Joshua Seeemu­n­gal

Se­nior Mul­ti­me­dia In­ves­tiga­tive Jour­nal­ist

joshua.seemu­n­gal@guardian.co.tt

With Prime Min­is­ter Stu­art Young’s April 28 poll an­nounce­ment, T&T is in the thick of elec­tion fever. How­ev­er, while the can­di­dates com­pete to gov­ern this coun­try, the next leader and gov­ern­ment will face a se­ri­ous eco­nom­ic chal­lenge in man­ag­ing the coun­try’s heavy debt.

T&T’s Debt Sit­u­a­tion

Ac­cord­ing to Cen­tral Bank da­ta, T&T’s ad­just­ed gen­er­al gov­ern­ment debt stood at $142.1 bil­lion as of De­cem­ber 2024. The Cen­tral Bank states that ad­just­ed gen­er­al gov­ern­ment debt is to­tal gov­ern­ment debt mi­nus debt in­stru­ments used for mon­e­tary pol­i­cy pur­pos­es. Ac­cord­ing to the Eco­nom­ic Dat­a­Pack from the Cen­tral Bank, the ad­just­ed gen­er­al gov­ern­ment debt/GDP ra­tio was pro­ject­ed at 73.1 per cent for De­cem­ber 2024.

Ad­just­ed gen­er­al gov­ern­ment debt is to­tal gov­ern­ment debt mi­nus debt in­stru­ments used for mon­e­tary pol­i­cy pur­pos­es.

In Sep­tem­ber 2015, when Dr Kei­th Row­ley be­came Prime Min­is­ter, the ad­just­ed gen­er­al gov­ern­ment debt was $26.5 bil­lion less ($114 bil­lion). This re­flects a 23.2 per cent in­crease over the past nine-and-a-half years that the ad­min­is­tra­tion has been in of­fice.

The Cen­tral Gov­ern­ment debt in­creased from $84.37 bil­lion in 2015 to $115.44 bil­lion in 2024, a 36.8 per cent rise in nine years and three months.

Ac­cord­ing to the Cen­tral Bank, cen­tral gov­ern­ment debt is the stock/out­stand­ing amount of all debt li­a­bil­i­ties owed by the Gov­ern­ment of T&T that re­quire pay­ment(s) of in­ter­est and/or prin­ci­pal at a spe­cif­ic date(s) in the fu­ture. It in­cludes debt li­a­bil­i­ties con­tract­ed with both do­mes­tic and ex­ter­nal cred­i­tors. Un­less oth­er­wise stat­ed, it in­cludes debt is­sued for liq­uid­i­ty ster­il­i­sa­tion pur­pos­es.

Mean­while, in June 2010, Kam­la Per­sad-Bisses­sar’s first full month in of­fice,

the Cen­tral Gov­ern­ment’s to­tal debt out­stand­ing was $47.99 bil­lion. That fig­ure in­creased by 75.8 per cent in Sep­tem­ber 2015 when the Peo­ple’s Part­ner­ship left of­fice af­ter five years and three months.

The debts mount­ed with each pass­ing year de­spite most of the an­nu­al au­di­tor gen­er­al’s re­ports pub­lished dur­ing that time hav­ing con­clu­sions that stat­ed, “The is­sue of pub­lic debt and sus­tain­abil­i­ty has long been a con­cern for pol­i­cy­mak­ers for both the fis­cal and mon­e­tary au­thor­i­ties …”

For­eign debt surged

For­eign debt al­so surged. As of De­cem­ber 2024, T&T owed $77.9 bil­lion (TT) in lo­cal debts and $37.5 bil­lion (TT) in ex­ter­nal debts. That means 32.5 per cent of T&T’s to­tal debt, as of De­cem­ber 2024, was for­eign.

The Cen­tral Gov­ern­ment’s ex­ter­nal debt grew from $13.98 bil­lion (TT) in 2015 to $37.53 bil­lion (TT) by 2024—an in­crease of 168 per cent.

Mean­while, the Cen­tral Gov­ern­ment’s to­tal ex­ter­nal debt out­stand­ing in June 2010 was $9.19 bil­lion (TT), while in Sep­tem­ber 2015, it was $13.98 bil­lion (TT), an in­crease of 52.2 per cent.

