- 7 minutes ago
The Government says its 2027 Budget will transform the economy and secure a sustainable future.
But with billions of dollars in debt, continued pressure on household budgets and questions about the country's dependence on energy revenue, are the numbers adding up?
But with billions of dollars in debt, continued pressure on household budgets and questions about the country's dependence on energy revenue, are the numbers adding up?
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00:00Irvashi joins us now for Beyond the Headlines.
00:14Good evening and welcome to Beyond the Headlines.
00:18The 2027 national budget presented on Monday by Finance Minister Davindranath Tanku
00:24projects a fiscal deficit of $3.639 billion.
00:28That's down from $7 billion in fiscal 2026.
00:33The government is promising continued investment in social support, infrastructure and the productive
00:39sectors while pursuing increased revenue collection and recovery in energy production.
00:45But beneath the headline figures are some critical questions.
00:49Can the government achieve its fiscal targets?
00:52Will the measures bring meaningful relief to households and businesses?
00:56And can Trinidad and Tobago finally build a more diversified economy while managing its
01:03debt burden?
01:04To examine the figures, the assumptions and the implication for the country's economic
01:09future, we are joined by regional economist Mala Dukaran.
01:13Ms. Dukaran, good evening and thank you for joining us on Beyond the Headlines.
01:18Thanks for having me, Irvashi.
01:20All righty, so let's get straight into it.
01:22The government has presented this budget as a people-centered budget focused on transforming
01:28the economy and securing a sustainable future.
01:32Is this a genuine economic recovery plan or is it largely a continuation of the government's
01:39existing fiscal approach?
01:42Well, I think there's a bit of a departure from the fiscal approach that they had last year.
01:49If I might share my slides, let me do that here.
02:02And are you seeing my slides?
02:05Yes, we're seeing it.
02:06Right.
02:07So I pulled some numbers from the draft estimates, which basically are supporting documents that
02:15are released by the Ministry of Finance and are on the website.
02:19So it is not the actual budget document.
02:22And these draft estimates are the true sort of cash flow numbers that they compile for
02:29revenue and expenditure and so on.
02:32Basically, they're looking at a level of revenue that is, as you can see here in the chart, one
02:39of the highest in our country's history.
02:42It is actually the highest in our country's history, which is quite ambitious, especially
02:48on the heels of contraction in 2020, 2025.
02:54So the economy is contracting, but they're expecting to earn more fiscal revenue than ever
02:59before, which is why I said this is not a continuation.
03:03This is a departure from what we would have seen last year.
03:09The other point I wanted to make in terms of a departure, last year, the total budget was
03:18about $75 billion, which the minister didn't announce.
03:23But again, it's in the draft estimates of revenue on the Ministry of Finance's website.
03:29$75 billion.
03:30Before you go further, Mr. Grant, let's just let our viewers know the 2026 figures you have
03:36here are actual.
03:38The 2026 figures here are called revised estimates in the document.
03:45These documents were released on Monday alongside the budget.
03:50And so this $74.8, almost $75 billion in 2026, the highest budget, the biggest budget our country
04:01ever saw, and now they're projecting to spend this year $9 billion or so less than they did
04:09last year.
04:10Again, this is why I said this is a departure.
04:12It's not a continuation.
04:13They're making some big changes that I guess that message did not come through in the budget
04:18for me.
04:19I'm not sure if anybody else picked up on that.
04:21And so the other thing is that they're looking to halve the deficit.
04:30You're going from $7 to roughly $3.5 billion.
04:35And I feel like that, as well as combined with $9 billion less in spending, that could constitute
04:47a shock to the economy, especially given that we had an economic construction last year.
04:53And so, again, this is not a continuation of what they did last year.
04:58This is a meaningful departure.
05:01And when you look at this slide that I have here, look at the dark blue column.
05:09And you will see that last year, we borrowed $20 billion, which is the most we ever borrowed.
05:20And we're looking to borrow, you know, less than half of that this year.
05:26So there's a lot happening in terms of the change.
05:31And I feel like all of this can be maybe a bit disruptive and can constitute a shock to
05:38the economy.
05:39And so I think that there's going to be not much of the same.
05:43It's going to be things are going to change.
05:46And on the heels of a contraction in 2025, I think this can have some negative ramifications.
05:56Where did those borrowings go in 2026?
06:03Where did they go?
06:04Well, I guess some of it would be money that they raised that they're holding in accounts
06:11in order to spend, because, of course, the minister announced that the capital expenditure
06:16budget was not realized.
06:18There were significantly less projects, you know, being executed and completed on time.
