In T&T: IMF: Govt on the right track

13 February 2012

T&T “turning the corner” according to IMF. Real economic growth expected to be 1.7% in 2012.

Finance Minister Winston Dookeran says the International Monetary Fund’s (IMF) Article IV Consultations on the local economy in 2011 indicate Government is on the right track.

Addressing a press conference at the Ministry of Finance head office, Eric Williams Financial Complex, Port-of-Spain, yesterday, Dookeran said the preliminary findings had “confirmed that the compass that we have set on financial management is in the right direction. I think it has the ability to influence the international financial community to ascribe to Trinidad and Tobago the proper ratings that we believe we deserve.”

The finance minister also said local investors should benefit from this positive review via their ability “to get financing at affordable rates” and the IMF’s findings would “provide the confidence that this nation and this economy need at this point in time.”

Chief among the positive news from the IMF Mission was a projection of economic growth this year. Mission chief and Deputy Division Chief of the IMF’s Western Hemisphere Department Judith Gold said “there is concrete evidence that the economy is turning the corner and that economic growth will resume in 2012, notwithstanding the ongoing technical disruptions in the energy sector. Real economic activity is projected to increase by 1.7 percent in 2012.”

Gold cited four reasons for this: private sector credit expansion is gaining momentum; the resolution of a large failed insurance company (CLICO) is proceeding: the faster pace of government investment continues and energy production is returning to normal as maintenance work is completed while energy prices remain high.

However, the IMF identified “downside risks” that Gold said stemmed from “the global economic environment, uncertainty in gas prices, and possible delays in the implementation of the public sector investment programme.”

Gold said the TT economy experienced a significant decline in 2009, recorded no growth in 2010 and contracted last year by 1.3 percent, due in large part to the profound and protracted impact of the 2008 global financial crisis and the failure of CL Financial Limited.

The local economy was cushioned from a harsher impact, Gold said, because of our “ample buffers.” Namely the Heritage and Stabilisation Fund, low public debt, and high international reserves.

“While unemployment has increased during this period, it remains low at 5.8 percent. Inflation, despite its recent resurgence due to volatility in food prices, also remains moderate at 5.3 percent,” Gold said.


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