Trinidad and Tobago: Staff Report for the 2018 Article IV Consultation—Informational Annex

2018 Article IV Consultation-Press Release and Staff Report


2018 Article IV Consultation-Press Release and Staff Report

Fund Relations

(As of June 30, 2018)

Membership Status: Joined: September 16, 1963; Article VIII

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Outstanding Purchases and Loans: None

Latest Financial Arrangements:

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Projected Payments to Fund:1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

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1/ When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative

Not applicable

Implementation of Multilateral Debt Relief Initiative

Not applicable

Implementation of Catastrophe Containment and Relief (CCR)

Not applicable

Exchange Arrangements

Trinidad and Tobago has accepted the obligations of Article VIII, Sections 2, 3, and 4. Its exchange system, a de jure float, is classified as a stabilized arrangement under the Fund’s revised methodology.

Trinidad and Tobago maintains an exchange restriction and two multiple currency practices subject to the Fund’s approval under Article VIII, Section 2(a) and Section 3. The exchange restriction arises from the authorities’ restriction of the exchange rate (i.e., by restricting the maximum market buy and sell rates, and prohibiting foreign exchange (FX) transactions beyond the maximum rates), while not providing enough FX (i.e., through the CBTT’s FX interventions) to meet all demand for current transactions at that rate. The CBTT also limits sales of its FX intervention funds to meeting only “trade-related” demand, which do not include non-trade transactions that are, however, current international transactions as defined under Article XXX(d) of the IMF’s Articles of Agreement, and encourages authorized dealers to similarly prioritize sales of FX obtained from other sources. Further, the authorities prioritize provision of FX to certain manufacturers through a special FX facility using the EximBank. These actions result in undue delays in access to FX to make payments or transfers for current international transactions and external payment arrears.

The two multiple currency practices arise from the absence of a mechanism to prevent the potential deviation of more than two percent at any given time among several effective exchange rates regulated by the authorities, for spot exchange transactions; namely:

  • The potential two percent deviation between: (i) on the one hand, the CBTT’s intervention rate and the authorized dealers’ sell rates (the maximum of which is anchored on the intervention rate plus fixed margins), and (ii) on the other hand, the authorized dealers’ buy rates (the maximum of which is limited at the previous day’s mid-rate).

  • The potential two percent deviation between: (i) on the one hand, the buy and sell rates for FX transactions between the CBTT and the government, and (ii) on the other hand, the authorized dealers’ sell rates.

Last Article IV Consultation

The 2017 Article IV mission was concluded on Aug 2, 2017. Trinidad and Tobago is on the 12-month consultation cycle.

Technical Assistance

Trinidad & Tobago has received a significant volume of technical assistance across the various CARTAC fiscal, financial, and statistical areas. On fiscal issues, CARTAC has supported the authorities in developing a medium-term fiscal framework (MTFF) and strengthening oversight of public bodies. FAD conducted a tax administration diagnostic assessment and a fiscal transparency evaluation.

On financial issues, CARTAC continues to assist the authorities with review of the Central Bank Act, consolidated supervision, the mutual fund industry, and regulatory and supervisory frameworks for credit unions. Statistical reform priorities have advanced with CARTAC helping to improve the quality of the retail, producer and trade price indices; advising on the household budget survey and rebasing of the Retail Price Index; and improving and rebasing the GDP estimates. CARTAC has also assisted the Central Bank of Trinidad and Tobago in finalizing the external sector statistics for dissemination in the framework of the IMF’s Balance of Payments and International Investment Position Manual, sixth edition (BPM6) and reinstitute timely reporting to the IMF’s Statistics Department.

Despite the many improvements, the errors and omissions item in the balance of payments is still very large for some years, indicating that further work to improve survey coverage, especially in the energy sector, may be needed. Additional TA missions are scheduled for early 2019. Beyond the provision of direct in-country TA, officials from Trinidadian institutions participated in training events and regional workshops across all areas of CARTAC expertise, including most recently on digital currencies.

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Statistical Issues

(As of July 2018)

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Table of Common Indicators Required for Surveillance

(As of July 22, 2018)

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic banks, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Central Bank data estimates pending finalization of conciliation of trade data with CSO.

Includes external gross financial asset and liability positions vis-à-vis nonresidents. Only from 2011 onwards.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA)