Maroc - NEWSDAY.CO.TT - A la Une - 01/Jan 05:58

From transition to delivery in 2026

WITHOUT a doubt, 2025 was a year of transition. But 2026 will be a year of delivery. Or at least, that’s the hope. All eyes will be on whether the state’s fiscal management will deliver results. Whether it will do so is the million-dollar question. In 2025, the local economic outlook was clouded because a new government was installed. There was a new Central Bank governor, and the Central Bank board was reconfigured. New boards were also installed at the country’s largest banks, which are still subject to significant state ownership. And more uncertain became the global geopolitical outlook, particularly due to disruptive US policy announcements and actions such as tariffs. Key economic indicators revealed an economy in the throes of convulsions. In September, Larry Howai outlined a softening of the economy in early 2025. The Central Bank governor disclosed the retail sales index had fallen, cement sales were down and LPG production dropped – all amid constrained fiscal space and reduced external buffers. In the same month came news of a GDP contraction of 2.1 per cent in the first quarter, according to the bank’s monetary policy announcement. Market liquidity continued to tighten, affecting the pace of credit expansion. Loans for motor vehicles and bridging finance slowed. Non-energy sector activity was lacklustre. By November, the bank gave a gloomy outlook. After remaining contained for some time, inflation, it said in its monetary policy report, was now expected to rise because of the US tariffs and adverse weather. Credit would slow down. While the government was filling public service vacancies, the closure of state employment programmes like Cepep would exert pressure on labour market conditions. Energy sector activity would stabilise thanks to first gas from various fields and new deals. But developments like the controlled shutdown of the Nutrien facility would bite. Business and consumer lending growth, it said, would slow. It declared the situation was “delicate.” Weeks later, Moody’s Ratings downgraded the country from stable to negative, citing a 24 per cent fall in liquid forex reserves, which exclude gold, drawing rights and sovereign funds like the HSF. The new UNC government’s response to all of this has been to present a $59.2 billion budget premised on growth through sustained spending – including on public sector pay – and institutional strengthening, while doubling down on a range of duties to supplement revenues. Davendranath Tancoo’s bet that his suite of measures will bear fruit was underlined by his response on December 12 to Moody’s changed outlook. The minister of finance felt the ratings agency had been premature and that it was too narrow in its approach to defining foreign reserves. He claimed that this definition was at the root of the downgrade. However, the last downgrade from the agency in June 2024 under the PNM had similarly cited drawdowns in “liquid foreign exchange reserves.” What’s clear is that by the time the mid-year review comes around in the first half of 2026, government’s honeymoon period will be over and it will face pressure for bolder action. The post From transition to delivery in 2026 appeared first on Trinidad and Tobago Newsday.