The International Monetary Fund (IMF) says Trinidad and Tobago’s economy is gradually recovering to pre-pandemic levels but faces ongoing challenges, including foreign exchange shortages, rising public debt and subdued short-term growth prospects.

An IMF staff team led by Ana Guscina visited Port of Spain, Trinidad and Scarborough, Tobago from January 27 to February 9, 2026, for discussions with government officials as part of the country’s 2026 Article IV consultation.

In its statement issued at the end of the visit, the IMF said growth in Trinidad and Tobago has been supported mainly by the non-energy sector, particularly manufacturing and services, while stagnant production in the mature energy sector continues to weigh on overall economic activity.

The IMF noted that inflation and unemployment remain low, the banking sector appears sound and private sector credit growth is strong. The current account remains in surplus, although the country’s external position has weakened and foreign exchange shortages persist.

Foreign reserves were described as adequate, covering 6.4 months of prospective imports, while the Heritage and Stabilisation Fund stood at US$6.38 billion as of February 2026.

The IMF acknowledged that a new administration which took office in May 2025 has prioritised revitalising the energy sector through work on mature fields, deepwater exploration and regional collaboration with Suriname, Guyana and Venezuela. 

Authorities are also focusing on boosting non-energy growth by improving the business environment, encouraging foreign investment and promoting economic diversification.

However, fiscal pressures remain a concern. The IMF said the central government’s overall deficit for fiscal year 2025 was estimated at 5.5 per cent of GDP, slightly improved from 5.9 per cent in fiscal year 2024. Public debt also increased, with central government debt rising to 67.8 per cent of GDP and overall public sector debt reaching 84.2 per cent.

Despite withdrawals of US$411 million from the Heritage and Stabilisation Fund to finance the deficit, strong investment returns increased the fund’s balance by about US$250 million.

The IMF said Trinidad and Tobago continues to maintain investment-grade sovereign credit ratings and access to international financial markets. It noted that the government successfully issued a US$1 billion 10-year international bond in January 2026 that was 2.5 times oversubscribed.

Looking ahead, economic growth is expected to remain modest in the near term. 

The IMF estimated the economy grew by 0.8 per cent in 2025 and projects growth of 0.7 per cent in 2026, as gains in the non-energy sector partly offset expected declines in energy production.

Growth is forecast to improve in the medium term, with new energy projects, including Manatee, expected to boost economic expansion to about 2.9 per cent in 2027 and 3.5 per cent in 2028. Inflation is projected to remain around 2 per cent.

The IMF said the current account surplus is expected to improve to 3 per cent of GDP in 2025 and average about 4 per cent over the medium term.

However, the outlook carries significant risks. The IMF warned that lower oil and gas production, policy slippages and continued foreign exchange shortages could weaken economic performance. External risks include global uncertainty, trade disruptions, tighter financial conditions and regional geopolitical tensions. Faster structural reforms and higher energy prices were identified as potential upside factors.

The IMF also called for stronger fiscal consolidation to place public debt on a clear downward path and rebuild economic buffers. While the fiscal year 2026 budget targets a deficit of 2.2 per cent of GDP, IMF staff project the deficit could reach 5 per cent without additional measures.

The Fund suggested targeting a deficit of 3.5 per cent of GDP through measures such as broadening the tax base, reducing untargeted utility subsidies while protecting vulnerable households, improving efficiency in public spending and strengthening the financial performance of state-owned enterprises.

The IMF welcomed reforms to improve the long-term sustainability of the public pension system, including gradual increases in the retirement age and contribution rates, which it said could delay depletion of National Insurance System assets by 15 years. It recommended further reforms to improve compliance, broaden contributions and strengthen administrative efficiency.

On monetary policy, the IMF said maintaining the country’s stabilised exchange rate arrangement requires tighter macroeconomic policies, including fiscal consolidation and adjustments to interest rates. It also suggested that greater exchange rate flexibility could help support exports, reduce imports and improve external balances over time.

The IMF said Trinidad and Tobago’s financial sector remains resilient, with banks well capitalised and profitable, although increased exposure to government debt has strengthened links between sovereign and financial sector risks.

The Fund commended progress in strengthening anti-money laundering and counter-terrorism financing measures, improving tax transparency frameworks and advancing regulations for virtual assets.

The IMF also welcomed the government’s push toward economic diversification under its Revitalisation Blueprint, which focuses on agriculture, tourism, the creative economy, innovation, infrastructure development and support for small and medium-sized enterprises.

The Fund said raising labour force participation and reducing informality will be critical to improving productivity and revenue collection. It also highlighted efforts to expand digitalisation and artificial intelligence readiness through the newly established Ministry of Public Administration and Artificial Intelligence.

The IMF further encouraged continued improvements to macroeconomic statistics, including transforming the Central Statistical Office into an independent National Statistical Institute to strengthen data quality and governance.