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Trinidad And Tobago Weathering The Storm

by Ulrika Lomas,, Brussels

12 November 2010

An International Monetary Fund (IMF) delegation, headed by Judith Gold, has welcomed the resilience of the Trinidad and Tobago economy despite considerable exposure to the financial crisis.

Concluding the staff visit on November 8, Gold said:

“After 15 years' positive growth, Trinidad and Tobago was hit hard in 2009 by the global financial crisis, the fall in energy prices, and the collapse of a large financial conglomerate.”

“The country entered this period of crisis from a position of strength, with large fiscal surpluses and low debt, which provided important buffers to help deal with both the external and domestic shocks. The fiscal balance has turned negative, despite a real decline in expenditure in 2009.”

"The 2010/11 budget appropriately adopts an expansionary stance with some additional expenditure and tax incentives to catalyze increased private sector activity and higher domestic and external investments to support a recovery.”

Presenting recommendations on behalf of the IMF, Gold added: “The government could enhance confidence by accelerating efforts to implement the public sector investment program and addressing arrears to contractors and on VAT refunds. The medium-term challenge is to place debt on a downward trajectory as energy revenues are expected to moderate. A credible framework would contain and reverse the increases in spending on goods and services and on transfers during the boom period, while strengthening the collection of non-energy revenue through improved tax administration.”

Concluding, Gold welcomed “the government’s plans for diversification and structural reform”, with the “focus being on investing in physical and human capital to support the development of a knowledge-based economy, improving the business climate including through a one-stop shop for investors, strengthening the public enterprise sector by inviting private sector participation, and accelerating privatization.”

TAGS: tax | investment | value added tax (VAT) | fiscal policy | international financial centres (IFC) | International Monetary Fund (IMF) | Trinidad and Tobago | offshore

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