former minister of finance cannot hide behind external shocks or inherited problems. Leadership requires facing harsh realities, not papering over them with borrowed money and empty assurances. The consequences of these decisions are now painfully clear, and the country is left to pay the price for years of financial mismanagement and denial.

Some government entities haven't submitted audited statements in years but continue to receive money in budgets... CLICO auditors are now owed over 300 million dollars... Over one billion in legal fees ...20 million for CARICOM anniversary, 5 million for crime meetings....all wasted. They had to borrow to pay VAT refunds, and still billions are owed.
Today 176 murders ...(141 under PNM). Why the sudden drop?

Now the net result...pain by increased taxes. A decade of hurt lies ahead for the poor in T&T..

In reply to Jumpstart

One of about dozens of examples of great leadership by the last government.

The government bankrupted PetroTrin....It had an outstanding debt of 650 million US.

Over the last decade, the government has borrowed to pay capital and debt each year.

The debt owing to be paid next year will be 1 billion plus interest.

Amazing financial leadership that leaves citizens holding the bag.

Check out how they spent the VAT that was collected. The government spent it.
Now they must pay twice the VAT, owing to bonds issued by the government.

Then the Auditor General is denied permission at the Central Bank to perform audits.

I can go on, but why bother? The poor will suffer.

Sarge

In reply to sgtdjones

the only options were cutting expenditure. the vast majority of expenditure for a trinidad and tobago government is recurrent expenditure(the biggest of which are salaries; over 60% of the workforce is employed by the state). they could have started to fire public servants. It is always an option. but then they would have to deal with the social stability of the country, probable legal challenges in the absence of a strict mandate from a loaning organization(like the IMF and World Bank) etc and even that would not have worked because as a small island, we cannot implement cost wholesale cost cutting measures and reasonably expect a windfall.

Firstly oil and gas production is significantly constrained, as is the case for all maturing oil and gas producers. Secondly the factors of production are very, very limited. So anybody telling you we could diversify into heavy agriculture and suddenly expect a windfall in a year is lying. Trinidad and Tobago has had problems with low yields for almost a century. It was even the subject of a discussion at Howard University in 1940. That discussion is now a book entitled The Economic Future of the Caribbean. And this is not even counting two of the biggest issues farmers have: the issue of land tenure and praedial larceny. Javier Milliei in Argentina can apply his chain saw economics in Argentina because Argentina is a massive country with infinitely larger factors of production(land, labor, capital, entrepreneurship). the only other way to lessen the deficit in the short term would have been to control spending and increase taxation.

The government also chose sources of borrowing from external sources exclusive of the imf and its sister, the world bank. For example, the IDB and the Andean Bank for its development projects. These institutions have arisen because debt is not only an issue in Trinidad and Tobago but across the entirety of Latin America, of which the West Indies is part. And as we cannot anticipate or expect any massive windfalls from oil(low production and oil will never be as high as $100.00 per day....ever) or gas, funding the deficit will have to be facilitated through borrowing.

This why i mentioned the limiting of GATE and limiting the increases in salaries public servants could get were just aligning the country with the then present realities and realities which remain unchanged today

In reply to Jumpstart

Jumpy

10 years ago, the government had to cut its budget back to the high 30 billions. It did not.
It borrowed....now where will this government get the funds to pay such loans?

Such will now consume over 30% of future budgets just to pay interest on debt.

It needs 9 billion to make ends meet till the fiscal year end.

The debt will now exceed 130 billion internally. 6 billion US external debt to China NDA, so no one knows the interest rate.
Such comes out of the yearly budget.

T&T is looking at finding 15 billion annually to service the debt.
The IMF noted 8 years ago too many in civil service. Too many government subsidies.
The government ignored such advice.

You mentioned various banks in Latin America. Did you realize that T&T must join such banks? One requested a deposit of 100 million US.
T&T then was allowed to borrow; these loans must be paid back. Where are these payments coming from?

Agriculture: The IMF noted you are spending too much for food externally; reduce it by 5% each year for approximately 8 years.
Check how much T&T purchases ... You only have 7 months of Forex left...

Manatee will not take T&T out of its misery, nor Dragon Gas.

To pay that debt down, T&T needs an oil discovery as large as Guyana.

In reply to Jumpstart

How are the engineering courses going?

In reply to sgtdjones


that's not quite correct. the value of the budget for fiscal 2015 was 64.664 billion, which was the biggest budget presented by a Trinidad government. They budgeted for for 60 billion dollars in revenue which never came because oil prices continued to slide due to shale oil and gas production pressures. The election cycle for 2015 ran for three months, into the beginning of september. The budget was presented in October and I believe the first PNM budget for fiscal 2016 was very close to that 64 billion dollar budget, but was revised down to 59 billion during the budget revue for fiscal 2016 in 2016. The decline in revenue was even worse in fiscal 2017, it fell to 37 billion dollars, while the budget that year was a 47 billion dollar package, which they revised upwards slightly to 48 billion in the mid year review. We haven't had a sub 40 billion dollar budget package in the last 15 years. The last sub 40 billion dollar budget we had in this country was almost 18 years ago in the fiscal 2008 budget presented in 2007 October, which was a 38.054 billion dollar package,

This why i was saying that we are budgeting for a slice of the economy that should not be there. The first thing GORTT can cut and which was started under the previous admin is transfers and subsidies. Dr Justin Ram said that transfers and subsidies accounted for more than 50 percent of every budget package between 2010 and 2020. The minute they touched the gas subsidy and gate, people became enraged, which goes back to my point that the TT populace is not and quite frankly refuses to be conversant with the current economic realities.

These were all outlined in both Moody's outlook report and the IMF report for this year. Moody's maintained the Ba2 stable outlook in december 2024 and the IMF said in June of last year that the economy is the strongest it has been in over a decade......but both outlined the structural weaknesses in the economy which centered around oil and gas revenues and production issues and its effect on forex and tax collection systems

In reply to sgtdjones


the latest CBTT data says that Trinidad has 8 months of import cover(roughly 32 weeks), which is not where we'd like it to be. it is not a crisis though. far from. Barbados in 2017 had only 6 weeks of import cover when they finally decided to head to the IMF.

CBTT

In reply to Jumpstart



The IMF was calling for T&T to cut its budget back to 40 billion. They had foresight.



The IMF saw the decline coming. T&T did not.

The IMF has warned about subsidies....T&T has ignored such. It was worried about the population's reaction.

The previous government has had 9 budgets, all living on borrowing and raiding the HSF.

Look at the position T&T is in today....

They must borrow more to stay afloat. Your central bank was used as an overdraft account.

Think about next year's budget. The government is now getting the lifeboats out, a position owing to the stupidity of the past government spending.

I have posted on numerous occasions on this site about Imbert and how unqualified he was to be finance minister. Today it shows.

Hope that a hurricane does not hit T&T...that 7-month import cover will disappear as the hurricane does.