Trinidad and Tobago
2007 Article IV Consultation: Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Trinidad and Tobago.
Author: International Monetary Fund
Publication Date:
28 Jan 2008
eISBN:
9781451837704
Language:
English
Keywords:
ISCR; CR; budget bill; surplus; WEO oil price projection; stabilization fund; energy GDP; GDP reduction; TT dollar; headline inflation; Inflation; Caribbean; misalignment measure
Download PDF (1.1 MB)

Trinidad and Tobago showed strong economic performance led by the buoyant energy sector. Executive Directors welcomed the robust economic activity, and the decline in public debt and external reserves. Directors stressed the need for strong macroeconomic and structural policies to enable the efficient absorption of energy revenues. They supported the tightening of fiscal policy and commended the monetary stance that has helped to contain inflation. They urged the authorities to improve the business environment and spur investment in the non-energy sectors and also encouraged plans to strengthen financial regulations and supervision.

Abstract

Trinidad and Tobago showed strong economic performance led by the buoyant energy sector. Executive Directors welcomed the robust economic activity, and the decline in public debt and external reserves. Directors stressed the need for strong macroeconomic and structural policies to enable the efficient absorption of energy revenues. They supported the tightening of fiscal policy and commended the monetary stance that has helped to contain inflation. They urged the authorities to improve the business environment and spur investment in the non-energy sectors and also encouraged plans to strengthen financial regulations and supervision.

I. Recent Economic Developments

1. Trinidad and Tobago’s economic performance has been remarkable in a regional context and in comparison to other energy producing economies (Figures 1–2). In the last four years, output doubled in U.S. dollar terms, net foreign assets have improved by the equivalent of a year’s GDP, and public debt declined considerably. By contrast, inflation rose and reliance on energy revenues increased.

Figure 1.
Figure 1.

Trinidad and Tobago: Macroeconomic Performance in a Regional Context 1/

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Source: Fund staff projections.1/ The comparison includes Trinidad and Tobago (TTO) and the following regions or groups of countries: the Caribbean (CAR; including Antigua and Barbuda, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines), oil-producing countries in Latin America (OIL; including Colombia, Ecuador, Mexico, and Venezuela), and other Latin American economies (LA; including Argentina, Brazil, Chile, Costa Rica, Peru, and Uruguay).
Figure 2.
Figure 2.

Trinidad and Tobago: Performance In the Context of Energy Producing Economies

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: British Petroleum; IMF Staff Reports; IMF/WEO; and Fund staff estimates.

2. Economic activity remains robust, supported by the strength of the energy sector, with signs that the economy is operating at full capacity (Figures 3–4). In 2006, real GDP grew 12 percent, led by a double-digit expansion of the energy sector. Despite a temporary reduction in energy output early this year, the economy is expected to grow by some 6 percent in 2007. The nonenergy sector is projected to grow at about 7½ percent on the continued strength of construction and manufacturing, and supported by government spending and the expansion of credit to the private sector. Emerging capacity constraints and labor shortages represent a downside risk.

Figure 3.
Figure 3.

Trinidad and Tobago: Real Sector Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: Central Bank of Trinidad and Tobago; Central Statistical Office; and Fund staff estimates.
Figure 4.
Figure 4.

Trinidad and Tobago: Energy Sector Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: Trinidad and Tobago authorities; British Petroleum; WITS; and Fund staff estimates.

3. The external accounts are solid and net foreign assets continue to accumulate at a rapid pace (Figure 5). In 2006, the current account posted another strong surplus—26 percent of GDP—and FDI flows remained healthy, while portfolio outflows accelerated. International reserves, including deposits in the Heritage and Stabilization Fund (HSF), continued to accumulate rapidly, reaching US$6.5 billion. In 2007, the current account surplus will narrow reflecting higher imports of capital goods related to large scale projects financed with FDI. Net foreign assets are projected to turn positive.

Figure 5.
Figure 5.

Trinidad and Tobago: External Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: Trinidad and Tobago authorities; Milessi-Ferretti and Lane (2006); World Integrated Trade Solution; and Fund staff projections.