06:25So that money that they would have allocated for these projects and so on, probably just
06:30sitting there.
06:31So I would imagine some of it is sitting there.
06:35But which is probably why they need to borrow so much less this year.
06:39But the government has also ramped up its social spending.
06:43As you know, even in this budget, it was announced that, for example, you know, the pensions are
06:51being increased and other types of social spending are being increased.
06:55You know, including a fund for people affected by road traffic accidents and don't have any
07:03insurance and things like that.
07:04So, you know, social spending is on the rise.
07:08And I would guess that's one of the main areas that's and the subsidy, which the minister
07:15discussed as well.
07:17So these kinds of spending are part of the whole mix that is accounting for the level
07:24of borrowing that's necessary.
07:27Now, let me ask you, if we could just go back a bit to the deficit.
07:342026, $7 billion.
07:36This year, it's estimated at $3.639 billion.
07:40How realistic is that reduction and what assumptions must hold for government to realize that?
07:52It's, you know what, I don't know that the deficit projection is realistic.
08:01I think to move from seven to three and a half roughly is, I mean, especially again in a contracting
08:09economy, I don't know that it's realistic.
08:14And I worry that these are numbers that, based on assumptions that I don't know are, again,
08:26realistic or have a high probability of bearing fruit.
08:31Already we have a situation where, as we know, the level of foreign exchange reserves are all
08:38borrowed.
08:39As you can see here, the level of borrowing and total debt is climbing.
08:44We have the highest level of debt that we've ever had in our history.
08:50And these things, the level of debt and the contraction in the economy, all of these things
08:57are a drag and will affect how much revenue can actually be raised from, for example, when
09:03you have a contracting economy, things like your VAT receipts tend to soften, things like
09:09your PAY income tax, corporate income tax, those things tend to soften when there is a
09:16contracting economy, especially when it's a non-oil sector contracting economy, which is
09:21what we have.
09:21We have some growth in the oil sector, oil and gas sector, energy sector, but we have a
09:27contracting non-energy sector.
09:30And so those tax revenue streams tend to soften when that's the case.
09:34And so I don't believe that some of these assumptions and certainly the deficit projection
09:40is terribly realistic, to be very honest with you.
09:44From what you are telling us, it's quite a shock from what was presented on Monday.
09:50There was some semblance of at least stability.
09:54I get the impression that government is depending on external investment.
10:02Well, government is depending heavily on foreign direct investment.
10:06You're right.
10:07They're depending on debt being raised again, and they're also depending on a buoyant energy
10:16sector to persist.
10:18Of course, we have oil prices that have been high for several months now, and oil at $100
10:25is, you know, generally positive for us.
10:31How long will oil at $100 last?
10:35I'm not sure.
10:37But also, maybe I show you this slide that shows that, you know, even if we have oil at
10:45$100, this is the reality of what our production is looking like.
10:49And I know that there are several projects underway for oil and natural gas.
10:56But I actually maybe want to share a slide that speaks to that.
11:02This is a slide done by Tony Paul, who is well-renowned in the energy sector.
11:08He created this slide based on Ministry of Energy data and some modeling that he did.
11:17And as you can see, you know, we're likely to see a bit of an increase and a boom, if
11:26you
11:26can call it that, in production based on certain projects, as you know, you can see highlighted
11:32in the colors.
11:33You have dragon, manatee, coconut, et cetera, et cetera.
11:38But you're going to have, you know, for maybe four years, three years.
11:44And it's not going to last long, according to these projections.
11:46No, exactly.
11:47Exactly.
11:48Exactly.
11:49So, it's a, you know, we are a mature oil and gas producer, as we know.
11:56It's, you know, well over 100 years.
11:59And so, we're not Guyana.
12:03And this, this, we're kicking, we keep kicking the camp down the road of, you know, meaningfully
12:11diversifying, which is, which is how you started out in your preamble.
12:17You know, when are we ever going to stop depending so heavily, even in the budget, we quote what
12:23oil and gas price we're, you know, pegging or basing the budget on.
12:28And when are we ever going to stop that?
12:30And when are we ever going to have a diversified enough economy where we don't depend so heavily?
12:38The minister announced over 70% of our exports is from the energy sector.
12:43It used to be about 80%.
12:46So, it's, in that sense, going back to your initial question, in this sense, we are pretty
12:54much continuing on the road that we have been for over 100 years where, you know, the energy
12:59sector is the dominant sector.
13:01And we're not looking to, at least not in action, but only in lip service, speaking about
13:07diversification.
13:09Ms. Ducran, if you had to identify the single biggest weakness in the 2027 budget, what would
13:16it be?
