An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

While busi­ness groups and econ­o­mists are en­cour­aged by the In­ter­na­tion­al Mon­e­tary Fund’s (IMF) favourable growth out­look for T&T, they al­so agree with the IMF that the for­eign ex­change short­age must be a top pri­or­i­ty for this coun­try.

The IMF, in its coun­try re­port on Wednes­day, said for the first time in a decade, Trinidad and To­ba­go was ex­pe­ri­enc­ing a grad­ual and sus­tained eco­nom­ic re­cov­ery.

The re­port not­ed that eco­nom­ic growth was ex­pect­ed to gain even more mo­men­tum this year, with re­al GDP ex­pect­ed to ex­pand by 2.4 per cent. In con­trast, in­fla­tion is ex­pect­ed to re­main steady.

How­ev­er, the IMF not­ed that while this coun­try was see­ing growth, it had not re­turned to pre-pan­dem­ic lev­els.

Al­so, the di­rec­tors stressed that ad­dress­ing for­eign ex­change short­ages re­mained a pri­or­i­ty and en­cour­aged adopt­ing a more ef­fi­cient and mar­ket-clear­ing in­fra­struc­ture for al­lo­cat­ing forex. They not­ed that re­mov­ing all re­stric­tions on cur­rent in­ter­na­tion­al trans­ac­tions and greater ex­change rate flex­i­bil­i­ty over the medi­um term would help meet the de­mand for forex.

On the in­fla­tion front, the IMF re­port said it plum­met­ed to 0.3 per cent in Jan­u­ary this year. It said this was main­ly due to de­clin­ing food and im­port­ed goods in­fla­tion.

In a state­ment yes­ter­day, Fi­nance Min­is­ter Colm Im­bert said, “This IMF re­port recog­nis­es that the Gov­ern­ment’s re­form pro­gramme in­tro­duced at the be­gin­ning of its pe­ri­od in of­fice has put the econ­o­my on the right track.”

“I was pleased to see that the IMF agrees with the need to sus­tain struc­tur­al re­form mo­men­tum to sup­port growth be­cause that is ex­act­ly what we are de­liv­er­ing. Dur­ing the 2024 Bud­get, I an­nounced mea­sures that shift­ed spend­ing from mit­i­gat­ing the im­me­di­ate cri­sis of the pan­dem­ic to in­vest­ment for medi­um- and long-term growth,” Im­bert added.

Weigh­ing in on the re­port yes­ter­day, econ­o­mist Dr Ronald Ramkissoon said the IMF did list some pos­i­tives, but it al­so re­it­er­at­ed this coun­try’s re­serves were be­ing de­plet­ed as T&T’s im­ports were ei­ther stay­ing still or in­creas­ing mar­gin­al­ly and there­fore, the Gov­ern­ment need­ed to do some­thing about the rate of de­ple­tion, es­pe­cial­ly the for­eign ex­change re­serves.

“Growth is good but we must un­der­stand that if that growth is not as a re­sult of net for­eign ex­change earn­ings, and that it is large­ly as a re­sult of gov­ern­ment ex­pen­di­ture, that that is not sus­tain­able, as we are see­ing, (that the econ­o­my is an im­port-in­ten­sive econ­o­my. It is said if you spend $1.90, it goes in­to im­port,” Ramkissoon said.

He not­ed that this coun­try need­ed to change course and was hope­ful it could.

“There has to be some recog­ni­tion across the board that we are in a dif­fi­cult place. And we must be pre­pared, es­pe­cial­ly pol­i­cy­mak­ers and lead­ers, to make dif­fi­cult de­ci­sions. We need to make dif­fi­cult de­ci­sions,” he said.

An­oth­er econ­o­mist, Dr In­di­ra Sage­wan, said it was great news that in­fla­tion sharply de­clined and the un­em­ploy­ment rate al­so de­creased.

Sage­wan said the fi­nance min­is­ter de­served his mo­ment of glo­ry, as the econ­o­my ap­peared to be bet­ter than in 2023.

How­ev­er, she in­di­cat­ed that the re­al­i­ty re­mained that in­vest­ment com­ing in­to T&T was at an all-time low.

“We are not see­ing any in­vest­ment that is ex­pand­ing the cap­i­tal in­fra­struc­ture, in such a way to cre­ate sus­tain­able jobs, val­ue-added jobs. Jobs that peo­ple can look for­ward to mov­ing up. The Gov­ern­ment con­tin­ues with its love af­fair with the oil and gas sec­tor, and by all mea­sures, the out­look for that is not look­ing so good,” Sage­wan said.

Forex is­sue must be ad­dressed

Ze­ro­ing in on the for­eign ex­change is­sue, Cou­va/Point Lisas Cham­ber of Com­merce pres­i­dent Mukesh Ram­s­ingh said while this coun­try was en­joy­ing a strong and sta­ble econ­o­my, the forex prob­lem re­mained a very big con­cern.

“We at the cham­ber are al­so hap­py that the Gov­ern­ment did not choose to de­val­ue the dol­lar. While the Min­istry of Trade and In­dus­try is pro­mot­ing the lo­cal ex­port mar­ket, we feel a lot more has to be done to pro­mote more man­u­fac­tur­ing, and al­so as­sist lo­cal man­u­fac­tur­ers to do more ex­port.

“Al­so, if we look are our re­gion­al neigh­bors for ex­am­ple Bar­ba­dos, St Lu­cia, and Ja­maica that does not have a strong man­u­fac­tur­ing sec­tor as Trinidad and To­ba­go, they don’t have any forex is­sues, be­cause they are fo­cused heav­i­ly on their tourism sec­tor that brings in a lot of for­eign ex­change,” Ram­s­ingh ex­plained.

The Ch­agua­nas Cham­ber of Com­merce agreed with the IMF’s sug­ges­tion that the Cen­tral Bank should make for­eign ex­change more ac­ces­si­ble.

The cham­ber said it al­so strong­ly sup­ports any ini­tia­tive aimed at en­sur­ing that Small and Medi­um En­ter­pris­es (SMEs) can ob­tain the nec­es­sary forex to op­er­ate ef­fec­tive­ly as it ham­pers their abil­i­ty to main­tain smooth busi­ness op­er­a­tions.

It not­ed that the lack of of­fi­cial forex chan­nels forces SMEs to re­sort to the black mar­ket, of­ten at in­flat­ed rates, which ad­verse­ly af­fects their prof­itabil­i­ty and caus­es the in­abil­i­ty to pay sup­pli­ers on time, which puts a strain on busi­ness re­la­tion­ships and dis­rupts sup­ply chains.

It not­ed that while the cham­ber ad­vo­cat­ed for in­creased forex avail­abil­i­ty, it was con­cerned that an un­reg­u­lat­ed free flow might lead to cap­i­tal flight.

“This could po­ten­tial­ly de­val­ue our cur­ren­cy, a sce­nario we do not sup­port at this time.”

Fur­ther, the cham­ber said en­sur­ing a bal­anced ap­proach is cru­cial.

“We be­lieve that a well-man­aged forex fa­cil­i­ty for SMEs is es­sen­tial to main­tain eco­nom­ic sta­bil­i­ty and avoid de­val­u­a­tion risks,” it added.