4. The government’s balance sheet continues to strengthen but the underlying fiscal position is unsustainable (Figure 6). In FY 2005/06, the central government’s budget surplus increased to 7 percent of GDP, its gross debt fell to 18 percent, and deposits in the HSF reached 8 percent. The rapid increase in public spending widened the nonenergy deficit to 15 percent of GDP—exceeding the medium-term sustainable level (Box 1). In FY 2006/07 the budget surplus is projected to decline to 4 percent of GDP, and the nonenergy deficit to further increase to 16 percent, owing to higher public investment. Capital spending by public enterprises has increased rapidly in recent years owing to investments in infrastructure for the gas processing industry. Looking forward such spending is projected to remain high as Petrotrin’s refinery needs to be upgraded to remain competitive. The government has continued to work on a fiscal reform agenda to improve the quality of fiscal policy (Text Table). Since the last consultation, the main development in this area was the approval of the HSF Act (Box 2 in IMF Country Report No. 07/10).

Figure 6.
Figure 6.

Trinidad and Tobago: Fiscal Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: Trinidad and Tobago authorities; and Fund staff estimates.

Text Table: Status of Structural Fiscal Initiatives

article image

5. Demand pressures continue despite efforts to tighten liquidity conditions. Strengthened monetary management and improved policy coordination with the treasury allowed the central bank (CBTT) to regain control over liquidity (Figure 7). The CBTT raised the policy rate to 8 percent in October (for a cumulative 300 bp increase since early 2005). Open market operations intensified, the ceiling on CBTT sales of treasury bills increased, and the treasury bill rate was allowed to rise. Foreign exchange sales were stepped up reaching US$1.5 billion in 2006 and the unsatisfied demands for foreign exchange that emerged in early 2006 disappeared. Liquidity management was also assisted by the placement of TT$2.4 billion in long-term treasury bonds in the domestic market. Nevertheless, bank credit to the private sector continued to grow rapidly (19 percent), albeit at a more moderate pace than in 2005. The banking system remains well capitalized and profitable (Figure 8).

Figure 7.
Figure 7.

Trinidad and Tobago: Monetary Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: Trinidad and Tobago authorities; and Fund staff estimates.1/ Defined as the overall balance plus net debt placements minus net foreign currency inflows.2/ The central bank reduced the rate on special deposits to 0 percent in December 2005. As a result commercial banks leave any excess liquidity in their reserve requirement balances.
Figure 8.
Figure 8.

Trinidad and Tobago: Financial Sector Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: WDI/World Bank; CBTT; Caribbean Money Market Brokers; T&T Security Exchange Commission; and Fund staff estimates.

6. Inflation has eased considerably in recent months (Figure 9). Since October, headline inflation fell from a peak of 10 percent to 7.3 percent in June, and core inflation has stabilized at about 4½ percent. These favorable developments reflect the tightening of liquidity as well as measures to increase competition in food distribution, including removing the common tariff on a range of basic food items. There have been calls for price controls to address rising food prices, rents, construction costs, and real estate prices. Inflation expectations are not well anchored and wage settlements are starting to carry a cost of living adjustment (COLA) clause.

Figure 9.
Figure 9.

Trinidad and Tobago: Inflation Developments

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Sources: Trinidad and Tobago authorities; and Fund staff estimates.

7. The real exchange rate misalignment has narrowed but remains significant. The TT dollar appreciated 4½ percent in real effective terms in 2006 as domestic inflation exceeded that of trading partners. However, improved terms of trade, increased NFA, and rapidly growing public spending raised somewhat the equilibrium real exchange rate (Box 2). Staff estimates indicate that the real exchange rate misalignment narrowed to 10–15 percent from 15–20 percent a year ago. These estimates are subject to larger than usual uncertainties given that Trinidad and Tobago is a large exporter of nonrenwable resources. For instance, the fact that wage pressures in the nonenergy sector have been moderate suggests that the undervaluation of the TT dollar may not be that large.

II. Report on the Discussions and Medium-Term Outlook

8. The discussions focused on the need to pursue macroeconomic and structural policies designed to use the energy buoyancy to promote long-term growth while strengthening macroeconomic stability. Special attention was given to the macroeconomic implications of the authorities’ diversification strategy, and the need to develop a medium-term fiscal framework.

