Trinidadian Government Will Face Increasing Pressure To Raise Spending To Combat COVID-19 Outbreak

• It is anticipated that the ruling, centre-left People’s National Movement (PNM) in Trinidad & Tobago (T&T) will continue to cut public expenditures in line with a long-term push towards fiscal consolidation. 
• Due to negative impact of the COVID-19 pandemic on government revenues, T&T’s fiscal deficit ballooned to 11.8% of GDP in 2020, from 3.2% in 2019, while total public debt rose to 68.9% in 2020, from 55.3% in the year prior. 
• In response, the PNM passed a 2021 budget that cut public expenditures, largely through an extension of public sector wage freezes, which should allow expenditure to decline by an estimated 5.7% in 2021. 
• However, the recent surge in COVID-19 cases and subsequent public health restrictions may increase political pressure for government assistance, potentially limiting PNM’s fiscal consolidation drive. 
• Although this risk exists, Fitch Solutions maintains T&T‘s score of 61.5 out of 100 in its Short-Term Political Risk Index (STPRI), due to the country’s below-average scores in the ‘policy-making process’ and ‘social stability’ sub-components of the STPRI.

(Source: Fitch Solutions)