THE pandemic hit an already struggling TT economy but the Government responded well, with a surge in global energy prices now positioning TT for 5.5 per cent growth this fiscal year, according to the IMF.
On Wednesday, the oil price (Brent crude) stood at US$98 per barrel, having once reached US$139 during the start of Russia's invasion of Ukraine, while natural gas was US$4.75 MMBtu.
In a report this month, after an Article IV consultation, the IMF said TT which had several years of underwhelming performance began to recover but was then hit by the pandemic plus a sharp drop in global energy prices, the latter which "translated into several petrochemical plants being temporarily mothballed."
The Government targeted four per cent of GDP to the banking system to preserve fiscal stability. However rigorous measures to contain covid19 impeded mobility, non-essential businesses and high-contact service industries such as tourism. The pandemic's impact on employment is inconclusive due to delayed labour market data.
"However, alternative indicators imply that a significant portion of the retail sector closed their doors permanently," said the IMF, "and the number of contributions paid to the national insurance board (NIB) experienced a sharp drop."
The IMF said TT has benefited from rising global oil and gas prices, despite notable bottlenecks in local production.
"The exploration and potential production from the 17 offshore deep-water blocks should help maintain energy production levels into the medium-term."
There are also plans for other bid rounds covering onshore and shallow water blocks.
"Under these circumstances, real GDP growth is expected to reach 5.5 per cent in 2022, stronger that initially projected, partially offsetting the combined economic contraction occurred in 2020-21." The IMF also said despite covid19, non-energy activity was picking up to provide an additional boost to economic activity. This was in line with a recent Central Bank (CBTT) monetary policy announcement saying business credit rose by 1.3 per cent (year-on-year) in October 2021, the first rise since August 2018.
The statement praised the Governments "decisive emergency response" to the pandemic by help to SMEs and vulnerable households, plus the support to the health sector and vaccine roll-out.
"As expenditures normalise and revenue gradually recovers due to improved economic activity and the implementation of mobilisation measures, the fiscal deficit is projected to continue narrowing in fiscal 2022 and achieve a primary surplus by fiscal 2023." The Government's emergency response to the pandemic was largely funded by the Development Bank of Latin America (CAF) and domestic sources like the US$5.6 billion Heritage and Stabilisation Fund.
The IMF noted how the Government was trying to tame the public debt by boosting revenues and curbing spending. The former was by way of establishing a TT Revenue Authority, collecting property tax, liberalising the fuel market and reforming the tax and customs administrati