9. Fiscal issues. The mission stressed the need for a tightening of fiscal policy to avoid overheating the economy, and for medium-term fiscal sustainability considerations. It recommended that the nonenergy deficit be brought down gradually from 16 percent of GDP projected for FY 2006/07 to 10 percent of current GDP in FY 2009/10, a level compatible with medium-term sustainability.1 It suggested to start this process by targeting a 2–3 percentage points of GDP reduction in FY 2007/08. To this end, the mission encouraged the authorities to phase out fuel and utility subsidies while strengthening the social safety net to protect the poor. The authorities’ indicated that medium term sustainability projections may be too conservative as more gas reserves are expected to be discovered. Nevertheless, the authorities agreed on the need to contain public spending growth from a demand management perspective. They intend to save revenues above the level projected in the budget supplementary bill and plan to keep public expenditure constant in real terms in FY 2007/08. This would reduce the nonenergy deficit by 1¼ percent of GDP. The authorities noted that fuel and utility subsidies could be reviewed next year.

10. Public finance management issues. The mission recommended adopting a medium term framework (MTF) to link the annual budget with medium-term sustainability objectives and long-term development plans. The authorities expressed interest and are considering to adopt such a framework with the FY 2008/09 budget. The mission welcomed the approval of the HSF bill and recommended to follow successful international experiences in the development of the HSF investment guidelines. The authorities intend to invest all HSF resources in foreign assets despite the provision in this regard having been dropped from the HSF Act. Regarding liability management, the mission endorsed the plan to strengthen the debt management unit at the Ministry of Finance and the CBTT’s initiatives’ to promote the development of local financial markets, including creating the conditions for the development of a secondary market for government securities.2 The CBTT is studying the possibility of diversifying the investment of the portion of its international reserves that are in excess of optimal prudential levels.

11. Monetary and financial issues. The mission commended the improved monetary policy management, but noted that the risk of excess liquidity will remain a concern for as long as the nonenergy deficit remains large. The authorities concurred and reassured the mission that they are following developments closely. The mission recommended to resist calls to introduce price controls and to discourage the incipient practice of introducing COLA clauses in wage settlements. The authorities indicated that they do not intend to introduce price controls, but that a plan to support the agricultural sector will be announced soon. The mission noted that the banking sector health indicators remain strong but urged the authorities to closely monitor developments in the nonbank financial sector, in particular the rapidly growing mutual funds industry. Legislation to update the financial system’s regulatory and supervisory framework will be submitted to parliament by year-end, incorporating a number of recommendations in the 2005 FSAP (Appendix I). Draft legislation to address the challenges identified in the evaluation by the FATF-style organization of the Caribbean (CFATF) has been prepared. While it waits for approval, compliance with the CBTT guidelines in this area is regularly assessed.

12. Exchange rate issues. The mission noted that even after acting on fundamentals through the fiscal adjustment described above, further real exchange rate adjustment might be inevitable. Thus, the mission recommended allowing a nominal appreciation of the TT dollar, as a means to accelerate convergence to the equilibrium real exchange rate and facilitate achieving the CBTT’s inflation objective. The authorities concurred that a correction of the real exchange rate will continue to take place. However, they noted that supply side constraints are one of the underlying causes of inflation. They stressed, therefore, that for a nominal appreciation to be effectively translated into lower domestic prices while preserving the competitiveness of the nonenergy sectors, it would need to be supported by the removal of infrastructure bottlenecks, particularly in transportation. The mission noted that in recent years the real exchange rate measured by unit labor costs has depreciated substantially, and therefore the industrial sector should be in a condition to absorb a more appreciated currency, provided that wage increases maintain competitiveness. The authorities questioned the usefulness of real exchange rate misalignment measures for commodity exporters, especially for exporters of exhaustible resources.

13. Economic diversification. The government has been very active in promoting economic diversification to reduce dependency on energy resources. The mission recommended to focus efforts on creating the conditions for the development of sectors that are viable over the medium term without permanent government subsidies. The authorities agreed in principle, but indicated that industrial policies are needed to promote diversification. There was general agreement on the need to focus the government’s effort on implementing structural reforms, addressing infrastructure bottlenecks, improving the business environment, increasing regional integration, and developing human capital.

14. The medium term outlook remains favorable and vulnerability to external shocks seems limited under current policies (Table 7-Baseline Scenario). Under the current outlook for energy prices, output growth would converge to 4 percent over the medium term, but a key challenge would be to lower inflation. The current account surplus would narrow but remain sizable, as the narrowing trade balance owing to higher imports is offset by rising factor services income. The net foreign assets position will continue to increase to about 60 percent of GDP by 2011. A large and persistent decline in energy prices is the main risk but the high level of reserves and low external debt provide a comfortable cushion to weather such shock well in the short- and medium-term.

