Front Matter Page

© 1995 International Monetary Fund

February 1995

IMF Country Report No. 95/16

Trinidad and Tobago—Economic Developments and Selected Background Issues

This report on economic developments and selected background issues in Trinidad and Tobago was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. In releasing this document for public use, confidential material may have been removed at the request of the member.

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International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

TRINIDAD AND TOBAGO

Economic Developments and Selected Background Issues

Prepared by a staff mission consisting of Samuel Itam, Paul Mathieu, Carlos Medeiros, Obert Nyawata, Jingping Yang, Michael Lewin (IBRD), and Jyoti Shukla (IBRD)

Approved by the Western Hemisphere Department

January 11, 1995

Contents

• Basic Data

• I. Introduction

Trinidad and Tobago - Basic Data

Sources: Data and information provided by the Trinidad and Tobago authorities; and Fund staff estimates.

^1/Calculated at TT$5.9 per U.S. dollar.

^2/As a percent of liabilities to the private sector at the beginning of the period of the financial system excluding finance houses, thrift and development banks.

^3/From December 1993 to October 1994.

^4/Refers to the net international reserves of the Monetary Authority.

Social and demographic indicators
Area				5,130 km2
Arable land (percent of total)				1,308 km2
Agricultural land (percent of total)				25
Population (mid-1992)				1.27 million
Density (1992)
	Total			244 per km2
	Arable			932 per km2
Rate of population increase (percent per annum)				1.2
Life expectancy at birth (in years)				71
Infant mortality (per thousand)				10
Child death rate (aged 1-4, per thousand)				0.4
Population per physician				943
Population per hospital bed				196
Distribution of national income, highest quintile				50 percent
			lowest quintile	4 percent
Access to safe water (percent of dwellings)
	Urban			100
	Rural			95
Access to electricity (percent of dwellings)
	Urban			92
	Rural			…
Per capita calorie intake (per day)				2,853
Per capita protein intake (grams per day)				65
Adult literacy rate				96 percent
Primary school enrollment				97 percent
Secondary school enrollment				84 percent
Illiteracy				4 percent
Unemployment rate (1994 estimate)				19.7 percent
GDP at market prices (1994)				TT$28,390 million
				U$84,812 million 1/
GDP at market prices per capita (1994)				U$83.881 1/
				1991	1992	Prel. 1993	Est. 1994
Origin of GDP				(percent)
Agriculture				2.5	2.5	2.4	2.4
Oil/gas				26.2	23.6	22.6	25.5
Manufacturing				9.1	9.2	9.1	8.7
Construction				8.6	8.8	8.4	8.0
Government				11.1	11.8	11.1	10.1
Other				42.5	44.1	46.4	45.3
Ratios to GDP
Exports of goods end nonfactor services				41.0	39.2	39.6	40.3
Imports of goods and nonfactor services				33.3	29.1	31.0	27.9
Current account of the balance of payments				-0.9	1.7	1.6	2.1
Central government revenues				29.9	26.3	27.1	26.9
Central government expenditures				30.2	29.1	26.9	27.2
Public sector overall surplus or deficit (-)				0.1	-2.1	1.1	-3.1
