A decade after Dr Keith Rowley was sworn in as Prime Minister in 2015, T&T’s economy is 17.6 per cent smaller than it was and the country is in a weaker state.
In early January, Prime Minister Rowley announced that he will be not be contesting elections again and will be retiring from politics.
Several economists spoke to the Sunday Business Guardian after they were asked to examine economic data and give an assessment of Rowley’s legacy in managing T&T’s economy over the last ten years.
Using the academic “A” to “F” grading system, the economists were also asked to rate the handling of the economy over the past nine years and four months that Rowley was prime minister. He received a poor grade from two of the three economists who chose to give it.
Colm Imbert was Minister of Finance from September 2015, when the People’s National Movement was re-elected to office.
University of the West Indies (UWI) economist, Dr Vaalmikki Arjoon, who examined economic data during the last nine plus years of the Rowley administration, said real Gross Domestic Product (GDP) fell from $187.5 billion in 2015 to an estimated $154.5 billion in 2024, because of lower levels of energy production.
“This decline is evident in fiscal underperformance, heightened debt, rising poverty and inequality, diminished investor confidence, and deepening economic uncertainty. Indeed, much of this decline can be attributed to reduced energy production—an industry accounting for roughly 30 to 40 per cent of our GDP, together with effects of lockdowns, supply chain disruptions, and the global trade slowdown during the pandemic,” he said.
Arjoon added that although the economy has shown modest growth in this post-pandemic period, averaging 1.41 per cent annually since 2022, T&T has yet to catch up with pre-pandemic performance levels. Using International Monetary Fund (IMF) data, T&T’s 2024 GDP still lags 6.14 per cent behind 2019 levels, Arjoon said.
“Growth was also hindered by increased taxes to compensate for the loss in energy revenues, like raising the corporate tax from 25 per cent to 30 per cent, and other numerous obstacles to business competitiveness, such as port clearance delays, difficulties obtaining licenses and permits, limited access to forex, and crime—all of which deter business operations, expansion and new investments.”
He then looked at investment flows into T&T over the past few years and said for instance, foreign investors have been withdrawing investment from T&T’s economy, with total Foreign Direct Investment (FDI) net inflows from 2015 to 2023 amounting to negative US$3.18 billion.
Arjoon then highlighted data in T&T’s important energy sector.
In the last nine years, the energy sector saw significant declines in output, with natural gas, LNG, and crude oil production falling by about 35 per cent, 45 per cent, and 36 per cent, respectively—largely due to maturing reservoirs and a slower-than-anticipated pace of new field development.
Fiscal performance
Arjoon then examined the fiscal data over the last ten years.
He said naturally, the decline in economic growth reduced revenue collection, leading to a nine-year cumulative deficit of $69 billion and pushing the Exchequer Account—the primary account for government spending (Consolidated Fund)—into an overdraft exceeding $47.76 billion in 2023, an increase of $14.4 billion since 2015.
“He explained that the deficit was largely shaped by energy revenue volatility. Energy revenues, plunged from $18.66 billion in 2015 to $6.64 billion in 2016, remaining low during the pandemic, then surging to $29 billion in 2022 amid post-pandemic demand and the Russia–Ukraine conflict, only to soften again in 2024 as prices eased.”
He said such deficit required T&T to borrow to meet its budget obligations, bringing the debt burden to $143 billion, which is $66.5 billion higher than 2015.
“Our external debt currently stands at US$5.5 billion, 147 per cent higher than 2015. Indeed, our persistent deficits and growing debt levels resulted in multiple downgrades by the credit rating agencies in the last decade. Moody’s downgraded us three times (from Baa2 to Ba2), while S&P downgraded us four times (from A to BBB–), reflecting heightened concerns by the credit rating agencies about our economic resilience, fiscal sustainability, and capacity to manage structural challenges effectively.”
He also said that Moody’s rating places T&T in the speculative grade rating, indicating higher perceived challenges to service the country’s debt during economic downturns or adverse market conditions, while T&T is currently in the lowest notch of investment grade S&P.
However, he qualified this by saying that one reason why T&T’s ratings have not fallen further is the Heritage and Stabilisation Fund (HSF), increased from US $5.7 billion in 2015 to over US $6 billion in 2024.
Forex
Arjoon then analysed one of the biggest complaints of the business community in T&T, which is a lack of foreign exchange to do business locally and internationally.
T&T’s foreign reserves declined over the last decade which has led to the grim situation that exists today.
“Our forex challenges largely stem from a sharp decline in earnings tied to reduced energy exports and lower tax revenues. Although the Central Bank of T&T (CBTT) injects US$100 to $150 million into the banking system every month, demand still far outstrips supply.
“Consequently, our foreign reserves dropped from US$9.9 billion at end of 2015 to US$5.6 billion in 2024, partly propped up by external borrowing and withdrawals from the HSF. If we net out external debt, barely US$100 million remains—less than a week of import cover!”
He then said that overall, T&T’s current account stayed in surplus for much of the last decade, though not as robustly as before 2015. Exceptions include 2022, where surpluses rose to US$5.2 billion thanks to high energy prices, albeit with weaker production, but is estimated to have dropped 70 per cent by 2024 as energy prices tempered with lowered consumption in China and increased supply from non-OPEC+ countries.
Poor grade
Two other economists gave the PNM a poor grade for his management of the economy over the past nine plus years.
Economist Dr Indera Sagewan told the Business Guardian that Rowley’s economic legacy is one of mismanagement.
When asked to grade Rowley’s performance in the economy from “A” to “F”, she gave him a grade “D.”
“There has been poor economic management. The economy has improved its import trading capacity while diminishing its export tradeable sectors. The result? Forex crisis, lack of sustainable job opportunities, brain drain. Add the inability to reduce crime and we have a recipe for socio-economic decay,” she said in a brief statement.
Economist Dr Anthony Gonzales said he would give Rowley a “D” grade for the way he handled the economy over the last decade.
“Real GDP has declined since 2015. Energy prices did not rise as high as they did between 2010 to 2014. Oil and gas production also continued to fall. Since 2015, T&T has not developed new productive industries, especially for exports. Except for some growth in beverage exports, both goods and services exports have not grown to take care of the fall in energy exports.
“Non-energy export diversification still remains a big challenge as the economy is today even more dependent on oil and gas exports. Non-energy domestic production has grown a bit but that consumes a fair amount of our foreign reserves which have fallen considerably since 2015. So, the economy is not in a better shape today as compared to 2015,” said Gonzales.