The Grow­ing Debt-to-GDP Ra­tio

Econ­o­mist Dr An­tho­ny Gon­za­les, for­mer di­rec­tor of UWI’s In­ter­na­tion­al Re­la­tions De­part­ment, ex­plained that while pub­lic debt alone is not nec­es­sar­i­ly alarm­ing, it be­comes an is­sue when con­sid­er­ing the coun­try’s gross do­mes­tic prod­uct (GDP) per­for­mance.

He said that when a coun­try’s debt-to-GDP ra­tio is around 80 per cent, alarm bells can go off.

As of Sep­tem­ber 2024, the ad­just­ed gov­ern­ment debt-to-GDP ra­tio stood at 74.7 per cent, ac­cord­ing to Cen­tral Bank da­ta. The pro­ject­ed ad­just­ed gen­er­al gov­ern­ment debt/GDP for De­cem­ber 2024 was 73.1 per cent. Re­pub­lic Bank econ­o­mist Garvin Joe­field ex­pects it to reach 76 per cent in 2025.

Dr Gon­za­les, in an in­ter­view with Guardian Me­dia, said, “Debt is an in­di­ca­tion of how you are man­ag­ing your coun­try. In the case of Trinidad and To­ba­go, our debt sit­u­a­tion is get­ting worse, and this is be­cause the Gov­ern­ment keeps bor­row­ing. I re­mem­ber years ago, our debt was about 30-40 per cent of GDP. Now, it’s some­thing like about 80 per cent.

“The rea­son is that the Gov­ern­ment has been bor­row­ing sys­tem­at­i­cal­ly. It bor­rows US dol­lars to kind of stack up the re­serves, and they then use the mon­ey to fi­nance the bud­get deficit. We have been run­ning this deficit for the last 18 or 19 years. We keep run­ning this deficit be­cause it al­lows us to keep spend­ing.

“The long-term im­pact is that, if you do that, you’ll have to keep bor­row­ing. I don’t think you could raise tax­es any­more, so you’ll have to keep bor­row­ing. And it would mean that your debt would keep go­ing up all the time, to the point that you would not be able to ser­vice it at a cer­tain point. Your debt-to-GDP per cent ra­tio would start climb­ing up in the 90s and over 100. Our debt ser­vic­ing ra­tio is climb­ing.”

Dr Gon­za­les added that “a good amount of the mon­ey we are col­lect­ing as rev­enue is used to pay debt.” That mon­ey, he said, could be used to fi­nance hous­ing and in­fra­struc­ture, etc, and we need to look at that.

Ac­cord­ing to IMF da­ta, T&T’s gen­er­al gov­ern­ment gross debt to GDP ra­tio in­creased by 199 per cent be­tween 2010 and 2025 (mov­ing from 20.9 per cent to 62.5 per cent).

Ex­pen­di­ture And Con­se­quences

Uni­ver­si­ty of the West In­dies Pro­fes­sor of Eco­nom­ics Roger Ho­sein de­scribed the coun­try’s debt as a gen­uine cause for con­cern, par­tic­u­lar­ly giv­en the slow eco­nom­ic growth of 1.5 to two per cent. He warned that “for 2026, Trinidad and To­ba­go, ac­cord­ing to IMF da­ta, is ear­marked to be one of the ten slow­est-grow­ing na­tions in the world.”

He said it was some­thing that we need to put a lot of thought in­to. Prof Ho­sein added that “be­cause the re­pay­ments of debt de­crease the amount of mon­ey that could go to­wards hu­man cap­i­tal for­ma­tion, so­cial cap­i­tal for­ma­tion and in­fra­struc­tur­al de­vel­op­ment, pol­i­cy­mak­ers will want to re­duce the pace at which ex­ter­nal debt and debt, on the whole, is in­creas­ing.”

He not­ed that in­ter­est pay­ments on the debts have in­creased sig­nif­i­cant­ly since 2007. Prof Ho­sein said in­ter­est pay­ments as a per­cent­age of cap­i­tal ex­pen­di­ture jumped from 33 per cent in 2007 to 165.7 at present.

“Be­tween 2010 and 2024, the econ­o­my con­tract­ed 10.9 per cent, and be­tween 2015 and 2024, it con­tract­ed 17.2 per cent. Those are sharp de­clines, and it there­fore points in the di­rec­tion that the ex­pen­di­tures are not be­ing man­aged in a way that will gen­er­ate am­ple eco­nom­ic growth,” Ho­sein, who holds a PhD in Eco­nom­ics from Cam­bridge Uni­ver­si­ty, said.