External public debt (end of year)				45.9	40.7	48.9	43.4
Gross national savings				15.2	14.0	14.7	15.5
Gross domestic investment				16.1	12.3	13.1	13.4
Homey and quasi-money (end of year)				42.0	39.7	43.1	42.2
Annual changes in selected indicators
Real GDP				2.7	-1.7	-1.7	4.0
GDP at current prices				4.7	-2.5	8.1	13.6
Domestic expenditures (at current prices)				16.0	-0.3	10.0	8.8
Gross capital formation				33.7	-21.5	15.0	20.0
Consumption				12.8	4.2	9.2	6.9
GDP deflator				2.0	4.2	9.9	9.2
Consumer prices (end of period)				2.3	8.5	13.5	5.9
Central government revenues				20.5	-9.9	11.2	13.0
Central government expenditures				15.6	-1.1	-0.2	14.8
Financial System2/
Liabilities to private sector				6.6	1.0	11.5	7.8
Money and quasi-money				6.0	-3.0	17.3	6.3
Net domestic assets of the financial system				14.0	2.7	-0.4	-2.6
	Credit to public sector			-1.0	3.0	-8.1	-5.3
	Credit to private sector			12.8	1.6	3.3	-4.0
External Sector
Merchandise exports (in U.S. dollars)				-8.3	-5.7	-13.7	10.9
Merchandise imports (in U.S. dollars)				28.5	-16.5	-1.9	3.3
Terms of trade				-8.6	-4.0	-6.9	2.4
Nominal effective exchange rate end of period (depreciation -)				-3.9	3.9	-25.1	-5.8 3/
Real effective exchange rate end of period (depreciation -)				1.0	9.0	-17.7	-5.2 3/
Central government finances				(millions of Trinidad and Tobago dollars)
Revenues				6,754.6	6,085.1	6,759.4	7,638.3
Expenditures				6,803.0	6,729.6	6,717.5	7,711.5
Current account surplus or deficit (-)				719.8	-196.5	400.0	442.3
Overall surplus or deficit (-)				-48.4	-644.6	42.1	-73.2
External financing (net)				475.2	-235.9	-135.4	-208.3
Domestic financing (net)				523.6	888.5	93.8	281.5
Balance of payments				(millions of U.S. dollars)
Merchandise exports				1,751.4	1,661.8	1,480.2	1,640.4
Merchandise imports				-1,436.9	-1,199.5	-1,165.1	-1,204.0
Factor income (net)				-438.2	-444.3	-318.5	-384.5
Other services and transfers (net)				77.7	72.9	77.1	52.6
Balance an current account				-46.1	90.9	73.8	104.0
Direct investment				169.1	177.9	368.7	415.3
Public sector capital				-317.7	-191.8	-42.7	-13.1
Private capital, including errors and emissions				-102.3	-179.3	-244.4	-356.2
Changes is reserves (increase -) 4/				173.9	32.5	-155.4	-150.0
Debt rescheduling				123.1	69.8	--	--
International reserve position				(millions of SDRs, end of period)
Central Bank (net)				-37.0	-59.0	51.8	150.5
Financial system (net)				2.6	-28.2	148.0	308.9
Gross official reserves				248.6	147.1	165.9	209.6
IMF data (as of November 30, 1994)
Article VIII status
Intervention currency and rate				U.S. dollar at 22$5.94 = US$1.00
Quota				SDR 246.8 million
Fund holdings of local currency				SDR 310.0 million
	As percent of quota			125.6 percent
Total Fund credit				SDR 63.2 million
	CCFF purchases			SDR -- million
	Credit tranche purchases			SDR 63.2 million
		Ordinary		SDR 18.4 million
		Enlarged access		SDR 44.8 million
Special Drawing Rights Department
	Cumulative SDR allocation			SDR 46.2 million
	Net acquisition or utilization (-) of SDRs			SDR 46.1 million
	Holdings of SDRs			SDR 0.1 million
Share of profits from gold sales				US$10.0 million

