T&T’s Reported Budget Deficit a Headwind to Policy Agenda & Political Stability

  • Newly elected Prime Minister Kamla Persad-Bissessar entered office on May 1, 2025, with a strong electoral mandate, a large parliamentary majority, and a potentially amenable opposition leader, supporting Trinidad and Tobago’s (T&T’s) policymaking environment and political stability outlook. However, T&T’s precarious fiscal position may hinder the incoming government’s ability to follow through on campaign promises, including significant increases in public sector wages and proposed tax cuts.
  • Immediately following her swearing-in as Prime Minister, Persad-Bissessar announced several top policy priorities, including her intent to abolish the Trinidad & Tobago Revenue Authority (TTRA), an opposition-led initiative to improve tax collection efficiency and collect taxes in arrears, estimated at 7.0% of GDP in Q1 2018. Instead, PM Persad-Bissessar announced her intention to strengthen the Board of Inland Revenue (BIR) by hiring additional commissioners.
  • With the IMF emphasising the importance of strengthening T&T’s tax collection and compliance capacity, the ability of the BIR to close the tax gap and identify new revenue streams will be crucial for fiscal stability, especially given the reported budgetary shortfalls.
  • However, budget constraints and a deteriorating fiscal position present a downside risk to both Trinidad and Tobago’s fiscal outlook and public support for the government.
  • On May 8, 2025, PM Persad-Bissessar reported that Trinidad and Tobago was in a significant budgetary hole, with a deficit of TTD 4.42Bn for May, and a projected deficit of TT$11Bn, an estimated 6.7% of GDP for the 2024/2025 fiscal year.
  • Additionally, the PM announced significant shifts in energy policy, indicating that the government would no longer pursue the Dragon gas project. Instead, T&T would look to import natural gas from other sources, including Guyana and Grenada. 
  • Finally, parliament will convene in May with proposed ‘stand-your-ground’ laws taking priority. As part of their anti-crime measures, the United National Congress (UNC) has pledged to expand access to firearms for law-abiding citizens, among other reforms. However, the effectiveness of these policies in reducing violence will remain to be seen, with previous efforts to crack down on crime yielding minimal results. 

(Source: Fitch Connect)