Senior Reporter
andrea.perez-sobers
@guardian.co.tt
As Finance Minister Davendranath Tancoo prepares to deliver his first national budget tomorrow, all eyes are on how the Government plans to balance the books amid rising expenditure and a widening fiscal deficit.
With spending growing faster than income, Bourse, a local investment company, warned that the Government may have to borrow again or restart asset sales to fill the gap.
According to a pre-budget analysis from Bourse, the fiscal deficit for 2025 was projected at $9.7 billion, a sharp 76 per cent increase from the $5.5 billion originally estimated in last year’s budget. This widening gap came despite a modest rise in energy revenues, underscoring the country’s continued fiscal challenges. The 2026 budget will also reflect another deficit.
Energy revenues have given the Government a small but welcome boost this year, jumping nearly 19 per cent to $12.1 billion in the first nine months of fiscal 2024/2025.
The increase came even though production levels have not rebounded. Crude oil output averaged around 52,000 barrels per day, while natural gas production held steady at about 2.56 billion cubic feet per day between October 2024 and April 2025.
Analysts note that despite improved energy revenues, production remains below pre-2023 levels. This leaves Trinidad and Tobago exposed to changes in global oil and gas prices.
The Central Bank’s Energy Commodity Price Index, tracking main energy exports, levelled off at 99.4 points in August 2025. This is a big drop from the 154.8 points recorded at its peak in 2022, showing that energy prices have stabilised but are much lower than before.
Outside of the energy sector, non-energy revenue—mainly taxes and other government income—grew modestly by 3 per cent to $24.4 billion, reflecting slow activity in the wider economy.
The report outlined that government spending continues to outpace revenue growth, putting pressure on the country’s finances.
The report showed that total spending for the first nine months of 2025 reached $41.3 billion, about 5 per cent higher than last year. Most of this went to day-to-day expenses, such as public sector salaries, fuel subsidies, pensions, and social support.
Bourse pointed out that transfers and subsidies, which make up more than half of all government spending, climbed 4.2 per cent to $30.5 billion. Analysts believe this area could be reviewed in the upcoming budget, as the new administration looks for ways to cut costs without upsetting the public.
S&P Global Ratings recently downgraded T&T’s outlook from Stable to Negative, citing persistent deficits and sluggish growth projections. The International Monetary Fund (IMF) expects T&T’s economy to grow slowly over the next two years. They forecast 2.4 per cent growth in 2025 and only 1.1 per cent in 2026.
The slow pace is largely due to lower oil and gas production and the economy’s heavy reliance on energy, with not enough growth in other sectors to balance it out.
While diversification was not highlighted in the report, over the past few months Guardian Media has published stories where economists, tourism, and business stakeholders have been calling for diversification to be actioned, as this country can no longer depend on oil and gas.
OFAC Licence Raises Concerns
Professor Emeritus Patrick Watson is cautioning that the terms surrounding the US Office of Foreign Assets Control (OFAC) licence for the Dragon Gas project leave T&T in a fragile position.
Watson noted that while the Government’s renewed push to develop the Dragon field could bring much-needed economic returns, the short six-month duration of the OFAC licence makes the arrangement highly uncertain. He pointed out that the United States retains the power to revoke the licence at any time, as it did under a previous administration, leaving T&T vulnerable to geopolitical shifts.
The economist stressed that although pursuing the project is the right move, the conditions imposed by the US—particularly that the Maduro government must not benefit—complicate negotiations with Venezuela.
He added that the situation underscores T&T’s dependence on external actors for energy progress and called for diversification to reduce economic risk.
Watson said the Government must approach the deal with caution, rebuild diplomatic ties with Venezuela, and ensure that national energy interests are not compromised by foreign policy pressures.
Giving a different perspective, UWI economist Dr Dave Seerattan believes this country remains in a strong position under the Dragon Gas arrangement, largely due to geography and existing infrastructure.
He explained that the Dragon field’s proximity to T&T’s natural gas network makes it one of the most commercially viable options for production. Unlike other fields that straddle regional borders and are far from established pipelines, Dragon allows gas to be brought to market quickly and at lower cost.
Dr Seerattan noted that the commercial terms between the US, Venezuela, and T&T will likely remain confidential, but emphasized that the country stands to gain a significant advantage from the project.
He added that in energy negotiations, leverage typically determines outcomes, and while multinational firms often hold the upper hand, T&T’s infrastructure gives it meaningful influence.
The economist cautioned that rebuilding diplomatic relations with Venezuela will be critical to ensuring long-term success, as future negotiations could depend on political changes within that country.
Efforts to contact the Minister of Finance on his readiness for tomorrow’s budget were unsuccessful.