“In my in­ter­pre­ta­tion and un­der­stand­ing of my num­bers, that’s be­cause too large a pro­por­tion of gov­ern­ment ex­pen­di­ture goes to trans­fers and sub­si­dies that do not help to widen cap­i­tal space and don’t help to im­prove pro­duc­tive ac­tiv­i­ty, and too lit­tle goes to­wards cap­i­tal in­jec­tions.”

Tack­ling The Cri­sis: Tough De­ci­sions Ahead

Both Gon­za­les and Ho­sein said in the ab­sence of new sub­stan­tial streams of rev­enue and much high­er oil and gas prices, the Gov­ern­ment will have to trim ex­pen­di­ture.

Dr Gon­za­les sug­gest­ed that some hard­ship is in­evitable. He not­ed that the coun­try must live with­in its means, em­pha­sis­ing the need to boost for­eign ex­change rev­enues—a process that will take years.

“The new Fi­nance Min­is­ter (Vish­nu Dhan­paul) is say­ing he’s not tak­ing any harsh mea­sures. A lot of peo­ple are ask­ing ques­tions as to how you are now go­ing to deal with this sit­u­a­tion in T&T be­cause there’s not much more rev­enue com­ing in here. There’s no more oil and gas be­cause we are now at the bot­tom. How are you go­ing to get the rev­enue to deal with all the things you in­tend to deal with here?

“Let’s face it. We have a pret­ty gen­er­ous so­cial wel­fare pol­i­cy here. We pay for ed­u­ca­tion. We pay for health­care. We sub­sidise en­er­gy. We sub­sidise a lot of hous­ing. Look at the trans­fers and sub­si­dies in the Gov­ern­ment’s bud­get. It’s more than half. It’s about 52 per cent of gov­ern­ment spend­ing,” Dr Gon­za­les said.

“Our for­eign re­serves have been de­clin­ing ... We still have a good amount, but it is de­clin­ing and de­clin­ing very fast. If we con­tin­ue de­clin­ing like this, with­in a year or so, we will go through it.”

Ac­cord­ing to Dr Gon­za­les, “The Cen­tral Bank has to keep putting in over US$1 bil­lion and US$2 bil­lion to keep the de­mand for for­eign ex­change. We have to de­cide very quick­ly what we are go­ing to do. And to cut back that de­mand for for­eign ex­change, we have to cut back fis­cal spend­ing, and im­pose some re­stric­tions here and there. We still have a lot of lux­u­ry im­ports in this coun­try.”

He rec­om­mend­ed for the short- to-medi­um term:

Re­duc­ing fis­cal spend­ing

Plac­ing im­port re­stric­tions on some goods

En­cour­ag­ing ex­ports in man­u­fac­tur­ing

Ex­pand­ing tourism ser­vices to about one mil­lion tourists com­ing in­to this coun­try every year

Mean­while, Prof Ho­sein said the coun­try’s rev­enue was a cause of con­cern and em­pha­sised the ur­gent need for rev­enue di­ver­si­fi­ca­tion, warn­ing that even with gas projects like Man­a­tee and Drag­on, for­eign ex­change earn­ings will not be “ex­treme­ly buoy­ant.”

He, how­ev­er, be­lieved that the com­ing on stream of the Trinidad and To­ba­go Rev­enue Au­thor­i­ty would help.

“We need to reach a point where you save all the rev­enues from the en­er­gy sec­tor. It makes very lit­tle eco­nom­ic sense to take an as­set out of the ground, mon­e­tise it and spend it with­in one gen­er­a­tion. In fact, in one fis­cal year, which is what we do in Trinidad and To­ba­go.”

To ad­dress these is­sues, he urged pol­i­cy­mak­ers to fo­cus on:

Dou­bling re­mit­tance flows by 2030

Dou­bling overnight tourism in­flows by 2030

In­creas­ing non-en­er­gy ex­ports, es­pe­cial­ly in man­u­fac­tur­ing

Lever­ag­ing par­tial scope trade agree­ments (eg, with Cu­ra­cao)

Tack­ling crime to im­prove eco­nom­ic sta­bil­i­ty

Guardian Me­dia reached out to the Fi­nance Min­is­ter Dhan­paul but he did not re­spond.

Next week, we take a clos­er look at the num­bers: how much T&T earned, how much was spent, and the break­down of do­mes­tic and ex­ter­nal debt. We’ll ex­plore the fi­nan­cial de­ci­sions that have shaped the na­tion’s econ­o­my.