Sources: Data and information provided by the Trinidad and Tobago authorities; and Fund staff estimates.

^1/Calculated at TT$5.9 per U.S. dollar.

^2/As a percent of liabilities to the private sector at the beginning of the period of the financial system excluding finance houses, thrift and development banks.

^3/From December 1993 to October 1994.

^4/Refers to the net international reserves of the Monetary Authority.

View Table

Social and demographic indicators
Area				5,130 km2
Arable land (percent of total)				1,308 km2
Agricultural land (percent of total)				25
Population (mid-1992)				1.27 million
Density (1992)
	Total			244 per km2
	Arable			932 per km2
Rate of population increase (percent per annum)				1.2
Life expectancy at birth (in years)				71
Infant mortality (per thousand)				10
Child death rate (aged 1-4, per thousand)				0.4
Population per physician				943
Population per hospital bed				196
Distribution of national income, highest quintile				50 percent
			lowest quintile	4 percent
Access to safe water (percent of dwellings)
	Urban			100
	Rural			95
Access to electricity (percent of dwellings)
	Urban			92
	Rural			…
Per capita calorie intake (per day)				2,853
Per capita protein intake (grams per day)				65
Adult literacy rate				96 percent
Primary school enrollment				97 percent
Secondary school enrollment				84 percent
Illiteracy				4 percent
Unemployment rate (1994 estimate)				19.7 percent
GDP at market prices (1994)				TT$28,390 million
				U$84,812 million 1/
GDP at market prices per capita (1994)				U$83.881 1/
				1991	1992	Prel. 1993	Est. 1994
Origin of GDP				(percent)
Agriculture				2.5	2.5	2.4	2.4
Oil/gas				26.2	23.6	22.6	25.5
Manufacturing				9.1	9.2	9.1	8.7
Construction				8.6	8.8	8.4	8.0
Government				11.1	11.8	11.1	10.1
Other				42.5	44.1	46.4	45.3
Ratios to GDP
Exports of goods end nonfactor services				41.0	39.2	39.6	40.3
Imports of goods and nonfactor services				33.3	29.1	31.0	27.9
Current account of the balance of payments				-0.9	1.7	1.6	2.1
Central government revenues				29.9	26.3	27.1	26.9
Central government expenditures				30.2	29.1	26.9	27.2
Public sector overall surplus or deficit (-)				0.1	-2.1	1.1	-3.1
External public debt (end of year)				45.9	40.7	48.9	43.4
Gross national savings				15.2	14.0	14.7	15.5
Gross domestic investment				16.1	12.3	13.1	13.4
Homey and quasi-money (end of year)				42.0	39.7	43.1	42.2
Annual changes in selected indicators
Real GDP				2.7	-1.7	-1.7	4.0
GDP at current prices				4.7	-2.5	8.1	13.6
Domestic expenditures (at current prices)				16.0	-0.3	10.0	8.8
Gross capital formation				33.7	-21.5	15.0	20.0
Consumption				12.8	4.2	9.2	6.9
GDP deflator				2.0	4.2	9.9	9.2
Consumer prices (end of period)				2.3	8.5	13.5	5.9
Central government revenues				20.5	-9.9	11.2	13.0
Central government expenditures				15.6	-1.1	-0.2	14.8
Financial System2/
Liabilities to private sector				6.6	1.0	11.5	7.8
Money and quasi-money				6.0	-3.0	17.3	6.3
Net domestic assets of the financial system				14.0	2.7	-0.4	-2.6
	Credit to public sector			-1.0	3.0	-8.1	-5.3
	Credit to private sector			12.8	1.6	3.3	-4.0
External Sector
Merchandise exports (in U.S. dollars)				-8.3	-5.7	-13.7	10.9
Merchandise imports (in U.S. dollars)				28.5	-16.5	-1.9	3.3
Terms of trade				-8.6	-4.0	-6.9	2.4
Nominal effective exchange rate end of period (depreciation -)				-3.9	3.9	-25.1	-5.8 3/
Real effective exchange rate end of period (depreciation -)				1.0	9.0	-17.7	-5.2 3/
Central government finances				(millions of Trinidad and Tobago dollars)
Revenues				6,754.6	6,085.1	6,759.4	7,638.3
Expenditures				6,803.0	6,729.6	6,717.5	7,711.5
Current account surplus or deficit (-)				719.8	-196.5	400.0	442.3
Overall surplus or deficit (-)				-48.4	-644.6	42.1	-73.2
External financing (net)				475.2	-235.9	-135.4	-208.3
Domestic financing (net)				523.6	888.5	93.8	281.5
Balance of payments				(millions of U.S. dollars)
Merchandise exports				1,751.4	1,661.8	1,480.2	1,640.4
Merchandise imports				-1,436.9	-1,199.5	-1,165.1	-1,204.0
Factor income (net)				-438.2	-444.3	-318.5	-384.5
Other services and transfers (net)				77.7	72.9	77.1	52.6
Balance an current account				-46.1	90.9	73.8	104.0
Direct investment				169.1	177.9	368.7	415.3
Public sector capital				-317.7	-191.8	-42.7	-13.1
Private capital, including errors and emissions				-102.3	-179.3	-244.4	-356.2
Changes is reserves (increase -) 4/				173.9	32.5	-155.4	-150.0
Debt rescheduling				123.1	69.8	--	--
International reserve position				(millions of SDRs, end of period)
Central Bank (net)				-37.0	-59.0	51.8	150.5
Financial system (net)				2.6	-28.2	148.0	308.9
Gross official reserves				248.6	147.1	165.9	209.6
IMF data (as of November 30, 1994)
Article VIII status
Intervention currency and rate				U.S. dollar at 22$5.94 = US$1.00
Quota				SDR 246.8 million
Fund holdings of local currency				SDR 310.0 million
	As percent of quota			125.6 percent
Total Fund credit				SDR 63.2 million
	CCFF purchases			SDR -- million
	Credit tranche purchases			SDR 63.2 million
		Ordinary		SDR 18.4 million
		Enlarged access		SDR 44.8 million
Special Drawing Rights Department
	Cumulative SDR allocation			SDR 46.2 million
	Net acquisition or utilization (-) of SDRs			SDR 46.1 million
	Holdings of SDRs			SDR 0.1 million
Share of profits from gold sales				US$10.0 million

