GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­lessar@guardian.co.tt

Econ­o­mist Mar­la Dukha­ran has is­sued a warn­ing re­gard­ing T&T’s fis­cal tra­jec­to­ry, cau­tion­ing that the na­tion is rapid­ly gain­ing mo­men­tum on the road to­wards an even­tu­al sov­er­eign debt de­fault or re­struc­tur­ing.

Speak­ing fol­low­ing the Mid-Year Bud­get Re­view de­liv­ered by Fi­nance Min­is­ter Dav­en­dranath Tan­coo yes­ter­day, Dukha­ran ref­er­enced the June 2026 edi­tion of her Month­ly Caribbean Eco­nom­ic Re­port, in which she re­vealed that Cen­tral Gov­ern­ment’s debt out­stand­ing surged by 2.5 per cent year-over-year in the first quar­ter of 2026.

Strik­ing­ly, ex­ter­nal debt drove much of this in­crease, spik­ing by 5.3 per cent.

This bor­row­ing push has dri­ven the coun­try’s debt-to-GDP ra­tio up by 2.1 per­cent­age points to 84.9 per cent.

“This be­ing the high­est debt lev­el ever tells us that we are in a pre­car­i­ous po­si­tion,” Dukha­ran stat­ed, sig­nalling that there were plans to in­crease spend­ing and bor­row­ing in yes­ter­day’s bud­get re­view, which would on­ly ac­cel­er­ate the im­pend­ing cri­sis.

She ar­gued that the coun­try’s for­eign ex­change buffers of­fer less com­fort than head­line fig­ures sug­gest.

Ac­cord­ing to Dukha­ran, T&T’s re­serves are now “more than 100 per cent bor­rowed and have to be re­paid with in­ter­est,” adding, “so they are not re­al­ly re­serves—they are 100 per cent debt.”

That dy­nam­ic, she warned, sig­nif­i­cant­ly height­ens the coun­try’s vul­ner­a­bil­i­ty, par­tic­u­lar­ly giv­en its de­pen­dence on US dol­lar in­flows from the en­er­gy sec­tor.

“We are bor­row­ing way too much, and bor­row­ing in for­eign cur­ren­cy, which is even more risky as you can’t print US dol­lars—you have to earn or bor­row it,” she said.

Dukha­ran al­so high­light­ed mount­ing ex­change rate pres­sures. While the of­fi­cial ex­change rate re­mains around TT$7 to US$1, she point­ed to an im­bal­ance in cur­ren­cy con­di­tions, not­ing that the ef­fec­tive ra­tio of TT dol­lars to US dol­lars in the sys­tem is clos­er to 19 to 1.

“This demon­strates how much pres­sure there is on the ex­change rate,” she said, adding that “none of this is pos­i­tive or should give any com­fort.”

Com­pound­ing these con­cerns is the Gov­ern­ment’s fis­cal po­si­tion. Dukha­ran un­der­scored that T&T is cur­rent­ly run­ning a pri­ma­ry fis­cal deficit, mean­ing it must bor­row not on­ly to fund spend­ing but al­so to ser­vice ex­ist­ing debt.

“Be­fore it pays its in­ter­est, the Gov­ern­ment is al­ready in the red,” she ex­plained. “It must bor­row to pay the in­ter­est on its ex­ist­ing debt.”

She cau­tioned that this com­bi­na­tion of record-high debt, bor­rowed re­serves, per­sis­tent deficits and in­creased ex­pen­di­ture—in­clud­ing mea­sures out­lined in the bud­get re­view—is set­ting the coun­try on a risky tra­jec­to­ry.

“More spend­ing and more bor­row­ing will on­ly see us ac­cel­er­ate to­wards even­tu­al sov­er­eign debt de­fault or re­struc­tur­ing,” Dukha­ran warned, adding that cur­rent trends sug­gest the coun­try is “gain­ing mo­men­tum” in that di­rec­tion.