IMF: TT pursuing fiscal adjustments

Addressing the opening of the High-Level Caribbean Forum yesterday at the Hyatt Regency, Port-of-Spain, Tao said that though fiscal adjustment can be difficult to sustain amid weak economic growth, there were some clear success stories in the region to share.

Jamaica, Grenada, and St Kitts and Nevis have achieved “important” results in reducing their fiscal and external vulnerabilities over the last few years and, he said, “Trinidad and Tobago is pursuing the same goals now.” The current financial environment with low interest rates, he said, “provides a window of opportunity to pursue adjustment, undertake liability management to lower financing costs, and reduce debts to safer levels.” On the downside, Tao noted that in the region, TT and Suriname have been hard hit due to the slump in oil and gas prices.

While TT’s economy is under pressure despite some savings, he said, “this makes the task even harder for the Government to rebalance policies in response to the low energy prices, particularly the fiscal stance.” On the positive side, the low oil prices have benefitted most other countries in the region.

“Jamaica has eliminated much of its double-digit current account deficit in a couple of years, and Guyana is experiencing its first external plus in decades,” he said. On regional challenges to economic growth, Tao noted the negative impact that natural disasters have on sustainability of small economies. To this end, he said, recent IMF studies have discussed a policy framework to enhance resilience to natural disasters. It includes a disaster response and reconstruction, a greater focus on risk reduction and preparedness, as well as avenues to finance prevention policie