Imbert: Government welcomes IMF report

FINANCE Minister Colm Imbert has said Government welcomes the International Monetary Fund’s (IMF) country report which indicated that the economy is at its strongest level in a decade. The IMF report was issued on June 5, two days before Imbert presents the mid-year review of the 2023/2024 budget in the House of Representatives. In its report, the IMF praised Government’s fiscal policies which led to a strong performance in the non-energy sector, its management of the public debt, diversification efforts and moves to strengthen its tax regime, and its climate and green energy agenda. Directors “welcomed Trinidad and Tobago’s sustained economic recovery, sharp decline in inflation in 2023 and strong external position,” the IMF reported on its Article IV consultation with TT, which it concluded on May 8. The non-energy sector was identified as the main driver of economic growth, increasing by 4.2 per cent. In contrast, the IMF said the energy sector “continues to struggle,” as the report said it contracted by 3.1 per cent. The IMF expects the deficit to balance by 2027, consistent with improvements in energy revenue. “Central government is projected to peak at 56.3 per cent of GDP (Gross Domestic Product) in FY2026 before gradually declining to 49.8 per cent. Public debt is expected to reach 68.1 per cent of GDP in FY 2029 remaining below the authorities’ soft debt target of 75 per cent of GDP throughout the period.” The IMF suggested a need for reforms to strengthen the economic recovery, rebuild buffers and secure a more diversified, green, resilient and inclusive economy. Staff at the IMF also agreed that developing a rules-based fiscal framework (such as the Procurement Act) and sound debt-management strategies would help fiscal management and mitigate risk. The IMF forecast that “economic growth is projected to gain momentum in 2024.” It also said TT’s external public buffers in the Heritage and Stabilization Fund were large, at about 20 per cent of GDP. Declines in the unemployment rate from 7.2 per cent in 2020 to 3.2 percent in 2023 and sharp decline in inflation from 8.7 per cent in December 2022 to 0.3 per cent in January, were other positive economic indicators it welcomed. In a statement on June 6, Imbert said, ““This IMF report recognises that the Government’s reform programme introduced at the beginning of its period in office has put the economy on the right track.” Imbert shared the IMF’s analysis of the importance of fostering private-sector participation and pursuing the reform agenda. “I was pleased to see that the IMF agrees with the need to ‘sustain structural reform momentum’ to support growth because that is exactly what we are delivering. During the 2024 budget, I announced measures that shifted spending from mitigating the immediate crisis of the (covid19) pandemic to investment for medium and long term growth.” Imbert promised the government “will continue on its path of responsible actions” to build a stronger TT. Before the House debates the Finance (Supplementary Appropriation) (Financial Year 2024) Bill, 2024, commonly referred to as the mid-year review, it will debate a motion filed by Imbert to approve a report by its Standing Finance Committee to approve an additional $2.3 billion supplementation to the budget. The committee, which includes all 41 MPs and is chaired by Speaker Bridgid Annisette-George, approved this supplementation when it met on June 3. Among the major supplementations the committee approved were $570,900,000; $155,677,500; $527, 800,000; $495, 286,000 and $144,200,000 for the ministries of Energy, Works and Transport, Public Utilities, Health and Education respectively. The committee also approved $50 million more in funding for the Tobago House of Assembly (THA). This supplementation is included in the Finance (Supplementary Appropriation) (Financial Year 2024) Bill, 2024, which the House will pass later in the sitting. The Senate is scheduled to debate the bill on June 11. While the mid-year review offers the opportunity for government to make adjustments to the existing budget, the review is not a second budget. Apart from the $2.3 billion supplementation, there have been no indications of any other adjustments. The 2024/2025 budget is expected to be presented in Parliament in September or October.