Caribbean News Now!

About Us Contact Us

Countries/Territories

Jump to your country or territory of interest

Advertise with us

Reach our daily visitors from around the Caribbean and throughout the world. Click here for rates and placements.

Contribute

Submit news and opinion for publication

Subscribe

Click here to receive our daily regional news headlines by email.

Archives

Click here to browse our extensive archives going back to 2004

Also, for the convenience of our readers and the online community generally, we have reproduced the complete Caribbean Net News archives from 2004 to 2010 here.

Climate Change Watch

The Caribbean is especially vulnerable to rising sea levels brought about by global warming. Read the latest news and information here...

Follow Caribbean News Now on Twitter
Connect with Caribbean News Now on Linkedin



News from the Caribbean:


Back To Today's News

IMF concludes 2014 consultation with Trinidad and Tobago
Published on July 11, 2014 Email To Friend    Print Version

WASHINGTON, USA -- On June 16, 2014, the executive board of the International Monetary Fund (IMF) concluded the Article IV consultation with Trinidad and Tobago.

Trinidad and Tobago’s economy is embarking on a sustainable growth path. Maintenance-related slowdowns in the energy sector are ending, while non-energy growth is robust, with economic slack being used up. Headline inflation is trending down (in part for statistical reasons), while core inflation remains contained at about 2–3 percent. The unemployment rate has fallen to only 3.75 percent, although this masks sizable underemployment in government “make-work” programs. The fiscal balance is likely to improve in fiscal year 2013/14, with the deficit falling to only 1.5 percent of GDP, but largely for ad hoc reasons rather than durable improvements in revenues or expenditures. The external current account surplus has rebounded to over 10 percent of GDP and reserves are at 12 months of imports. However, the foreign exchange allocation system, although it had generally worked well for several years, led to fairly widespread and persistent foreign exchange shortages, as supply and demand imbalances grew from late 2013. A recent series of actions by the central bank has improved the supply of foreign exchange to the market.

The time is drawing near for policy tightening. The main external risk is from a sustained decline in energy prices. The domestic medium-term challenges are to boost long-run growth through structural reforms and reorienting fiscal policy, with measures to save more of the nation’s nonrenewable energy wealth, and limiting current expenditures while increasing growth-enhancing capital spending. Such policies would likely pose near-term headwinds, but enhance competitiveness and boost potential growth in the non-energy sector. However, significant reforms are likely to be delayed by the electoral calendar. A greater degree of flexibility is needed in the foreign exchange system to avoid further shortages.

Executive Board Assessment

Executive directors welcomed the improved growth outlook, and noted the strong external position and limited fiscal vulnerabilities. They agreed, however, that the reduction in economic slack and the need for a durable consolidation of the fiscal position suggest that a tightening of macroeconomic policies may be necessary in the near future. Over the medium term, Trinidad and Tobago remains vulnerable to a decline in energy prices, which calls for structural reforms to diversify the economy and improve its growth potential.

Directors concurred that the authorities should stand ready to start tightening monetary policy in view of the reduced labor market slack and high consumer credit growth, and to prepare for the spillovers from the normalization of monetary policy in the United States. Implementing this tightening, however, could be complicated by banks’ excess liquidity and the weak monetary transmission mechanism. Against this background, directors concurred that tighter prudential regulations could be considered.

Directors welcomed recent measures to improve the budget outturn for the current fiscal year. They underscored the importance of moving toward fiscal surpluses as soon as feasible, using more durable improvements in revenues and expenditures, in order to make better use of the country’s nonrenewable energy endowment. Spending should be reoriented away from current expenditure toward growth-enhancing capital projects, including by better targeting social benefits and reducing energy subsidies. Broadening the non-energy tax base remains key to strengthening revenues.

Executive directors welcomed continued progress in financial sector reform, including improvements to the legislative framework for financial regulation. They also supported the actions taken to bring systemically important non-bank financial institutions into the regulatory perimeter and looked forward to a comprehensive assessment of Trinidad and Tobago’s regime against money laundering and the financing of terrorism.

Directors took note of recurring shortages in the foreign exchange market. They encouraged the authorities to allow for sufficient flexibility in the operation of the market to ensure that it clears, especially given the ample foreign reserve position.

Directors expressed concerns about the lack of reliable and timely economic statistics, which severely limits the ability to conduct surveillance. They recommended prompt action to provide adequate resources to the statistical office.

Directors emphasized the benefits of further structural reforms to boost competitiveness and lay the foundation for sustainable and diversified growth. They welcomed recent measures taken to reduce business impediments, but noted that action remains necessary in several areas. In particular, inefficiencies in the public sector and distortions in the functioning of labor markets hinder private investment and should be addressed decisively.
 
Reads: 1308





Click here to receive daily news headlines from Caribbean News Now!



Back...

Comments:

No comments on this topic yet. Be the first one to submit a comment.

Back...

Send us your comments!  

Send us your comments on this article. All fields are required.

For your contribution to reach us, you must (a) provide a valid e-mail address and (b) click on the validation link that will be sent to the e-mail address you provide.  If the address is not valid or you don't click on the validation link, we will never see it!

Your Name:

Your Email:

(Validation required)

Comments:
Enter Code



Please note that, if you are using an AT&T domain email address, e.g. att.net, bellsouth.net, sbcglobal.net, the verification email will likely not be delivered. This is outside of our control and the only remedy seems to be for readers to complain to AT&T





Disclaimer
User comments posted on this website are the sole views and opinions of the comment author and are not representative of Caribbean News Now or its staff. Caribbean News Now accepts no liability and will not be held accountable for user comments.
Caribbean News Now reserves the right to remove, edit or censor any comments. Any content that is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will not be approved.
Before posting, please refer to our Terms of Use and Privacy Policy.

The Caribbean Writer 2014


Other Headlines:



Regional Sports: