Front page news over the last two weeks have been dom­i­nat­ed by the on­go­ing con­tro­ver­sy in the jus­tice sys­tem be­tween the Chief Jus­tice, the Di­rec­tor of Pub­lic Pros­e­cu­tions and the At­tor­ney Gen­er­al, the crime sit­u­a­tion, the Wa­ter and Sewage Au­thor­i­ty and more re­cent­ly, the in­au­gu­ra­tion of a new pres­i­dent.

No­tably ab­sent from the com­men­tary on the jus­tice sit­u­a­tion or WASA was an ac­cep­tance of re­spon­si­bil­i­ty or ac­count­abil­i­ty by the key play­ers. Giv­en the “noise,” the con­clud­ing state­ment of the In­ter­na­tion­al Mon­e­tary Fund’s Ar­ti­cle IV con­sul­ta­tion with Trinidad and To­ba­go is­sued on March 16 went al­most un­no­ticed but for a front-page re­port on the need to re­move for­eign ex­change re­stric­tions.

Ar­ti­cle IV of the IMF mem­ber­ship agree­ment re­quires every mem­ber to hold dis­cus­sions with IMF tech­ni­cal staff on a reg­u­lar ba­sis, usu­al­ly once a year. The pur­pose of the con­sul­ta­tion is to as­sess the mem­ber coun­try’s eco­nom­ic sit­u­a­tion. This is achieved by IMF staff col­lect­ing eco­nom­ic and fi­nan­cial in­for­ma­tion and eye­balling of­fi­cials on the key poli­cies and de­vel­op­ment projects. Much has changed since the 2018 con­sul­ta­tion, in­clud­ing the ram­i­fi­ca­tions of the pan­dem­ic.

The state­ment con­firmed the im­proved eco­nom­ic out­turn re­port­ed by the fi­nance min­is­ter in the 2023 bud­get speech. It not­ed the econ­o­my’s re­cov­ery in 2022 grow­ing by an es­ti­mat­ed 2.5 per cent and that growth will con­tin­ue in 2023 at around 3.2 per cent. The cur­rent ac­count sur­plus re­bound­ed, and for­eign re­serves cov­er­age re­mained ad­e­quate at 7.6 months of prospec­tive to­tal im­ports.

It not­ed that the change had come from high­er en­er­gy prices and com­ple­ment­ed the gov­ern­ment on its ef­forts to con­sol­i­date the debt po­si­tion which re­sult­ed in a pos­i­tive fis­cal po­si­tion and a de­cline in debt to GDP ra­tio.

It not­ed that the 2022 fis­cal sur­plus re­flect­ed a com­bi­na­tion of high­er than an­tic­i­pat­ed en­er­gy rev­enues, some spend­ing cuts rel­a­tive to the bud­get, and the re­duc­tion of the fu­el sub­si­dies. It ac­knowl­edged that the rate of in­fla­tion had in­creased, reach­ing 8.7 per cent by end-2022, dri­ven by im­port­ed en­er­gy and food prices, as well as the de­cline in agri­cul­tur­al out­put due to flood­ing in 2022. It con­grat­u­lat­ed gov­ern­ment on its stat­ed in­tent to bal­ance the bud­get in the medi­um term and to ra­tio­nalise spend­ing in­di­cat­ing that gov­ern­ment’s fis­cal stance was pru­dent.

In a nod to the on­go­ing is­sues in the US bank­ing sys­tem, it not­ed the bank­ing sec­tor was prof­itable, well cap­i­talised and liq­uid.

How­ev­er, the re­port in­di­cat­ed that the eco­nom­ic risks were “bal­anced to the down­side,” mean­ing more could go wrong than right. The state­ment not­ed that low­er en­er­gy rev­enues due to de­clin­ing prices, falling do­mes­tic en­er­gy pro­duc­tion, in­creased cap­i­tal spend­ing as well as pub­lic sec­tor wage ne­go­ti­a­tions will lead to a deficit of 2.8 per cent in 2023 and in the medi­um term. It al­so not­ed that it was im­por­tant to pro­vide tem­po­rary and tar­get­ed re­lief to al­le­vi­ate the ris­ing liv­ing costs for the most vul­ner­a­ble.

The re­port was couched in diplo­mat­ic lan­guage with a hard edge. It re­ferred to “wind­fall” rev­enues in­di­cat­ing that the re­cov­ery in en­er­gy rev­enues is dri­ven by tem­po­rary, for­tu­itous in­ter­na­tion­al de­vel­op­ments. It em­pha­sised the need to pri­ori­tise ex­pen­di­ture giv­en the ex­pect­ed re­turn to deficit spend­ing in 2023 con­tin­u­ing in­to the medi­um term. It stat­ed that the Na­tion­al in­sur­ance sys­tem would be “de­plet­ed” by the mid 2030’s if re­forms are not un­der­tak­en.

De­spite its diplo­mat­ic lan­guage the IMF’s con­clud­ing state­ment con­tained many cau­tion­ary notes that need to be ac­tioned.