IMF welcomes the government’s management of covid19



In this file photo, Finance Minister Colm Imbert (right) smiles as he speaks with Energy Minister Stuart Young (left).

The International Monetary Fund (IMF) on Friday hailed the government’s decisive efforts to support the country during the covid19 pandemic and said Trinidad and Tobago now had a very positive outlook for economic recovery next year.

The IMF said TT faced “unprecedented challenges” in 2020-21, as covid19, cuts in power generation and price shocks all pushed TT further into recession.

“The authorities’ decisive political response has helped contain the spread of covid19, protect lives and livelihoods, and pave the way for a strong recovery.

“The immediate priorities are to speed up vaccinations and support the economic recovery. “

He said once the recovery strengthens, the government must reduce public debt, rebuild fiscal buffers and enable sustainable and inclusive growth.

Finance Minister Colm Imbert said in a statement on Twitter: “TT has just received positive reviews of our IMF consultation under Article IV”.

Finance Minister Brian Manning told Newsday the report justified the government’s performance.

“This testifies to our good budgetary management. We are doing everything we can to stabilize our economy and create an environment conducive to growth, while protecting the most vulnerable citizens.

“The IMF report simply does not give credence to the opponents. “

He mocked an economist who claimed TT would soon default on its debt and run out of currency.

Manning said: “International rating agencies and the IMF have said that we are doing well, relatively well, in the midst of a global slowdown and a pandemic.

“We will continue to work to create a positive economic environment for the development of TT.”

The report states that covid19, cuts in power generation and weak global demand have all derailed a nascent TT recovery.

Measures to curb covid19 had “severely impacted” non-energy activity, while energy production “declined significantly” with energy exports and income “drastically reduced”.

Overall, GDP fell 7.4 percent last year and is expected to decline 1 percent this year.

However, the IMF hailed the recovery efforts.

“The authorities have acted decisively to contain the pandemic.

“Containment and health measures to fight the virus have limited the number of cases and deaths despite waves of infections.

“Progress on vaccination efforts is underway, with approximately 45% of the target population fully vaccinated as of November 15. “

The IMF praised the government for giving 4% of GDP to help the most vulnerable, jobs and businesses, while the central bank eased monetary and financial sector policies to support liquidity and financial stability.

The report says the deficit fell from 3.7 to 11.6 percent of GDP between 2020 and 2021, while the debt-to-GDP ratio rose to 87 percent.

However, the IMF said: “A strong economic recovery is forecast for 2022. Real GDP growth in 2022 is expected at 5.7%, bolstered by continued political support and the expected recovery in oil and gas production. . However, production would remain below pre-covid19 levels well in the medium term. “

While the annual expenditure deficit is expected to narrow next year due to rising incomes and modest spending cuts, the accumulated government deficit will remain high.

In addition, the report also states that persistent risks to the economic recovery exist, including new virus strains that could weaken global energy demand and prices, supply chain issues and the residual effects of the recession. The IMF advised: “A sustained and inclusive recovery requires cohesive political action. Overcoming the pandemic and supporting the economy are the immediate priorities. “

He called for continued vaccine deployment and targeted support to the most vulnerable sectors, as well as a covid19 spending report and contingency plan if downside risks materialize.

Any withdrawal of support must be careful and gradual so as not to hamper the recovery, he said.

“The government spending envelope envisioned in the 2022 budget is appropriate. The current accommodative monetary policy is appropriate to support the recovery. “

The report supported the government’s plans for tax reform and expenditure control.

“Additional revenue could be generated through tax policy reforms and strengthening tax administration.

“In this regard, the mission welcomed the recent enactment of the Gaming Tax Bill and encouraged the swift implementation of the property tax and the establishment of the Tax Authority.

The IMF called for greater efficiency in public spending, phasing out subsidies, reforming public procurement, and disclosure of beneficial ownership of public procurement.

The government should remove restrictions on all current international transactions, while providing sufficient foreign exchange.

The agency hailed TT’s progress in combating money laundering and terrorist financing, while saying more could be done.

He asked for a boost from the non-energy sector.

“Reforms to remove barriers to doing business, improve education and skills training to help address skills mismatches and boost productivity and boost entrepreneurship will be important.

“The authorities’ recent initiative to support SMEs and their efforts to foster the transition to the digital economy are steps in the right direction.

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