15. Stronger long-term growth with less vulnerabilities could be achieved by tightening fiscal policy consistent with long-term considerations (Table 7-Policy Scenario). Although current macroeconomic policies are financially sustainable over the next decade, it would be important that fiscal policy be guided by intergenerational wealth distribution considerations associated with the exploitation of nonrenewable natural resources, which in the case of Trinidad and Tobago are expected to last for about 20 years. The inflation outlook could be improved by facilitating a correction of the real exchange rate through a nominal appreciation of the TT dollar. Under this scenario, a major fiscal adjustment would be avoided at the time when energy resources are exhausted as the public sector would accumulate sizable net assets; potential output growth would be boosted as more space is created for private investment and the private sector access cheaper imports of capital goods; inflation pressures would ease and bringing inflation back to international levels in the short-term would be feasible; and the current account surpluses would narrow faster but remain sizable, portfolio outflows would decline, and the rapid accumulation of international reserves would continue.

III. Staff Appraisal

16. Trinidad and Tobago is rightly aiming at using energy resources to reach ambitious development goals before energy reserves are exhausted. Key to this goal is the transformation of the energy wealth into a balanced combination of external financial assets, and physical and human capital. The challenge is to implement a prudent mix of macroeconomic and structural policies, as this is essential to support an orderly and efficient absorption of the increased energy earnings over time.

17. Long-term fiscal sustainability analysis and signs that the economy is operating at capacity indicate that the policy mix needs to be adjusted by tightening fiscal policy. For the short-term, staff recommends saving any revenue overperformance to help contain demand pressures. For the medium to long-term, a nonenergy deficit of 10 percent of current GDP is needed to prevent large policy reversals when energy income declines. A gradual tightening is recommended to avoid disruptions in the economy. Staff recommends to target a 2–3 percentage points of GDP reduction in the nonenergy deficit in the FY 2007/08 budget and to bring it down to the level just mentioned by FY 2009/10. The recommended tightening would ideally be implemented in the context of phasing out the current fuel and utility subsidies while strengthening the social safety net to protect the poor.

18. Adopting an MTF would facilitate this process and allow a more efficient management of public resources. An MTF would assist in linking the annual budget with medium-term sustainability objectives and long-term development plans. Staff welcomes the authorities’ intention to request technical assistance from the Fund in this area, and encourages them to start adopting an MTF in the context of the FY 2008/09 budget.

19. Staff welcomes the approval of the HSF Act as a means to facilitate an efficient transformation of energy wealth into financial wealth. The authorities are encouraged to examine successful international experiences as they develop the HSF investment guidelines. Staff supports the plan to strengthen the debt management unit at the Ministry of Finance, and the CBTT’s initiatives to promote development of the local capital markets.

20. Significant improvements in monetary policy management helped curb inflation. The authorities will need to follow developments closely because, for as long as the nonenergy deficit continues to be large, there would be a need to mop up excess liquidity to contain inflation. Foreign exchange sales and open market operations would continue to be the first line of defense, while continued policy coordination with the Ministry of Finance is crucial to keep liquidity under control. Staff supports efforts to improve supply conditions in food markets and encourages the authorities to resist pressures to introduce price controls, as such controls are distortionary and usually ineffective. The incipient practice of establishing COLA clauses (indexation) in wage settlements needs to be discouraged, as they entrench inflation.

21. The buoyancy of the energy sector inevitably puts upward pressure on the equilibrium real exchange rate. A tighter fiscal policy stance and further opening the economy within the constraints of CARICOM would limit the real appreciation of the TT dollar. Monetary and exchange rate policies can affect whether the adjustment in the real exchange rate occurs through nominal appreciation, or through higher inflation than in trading partners. Staff recommends allowing for a more appreciated TT dollar as a means to accelerate convergence to the equilibrium real exchange rate and to facilitate achieving the CBTT’s inflation objectives. Efforts to remove infrastructure bottlenecks are important to support this policy. The depreciation of the real exchange rate measured by unit labor costs in recent years suggest that the industrial sector should be in a condition to absorb a more appreciated currency, provided that wage increases are in line with productivity gains.

