Rebound In Energy Prices, Economy To Boost Revenues, Narrow Trinidadian Fiscal Deficit

• The recovery in global energy prices, paired with a domestic economic rebound, will drive a substantial increase in government revenues in Trinidad and Tobago over the coming quarters, narrowing the budget deficit.
• Moreover, expenditures will continue to decline in the short term as the government reins in pandemic-era stimulus and in the medium term as the ruling People’s National Movement, which will not face an election until 2025, remains committed to fiscal consolidation.
• Fitch has revised its 2021 and 2022 budget deficit forecasts to 4.6% of GDP and 2.1% respectively, from 5.7% and 3.8% previously, as revenues surprised significantly to the upside in H121 due to higher energy prices.
• T&T ran its largest budget deficit on record in 2020 as the collapse in global energy prices undermined government receipts from the country’s energy sector, which historically accounts for 35.0% of total revenue. However, higher energy prices and a domestic economic rebound will drive a 13.0% increase in revenues in 2021.

(Source: Fitch Solutions)