‘We will protect citizens’

The Ministry of Finance has reaffirmed its commitment to maintaining a “managed foreign exchange policy” despite the International Monetary Fund’s (IMF) suggestion that Government adjust the exchange rate or make foreign exchange freely available by injecting more reserves into the commercial banking sector.

In a statement yesterday, the ministry noted that its policy of not engaging in any drastic devaluation of the TT dollar is one that will “protect the citizens of Trinidad and Tobago by keeping prices in check and maintaining the country’s rate of inflation at low levels.”

“While the Government notes the IMF’s view, it also is conscious of its responsibility to the economic well-being of each and every citizen of the country.”

The ministry was responding to the IMF’s latest mission report which had been in the country for the past two weeks for its regular annual Article IV consultation. The mission’s concluding statement was published on its website on Friday.

“The Government of Trinidad and Tobago received a very positive report from the IMF on Friday July 6th, 2018. The Article IV Mission Statement states explicitly that the Trinidad and Tobago economy is in recovery mode. The report also indicates that the economy has revealed signs of improvement driven by energy sector growth from the second half of 2017.”

The IMF report also projected positive growth in 2018 due to recovery in the non-energy sector, with nominal GDP increasing from $154.4 billion in 2017 to $163.9 billion in 2019 while real GDP is projected to increase by one per cent in 2018, “with constant increases thereafter.” The report also noted significant progress in implementing fiscal consolidation and improved data collection.

“In short the measures taken, and initiatives put forward by the Government of Trinidad & Tobago have effected a turnaround in the country’s economic outlook,” the ministry stated.

The IMF’s review also suggested that economic prospects are expected to “improve broadly over the medium-term, with modest economic growth” stating this is attributed to energy projects coming on-stream as well as recovery in the non-energy sector.

The fund also projected “near-term growth” led by natural gas production due to higher energy prices and also suggested that a rise in energy prices had supported improvements in fiscal and external balances, together with the authorities’ ongoing fiscal consolidation efforts.

“Gradual recovery in non-energy growth is expected to help stabilize growth at 1.5 per cent over the medium term, while, the fiscal deficit is expected to narrow to an average four per cent of GDP as energy revenues rise, non-energy revenues recover, and spending falls with improved efficiency of transfers and subsidies.”

The country’s current account balance is also expected to move into surplus in the near future.

The IMF also stated that TT’s financial system has remained “remarkably stable” notwithstanding the deep recession in the past two years as banks continue to be “well-capitalised and profitable and credit quality remains relatively high, with NPL (non-performing loan) ratios one of the lowest in the region.”

And regarding the foreign exchange situation, the ministry stated that its managed foreign exchange policy is designed to control inflation which presently stands at one percent, the lowest level for decades.

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