22. There are no indications of external instability and the balance of payments position is unlikely to give rise to disruptive exchange rate movements. Except for the estimated exchange rate misalignment, other indicators of external instability listed in the 2007 Surveillance Decision do not suggest the potential for such instability. The sizable current account surplus is consistent with the need to accumulate foreign assets to smooth consumption once energy resources are exhausted.

23. Success of the government’s economic diversification efforts hinges on adequately preparing the economy for the eventual exhaustion of energy resources. Continued efforts are needed to create the conditions for the development of industries that are viable over the medium term without permanent government subsidies. Staff recommends focusing on addressing infrastructure bottlenecks, improving the business environment, increasing regional integration, and developing human capital. Staff urges the authorities to attach priority to submitting to Parliament draft legislation to strengthen the financial sector regulatory and supervisory frameworks. This legislation is essential to ensure a healthy expansion of this key sector, and achieve the objective of becoming an international financial center.

24. The staff recommends that the next Article IV consultation be held on the standard 12-month cycle.

Fiscal Sustainability1/

Medium-term fiscal projections indicate that the sustainable nonenergy deficit is no greater than 10 percent of current GDP. Such deficit would allow the government to build enough assets, before energy resources are exhausted, to finance indefinitely a nonenergy deficit constant in real terms. The corresponding sustainable primary expenditure is 38 percent of nonenergy GDP, substantially lower than the 51½ percent envisaged in the FY 2006/07 budget.

This result is based on the following assumptions:

  • energy prices as in the May 2007 WEO baseline until 2012, then they converge towards a long-term value of US$45/bbl in real terms (in line with the oil price used in the budget in recent years);

  • proven, probable and possible reserves are assumed to have extraction probabilities of 100 percent, 75 percent, and 50 percent;

  • the real rate of return on the government’s financial assets is 4 percent;

  • energy revenue in the long run is 27 percent of natural gas and oil production value;

  • nonenergy revenue over the long term equals to 21 percent of nonenergy GDP.

The result is robust. The sustainable nonenergy deficit would be:

  • 11 percent if long-term energy prices were 10 percent higher than in the baseline;

  • 7 percent if only proven reserves were to materialize;

  • 12 percent if probable and possible reserves were fully extracted;

  • 8 percent if the real return on the government’s financial assets were 3 percent.

Maintaining the nonenergy deficit at current levels would involve a drastic fiscal adjustment of about 25 percent of nonenergy GDP in the five year period after 2020. Given that the tax burden on the nonenergy sector is in line with similar countries the brunt of the adjustment would need to fall on primary spending.

uA01fig01

Net assets

(in percent of nonenergy GDP)

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

uA01fig02

Primary expenditure

(in percent of non-energy GDP)

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

1/

For a description of the medium-term fiscal sustainability framework and a discussion on alternative criteria, see the Selected Issues Paper prepared for the 2006 Article IV consultation (IMF Country Report No. 07/8).

Real Exchange Rate Developments

The TT dollar has continued to appreciate. Although the CPI-based real effective exchange rate (REER) has presented low volatility since the devaluation of 1993, the steady appreciation that started in the late 1990s has accelerated in recent years (11 percent since the beginning of 2004), and the REER is almost back to the pre-devaluation level.

The increase in energy earnings is the main cause leading the appreciation. The energy sector accounts for 45 percent of Trinidad and Tobago’s GDP and 91 percent of exports. Consequently, the energy sector buoyancy of recent years led to a sharp increase in net wealth, thereby moving upward the equilibrium real exchange rate. Given the de facto fixed exchange rate vis-à-vis the U.S. dollar, the appreciation has occurred through a widening in the inflation differential between Trinidad and Tobago and its trading partners.