13:19This one.
13:22So, the minister did not speak meaningfully about, in my view, the foreign exchange problem
13:32that we have, that, yes, they've taken some measures.
13:36He talked about Ex-Im Bank.
13:39He talked about Decentral Bank injecting an additional, I think, is 10 million a month,
13:46if my memory serves me correct.
13:50But a few things he didn't say.
13:53One is that, actually, all of our foreign exchange reserves are borrowed.
13:58So, they are, in fact, not really reserves, are they?
14:01Because we have to repay them with interest.
14:06It means that our economy is not generating enough foreign exchange to pay for the demand
14:16for foreign exchange for imports and for debt servicing and for all the other things that
14:21we need foreign exchange for.
14:23So, we are net users and have been, for a long time, net users of foreign exchange, and
14:32he has not announced any meaningful measures to address this.
14:36So, that's the biggest weakness.
14:39Now, the other thing I want to highlight with respect to foreign exchange and the net outflow
14:45of U.S. dollars is that one of the biggest drivers of this net outflow of foreign currency
14:53in our economy is the fiscal deficit.
14:56It's called the twin deficit phenomenon, where, because the government is the largest economic
15:02actor, if they are running a fiscal deficit, it means that they are spending more than they're
15:09earning, and all of that spending, whether it's going to wages and salaries, transfers and
15:15subsidies, projects, roughly 80% of what we use and consume in our economy is imported.
15:23So, when the government is spending more than they're earning, in particular, they are driving
15:30higher levels of consumption and basically imports.
15:34So, a big part of solving this problem is solving the fiscal deficit.
15:40Now, we did discuss, and he did show, that he is planning to bring the deficit down by half,
15:46roughly.
15:46And while I would like to be wrong, and I would welcome that kind of an outcome, normally,
15:56a couple of things.
15:58Again, as we discussed, is it a realistic projection?
16:02I'm not so sure.
16:04And also, if you are going to reduce your fiscal deficit that much, and the majority of the
16:13way in which you're going to do that is not by raising revenue, but by cutting your spending,
16:24then, remember, we said $9 billion less in spending this fiscal year?
16:29That's a huge shock to the economy, right?
16:33So, maybe that's not the way to balance the budget.
16:36You need to do both.
16:37You need to raise revenue and cut spending.
16:39But if you just cut spending so significantly in one year on the heels of a contracting economy
16:46in 2025, you can end up creating an even deeper recession.
16:54Ms. Dukran, we've reached just about half time.
16:57We're examining the numbers behind the 2027 budget and what they can mean for the country's
17:03economic future.
17:04Coming up after the break, we continue the conversation with economist Mala Dukran, looking
17:09at government's tax measures, the outlook for the energy sector, and whether the country
17:13can translate its spending commitments into sustainable growth and jobs.
17:17Stay with us.
17:18Beyond the Headlines continues after the break.
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19:06Transcription by CastingWords
19:36Transcription by CastingWords
19:38Oh, I'm very concerned. I mean, the fact of the matter is already we have what is a primary fiscal
19:46deficit.
19:47A primary fiscal deficit means that we are borrowing to pay interest on the existing debt that we already have.
19:54And like I just discussed, all of our foreign exchange reserves are borrowed. Our debt level is well in the
20:03unsustainability zone.
20:06And so I'm very, very concerned. And the higher the debt goes, the larger the what is called fiscal drag,
20:13meaning the debt has a negative impact on overall economic buoyancy and economic growth.
20:20Because of how much the government then has to spend and redirect spending towards debt servicing.
20:27And it's almost like a spiral that you get into once you cross that sustainability threshold, which we crossed years
20:35ago.
20:37The government says it's increasing senior citizens grant, disability grants, public assistance by $250 per month.
20:46And that's from January. Is that sufficient relief when we offset that against the cost of living?
20:53It's difficult for me to say what is sufficient. I guess it's a very individual thing.
20:59But the fact that the minister announced that, you know, we have, was it one in three children who are
21:08recorded as being multidimensionally poor?
21:12We do not have an overall poverty statistic, and we haven't had it for what, more than 10 years?
21:20And so we need that. That is the kind of data that would help me to answer a question like
21:26that, Uwashi.
21:27But the fact that we have one in three children who are multidimensionally poor, just increasing a grant is not
21:34going to fix that.
21:36Multidimensional poverty requires a robust poverty reduction strategy that involves things like health care interventions, education interventions, nutrition interventions, not
21:51just handing out more money.
21:53What about the fuel subsidy?
21:55Government is maintaining the fuel subsidy to the tune of $290 million, and that was in fiscal 2026.
