Days before he presents his mid-year fiscal review, Finance Minister Colm Imbert received encouraging news from the International Monetary Fund (IMF) which gave TT a favourable outlook for growth.
The IMF, in its country report on June 5, said, for the first time in a decade, TT is experiencing a gradual and sustained economic recovery.
It 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 TT's sustained economic recovery, sharp decline in inflation in 2023 and strong external position," the IMF reports on its Article IV consultation with TT which it concluded on May 8, this year.
The positive review comes as Imbert prepares to give an account of where the country is at economically, in Parliament on June 7.
“Real Gross Domestic Product (GDP) rebounded in 2022 and is estimated to have further expanded in 2023,” the IMF said. It said this is happening while headline inflation is declining sharply.
The report added that economic growth is expected to gain even more momentum this year, with real GDP expected to expand by 2.4 per cent while inflation is expected to remain steady.
However, it noted that while TT is seeing growth, it has not returned to pre-pandemic levels.
The IMF suggested that, going forward, Government continues to focus on strengthening TT's economic recovery.
Inflation deflation
After peaking at 8.7 per cent at the end of 2022, the IMF noted that headline inflation plummeted to 0.3 per cent in January this year. The report said it was mainly due to declining food and imported goods inflation.
It also noted a reduction in core inflation to 1.0 per cent in January.
The unemployment rate also decreased to 3.2 per cent in the third quarter of 2023, after peaking at 7.2 per cent in 2020, but female unemployment exceeds the national average at 4.1 per cent. Youth unemployment, although elevated at 9.3 per cent is below the peak in 2021, which was 21.3 per cent.
The IMF also patted the Government on the back for keeping the budget in line with the fiscal balance for 2023.
“The overall fiscal deficit is estimated at 1.1 per cent of GDP in FY 2023, 0.2 percentage points better than budgeted,” the report said.
It added that debt margins also went under the estimates despite increasing. Central government debt increased to 54.3 per cent of GDP in 2023, as compared to 50.7 per cent in 2022. Public sector debt went up to 70.9 per cent of GDP in 2023, as compared to 67 per cent of GDP in 2022.
Government’s soft target for public sector debt was 75 per cent of GDP.
The IMF noted accommodating financial conditions with the Central Bank of TT (CBTT) keeping the repo rate at 3.5 per cent since 2020, in a bid to support economic recovery.
“This, together with excess liquidity in the banking system has helped keep lending rates low,” the report said.
Lending rates remained l