At the same time, Trinidad and Tobago’s unit labor costs (ULCs) have declined faster than those of its trading partners, implying a competitiveness gain in the manufacturing sector. This decline has been more pronounced in the nonpetrochemical sectors, allowing them to mitigate the adverse effects related to the REER increase. In contrast with previous oil price booms, Trinidad and Tobago’s ULCs have continued to improve in recent years

Econometric methods to estimate equilibrium real exchange rates based on economic fundamentals suggest that the TT dollar was undervalued by about 10–15 percent in 2006, slightly less than the 15–20 percent undervaluation estimated in the 2005 and 2006 Article IV consultations. The long-run relation is estimated using a cointegrating vector, estimated by the Johansen maximum likelihood method, based on the following fundamentals: NFA as a share of trade, productivity relative to trading partners, terms of trade, government consumption as a share of GDP, and trade restrictions index. The error correction term is also statistically significant, indicating that the short-term deviations from the equilibrium tend to revert. Although the TT dollar has appreciated recently, the sustained improvement in the terms of trade, in NFA position and in productivity have led to a further increase in the equilibrium real exchange rate.

uA01fig03

Trinidad and Tobago: CPI Based REER

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

uA01fig04

Trinidad and Tobago: ULC Based REER

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

uA01fig05

Trinidad and Tobago: Equilibrium REER

Citation: IMF Staff Country Reports 2008, 036; 10.5089/9781451837704.002.A001

Table 1.

Trinidad and Tobago: Selected Economic and Financial Indicators

article image
Sources: Trinidad and Tobago authorities; and Fund staff estimates and projections.

The data refers to fiscal years 2001/2002–2007/08.

Defined as expenditure minus nonenergy revenue of the central government.

Refers to gross debt. The baseline projections assume a significant increase in government deposits at the CBTT, in the context of the Interim Revenue Stabilization Fund/Heritage and Stabilization Fund, and accordingly lower net debt.

World Economic Outlook.

Table 2.

Trinidad and Tobago: Summary Balance of Payments

article image
Sources: Central Bank of Trinidad and Tobago, Central Statistical Office; and Fund staff estimates and projections.

Includes net errors and omissions.

FDI inflows projections include 5 percent of the proposed projects in 2007 and 10 percent of the proposed projects for the rest of the projection period.

Table 3.

Trinidad and Tobago: Summary of Central Government Operations 1/

article image
Sources: Data provided by the Trinidad and Tobago authorities; and Fund staff estimates and projections.

Fiscal year from October to September.

Based on FY 06/07 mid year budget review and Fund staff estimates.

Refers to gross debt. The baseline projections assume a significant increase in government deposits at the CBTT, in the context of the Heritage and Stabilization Fund, and accordingly lower net debt.

World Economic Outlook; fiscal year basis.

Table 4.

Trinidad and Tobago: Consolidated Nonfinancial Public Sector

(In percent of GDP)

article image
Sources: Trinidad and Tobago authorities; and Fund staff estimates and projections.

Refers to gross debt. The baseline projections assume a significant increase in government deposits at the CBTT, in the context of the Interim Revenue Stabilization Fund, and accordingly lower net debt.

Includes BOLT and leases.

Includes Public Transport Company, Electricity Company, Water Authority, Airport Authority and Port Authority.

Refers to gross debt, and it includes government guaranteed debt and letters of comfort.

Includes CARONI, MTS, NFM, NFM, NHSL, NPMC, NQCL, NGC, PETROTRIN, PLIPDECO, SWMCOL, TIDCO, TANTEAK, TRINGEN, TTST, and UDECOTT. Data for National Housing Authority was not available.

Table 5.

Trinidad and Tobago: Monetary Survey

article image
Source: Central Bank of Trinidad and Tobago.

Includes investment note certificates, secured commercial paper, and other asset-backed instruments.

Table 6.

Trinidad and Tobago: Summary Accounts of the Monetary Authority

article image
Sources: Central Bank of Trinidad and Tobago; and Fund staff estimates.

Proceeds of treasury bills and treasury notes used for open market operations.

Table 7.

Trinidad and Tobago: Illustrative Medium-Term Scenarios

article image
Sources: Trinidad and Tobago authorities; and Fund staff estimates and projections.

Fiscal data refers to fiscal years ending September 30.

Refers to non financial public sector gross debt. The baseline projections assume a significant increase in government deposits at the CBTT, in the context of the Interim Revenue Stabilization Fund, and accordingly lower net debt.

Table 8.

Trinidad and Tobago: Indicators of External and Financial Vulnerability

(In percent of GDP, unless otherwise indicated)

article image
Sources: Central Bank of Trinidad and Tobago, Standard and Poor’s, Trinidad and Tobago Stock Exchange; and Fund staff estimates and projections.

As of end-August 2007.

Includes commercial banks only.

As of end-August.

Weighted average discount rate.

Adjusted for inflation.