PORT OF SPAIN, Trinidad, CMC – The Trinidad and Tobago government Wednesday presented a TT$3.14 billion (One TT dollar=US$0.16 cents) supplemental budget to Parliament, outlining a raft of new measures aimed at reviving an economy it claimed had been left in a “dire” situation by the former People’s National Movement (PNM) administration.
Finance Minister Davendranath Tancoo told legislators that the signs of a faltering economy were “obvious” and that the vast majority of the middle class had been thrown into poverty.
He said that over 60,000 businesses had been struck off the register of companies, and an additional 6,000 businesses, many of them micro-small and medium-sized, had been forced to close, “crippling the domestic small investment class.
The finance minister stated that the mid-year review serves a dual purpose, including providing an update on the state of the economy and obtaining parliamentary approval for proposed amendments to the Appropriation Act 2025.
“The reason we are here today seeking a supplementary appropriation of $3.14 billion is simple: we are forced to supplement a PNM budget,” he said, adding that the new government has been forced to seek additional money in supplementary funding, not because of unforeseen crises, “but because the former government intentionally underbudgeted for critical expenditure, knowing full well that the bills would come due.”
He stated that the 2025 budget projected an overall fiscal deficit of TT$5.51 billion, or 2.91 percent of the gross domestic product (GDP) and that an overall deficit of TT$3.97 billion was projected for the period from October 1, 2024, to March 31, 2025.
“However, the actual outturn of revenue and expenditure resulted in a deficit of TT$3.44 billion, which was TT$526.7 million lower than projected. This reduced deficit figure, however, is deceptive and was achieved by slashing expenditure, resulting in the accumulation of hundreds of millions in arrears that the current government must now pay,” Tancoo said.
He stated that, in terms of revenue collections projected for the period from October 2024 to March 2025, it was TT$24.58 billion. However, the actual revenue collected was TT$24.09 billion, resulting in a shortfall of TT485.5 million in revenue.
“This almost TT$485.5 loss in revenue is very likely as a direct result of the under-resourcing of the one entity engaged in tax collection, the Board of Inland Revenue,” he said.
Tancoo said the data also showed that the total expenditure was slashed by TT$1.01 billion for the first six months of the 2025 fiscal year and that the total projected spending for the period October 2024 to March 2025 was TT$28.55 billion.
“However, actual expenditure recorded for the six months was TT$27.54 billion, TT$1.01 billion less than projected.”
Tancoo said that the supplemental budget would allow for recurrent Expenditure of TT$2.8 billion and a development program of TT$278 937,000
“These funds are necessary for a large part to meet multiple instances of deliberate under budgeting,” Tancoo said, or to meet obligations promised in the budget of the last government “for which no provision was made or for new initiatives determined by the then Government, again where no provisions had been met.”
He stated that the last budget was based on an average oil price of US$77.80 per barrel and a natural gas price of US$3.59 per MMBtu and that the new government’s estimates for oil and gas prices at the end of the fiscal year are US$66.00 and US$5.00 per MMBtu.
“With this and other adjustments, we anticipate a decrease in total revenue of TT$556.7 million, with a resultant overall deficit of TT$9.67 billion,” Tancoo said, adding, “We expect to fund the increased deficit principally via borrowings on the local capital market as well as by drawing down on existing multi-lateral facilities.
“We will also work assiduously to improve the revenue mobilization capacity of the Inland Revenue Division and explore further expenditure consolidation and efficiency initiatives in the coming months,” he said, adding, “Let me be clear: this plan is an interim strategy aimed at restoring financial stability.
The finance minister said that the Persad Bissessar government has already implemented a suite of policy measures and structural reforms, including repealing the Trinidad and Tobago Revenue Authority (TTRA) Act, as well as the Property Tax Act, and launching a feasibility study on reopening the state-owned PETROTRIN oil refinery, which the last government closed down in 2018 due to billions of dollars in losses.
He stated that the key priorities going forward will include transfer pricing legislation to ensure that profits earned in Trinidad and Tobago are taxed fairly and by international standards.
He said the government is now aggressively moving to implement the necessary international tax standards to remove Trinidad and Tobago from the European Union’s list of non-cooperative jurisdictions for tax purposes and to engage in the exchange of information on request (EOIR) as part of the Combined Peer Review.
“We are advancing our efforts for delisting by the EU, an important step in demonstrating our commitment to transparency and cooperation in global tax matters,” Tancoo said, adding that there would be a reform of the business levy, with particular attention to its impact on capital-intensive and foreign firms in the early stages of investment.
“We are reviewing the Income Tax (In Aid of Industry) Act to broaden the scope of incentives for Research and Development and capital expenditure beyond the traditional manufacturing sector,” he said, adding, “We will consider introducing a statutory definition of Permanent Establishment (PE) in domestic tax law to provide greater legal certainty for foreign investors and strengthen source-based taxation.”
Tancoo stated that the qualified domestic minimum top-up tax would apply only to huge multinational enterprise groups with global revenues of at least EUR 750 million (approximately US$1.29 billion), which pay less than 15 percent effective tax on their profits in Trinidad and Tobago.
“In these instances, we will consider the introduction of a “top-up tax” to bring them up to the 15 percent minimum.”
He stated that on the issue of foreign exchange (FX) and investment framework, the government will collaborate with the necessary stakeholders to establish a Foreign Exchange Allocation Committee, aiming to bring greater transparency, equity, and strategy to the allocation of scarce FX resources.
The government will also implement reporting obligations for high-volume importers to ensure that foreign currency inflows and outflows are better monitored and aligned with the country’s strategic economic priorities, as well as enhance investor confidence through the development of profit repatriation protocols, dividend safeguards, and investment protection frameworks, drawing on best practices such as those implemented in Barbados.
Tancoo said that the government would explore foreign currency tax exemptions and investment tax credits as tools to encourage the retention and reinvestment of foreign earnings within the domestic economy, review the country’s network of bilateral tax treaties, and work with the Caribbean Community (CARICOM) partners to advance regional tax harmonization, promoting cross-border investment and reducing administrative burdens on regional businesses.
He said the government is also examining the introduction of an Export Allowance and an Export Growth Incentive, with a focus on high-potential non-CARICOM markets and target priority sectors, including agro-processing, ICT services, and niche manufacturing.
It is also considering the establishment of an Export Proceeds Retention Facility, which would enable exporters to retain a portion of their foreign currency earnings, thereby ensuring more predictable access to foreign exchange for reinvestment and operational expansion.
Tancoo described as “economic sabotage” the economic policies of the past administration and that the task before the new Kamla Persad Bissessar administration, which came to office following the April 28 general election, “is challenging.
He said he met with representatives of the Caribbean Development Bank (CAF) on Tuesday, and “I am proud to announce today that this government is finalizing arrangements for the signing of a US$15 million or TT$102 million loans from CAF to undertake several coastal protection projects across Tobago.”
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