Sources: Data and information provided by the Trinidad and Tobago authorities; and Fund staff estimates.

^1/Calculated at TT$5.9 per U.S. dollar.

^2/As a percent of liabilities to the private sector at the beginning of the period of the financial system excluding finance houses, thrift and development banks.

^3/From December 1993 to October 1994.

^4/Refers to the net international reserves of the Monetary Authority.

Contents

• II. Retrospective

• III. Recent Economic Developments

  • 1. Developments in 1992-93

  • 2. Developments in 1994

• Text Tables

  • 1. Selected Economic and Financial Indicators

• IV. Economic Structure, Investment and Savings

  • 1. Oil/gas sector

  • 2. Agriculture

  • 3. Nonpetroleum manufacturing sector

  • 4. Nontradable sector

  • 5. Investment

    • a. Public sector investment

    • b. Private investment

  • 6. National savings and financing of investment activities

  • 7. Labor productivity

• Text Tables

  • 2. Sectoral Contribution to Real Growth of Gross Domestic Product

  • 3. Ratios of Gross Domestic Product by Sector of Origin

  • 4. Manufacturing Production by Activity at 1985 Prices

  • 5. Savings and Investment

  • 6. Investment by Sector and Activity

• Charts

  • 1. Developments in the Oil/Gas Sector

  • 2. Distribution of Public Investment

  • 3. Domestic Savings

  • 4. Productivity and Wage Costs

• V. Recent Developments and Policies in the Labor Market

  • 1. Labor force and unemployment

  • 2. Some explanations for the unemployment

  • 3. Alleviation policies

• Text Tables

  • 7. Labor Force and Employment

  • 8. Unemployed Persons Who Did Not Look For Work During the Survey Week by Reasons

  • 9. Total Unemployed by Age Group and Occupational Group

  • 10. Total Unemployed by Age Group and Administrative Area

  • 11. Total Unemployment by Gender, Duration of Unemployment and Age Group

• VI. Social Safety Net Programs

  • 1. Programs

  • 2. Issues

• Text Tables

  • 12. Central Government Expenditure Targeted at the Poor

• VII. Financial Liberalization

  • 1. Financial controls and repression

  • 2. Liberalization measures

  • 3. Results of liberalization

  • Appendix--The Structure of the Financial System

• Text Tables

  • 13. Selected Indicators for the Financial Sector

  • 14. Number of Financial Institutions

  • 15. Monthly Real Interest Rates

• Charts

  • 5. Financial Indicators

  • 6. Selected Interest Rates

• VIII. The Demand for Currency and Broad Money

  • Appendix I--Cointegration, Error Correction Mechanisms and Money Demand Function