22:02Is that economically sound use of public monies?
22:07Well, we're borrowing to pay for that.
22:09OK, so it's absolutely not sound.
22:12A subsidy like this, basically, it creates the wrong kinds of incentives.
22:20It creates perverse incentives for people to use whatever is subsidized more so than they would if it wasn't subsidized.
22:30The government probably needs to look at other mechanisms to make people's lives more affordable.
22:38And also, a fuel subsidy, just like an electricity subsidy, which we also have, those favor the rich.
22:46The people with the biggest cars, with the biggest engines, and the most cars are going to benefit from this
22:53subsidy more so than those who don't have cars or who have the smallest cars.
22:58So these subsidies, and they run more ACs, you know, and have more than one refrigerator, et cetera, et cetera.
23:05So these subsidies are subsidies that favor the rich and do not necessarily alleviate the hardships that people who are
23:14on the poverty line experience.
23:17And so it's really a perverse way of spending money that is borrowed, basically.
23:23I need to go back a bit.
23:25I know we were talking about the fiscal measures, but the prime minister just yesterday announced plans to divest Hilton,
23:33Magdalena, Libidco, National Quarries.
23:36She said Libidco was under consideration, but she threw in Carrie Dock into that mix.
23:41Is this a good move?
23:44Well, I think, you know, generally the government should not be in the business of business.
23:50I think the private sector is much better place to handle private, to handle business than government is.
24:00So in general, that kind of a move is positive, except when the assets are strategic.
24:07I am not sure if any of those, certainly Magdalena, the government should not be in the tourism sector.
24:13There is no way the government should have been in the sector in the first place.
24:17Maybe Carrie Dock could be considered to be a strategic asset, meaning when I say strategic, meaning sort of security
24:24-wise and so on.
24:25I'm not sure.
24:27Unless it's a strategic asset, I would say it's probably better to divest.
24:32It's interesting that you mentioned that because I did put the question to the prime minister earlier today.
24:37If you're going to divest these companies and properties, why not the Guaracara refinery?
24:44And she used that same term that you did.
24:46She said that it is strategic.
24:49Yeah.
24:51Well, I don't know if I agree necessarily that it's a strategic asset, simply because we have been functioning for,
24:59what, eight years or so without a functioning refinery.
25:04And we seem to be okay.
25:07I mean, of course, things like the U.S. banning exports on diesel can be a shock and it can
25:14create some discomfort as it relates to how do you replace that supply.
25:19Maybe from that perspective, you can say it's strategic.
25:23But so many countries operate just fine without a refinery.
25:29So the budget proposes applying VAT to digital and remote services supplied by non-resident providers, and that's from March
25:3720, 27.
25:39This will equate to higher costs for consumers using international digital platforms.
25:45It's expected to raise some $18 million in TT, in revenue.
25:50Is that worth that $18 million TT?
25:54Is that worth the additional burden?
25:57It's not a lot of money.
25:59So I'm not sure if $18 million spread across the 1.3, 1.4 of us is going to really
26:07make a difference in our lives.
26:09I think it's more of a, it's directionally significant, not necessarily the quantum of money.
26:17Governments all over the world are looking at ways of taxing this space.
26:22And so ours is just the more recent addition to that long list.
26:27This is done internationally, if I'm not mistaken.
26:30What exactly is being targeted?
26:32Would you have any ideas that entertainment services alone persons were asking my Microsoft subscription, will that be targeted?
26:40Well, there is a feeling that there is a lot of economic value and economic activity in a space that
26:49is not adequately taxed.
26:51The Amazons of the world, the Netflix and so on.
26:56And right now, the OECD has a framework that is supposed to address this.
27:04And so that's probably part of why you're seeing these kinds of reforms, because we have to sort of, we
27:12don't have to,
27:13but some, some governments feel it's important to comply with the OECD's requirements.
27:20Mr. Grant, how fast half an hour really does fly.
27:25That brings us to the end of tonight's Beyond the Headlines.
27:27The 2027 budget sets out the government's plans for managing the country's finances,
27:32supporting vulnerable citizens and stimulating economic activity.
27:36But ultimately, its success will be measured not simply by the figures announced,
27:41but by whether the government can deliver on its commitments,
27:45strengthen the economy, create sustainable jobs and improve the lives of citizens.
27:49My thanks to economist Mala Dukaran for joining us and of course sharing her analysis.
27:54And thank you for watching Beyond the Headlines.
27:56I'm Urvashi Tawari Rupnarein.
27:58Join us again for another Beyond the Headlines this after a break.
28:01Disha's back with news.