  • Appendix II--Time Series Properties and Diagnostic Tests

• Text Tables

  • 16. Unit Root Test

  • 17. Tests of Cointegration

• IX. An Assessment of the Sustainability of Public Sector Debt

  • 1. A balance sheet approach

  • 2. A fiscal sustainability approach

  • 3. A debt capacity approach

  • 4. Conclusions

• Text Tables

  • 18. Indicators of Nonfinancial Public Sector Debt Sustainability

• X. Indicators of Competitiveness

  • 1. Overall trends

  • 2. Export production

  • 3. Imports and import substitution

• Text Tables

• 19. Indicators of Competitiveness

• Statistical Appendix Tables

• 20. Gross Domestic Product by Sector of Origin at Constant 1985 Prices

• 21. Gross Domestic Product by Sector of Origin at Current Market Prices

• 22. Implicit GDP Deflators by Sectors

• 23. National Accounts by Final Expenditure at 1985 prices

• 24. National Accounts by Final Expenditure at Current Market Prices

• 25. Savings and Investment at Current Market Prices

• 26. Production and Utilization of Crude Oil and Refined Products

• 27. Retail Price Index

• 28. Index of Producer Prices by Industry

• 29. Domestic Prices of Selected Refined Petroleum Products

• 30. Labor Force and Employment

• 31. Employment in the Public Enterprises

• 32. Indices of Production, Earnings, Employment, and Costs in Manufacturing

• 33. Index of Minimum Wage Rates for Production and Ancillary Workers by Industry

• 34. Overall Nonfinancial Public Sector Operations

• 35. Summary of Central Government Budgetary Operations

• 36. Central Government Revenue

• 37. Ratios of Central Government Revenue

• 38. Central Government Expenditure

• 39. Ratios of Central Government Expenditure

• 40. Functional Classification of Central Government Expenditure

• 41. Central Government Transfers to Public Enterprises

• 42. Summary of Central Government Financing

• 43. Outstanding Central Government Domestic Debt

• 44. Summary of Nonfinancial Public Enterprises

• 45. Consolidated Financial Operations of Public Utilities

• 46. Operations of the Electricity Commission (T&TEC)

• 47. Operations of the Port Authority

• 48. Operations of the Public Transport Service Corporation (PTSC)

• 49. Operations of the Telecommunications Services (TSTT)

• 50. Operations of the Water and Sewerage Authority (WASA)

• 51. Consolidated Financial Operations of State Enterprises

• 52. Operations of Caroni Ltd. 108

• 53. Operations of BWIA International Airways Corporation

• 54. Operations of the Iron and Steel Company of Trinidad and Tobago (ISCOTT)

• 55. Consolidated Energy Sector Enterprises

• 56. Operations of Trinidad and Tobago Petroleum Company (TRINTOPEC)

• 57. Operations of the National Gas Company

• 58. Operations of Trinidad and Tobago Methanol Company Ltd. 114

• 59. Consolidated Financial Operations of Enterprises Included in the Budget for Statutory Boards and Similar Bodies

• 60. Summary Operations of the National Insurance Board (NIB)

• 61. Summary Accounts of the Financial System

• 62. Origin, Destination, and Financing of Credit Extended by the Consolidated Financial System

• 63. Liabilities of the Financial System to the Private Sector

• 64. Summary Accounts of the Monetary System

• 65. Commercial Banks--Loans and Advances

• 66. Liquidity Position of Commercial Banks

• 67. Accounts of Nonbank Financial Institutions (NBFIs)

• 68. Reserve Position of Nonbank Financial Institutions (NBFIs)

• 69. Summary Accounts of Development Banks

• 70. Market Value of Trading in Securities on the Stock Exchange

• 71. Investments by Self-Administered Pension Plans

• 72. Insurance Companies Statutory Fund - Securities Held in Trust (Long-Term Business)

• 73. Interest Rates

• 74. International Reserves

• 75. Summary Balance of Payments, 1990-94

• 76. Summary of Current Income

• 77. Summary of Nonfactor Services

• 78. Summary of Capital Account

• 79. Summary of Exports, f.o.b. 138

• 80. Summary of Imports, c.i.f. 139

• 81. Trade with CARICOM Countries

• 82. Indices of the Terms of Trade

• 83. Indices of Volume, Value and Unit Value of Selected Exports

• 84. Outstanding External Public Debt by Borrower, Lender, and Maturity

• 85. Public Sector External Debt by Creditor

• 86. Public Sector External Debt by Currency Composition

• 87. Direction of Trade

• 88. Exchange Rates