Download Comments on Competitiveness and Growth in Trinidad and Tobago

Comments on
Competitiveness and Growth in
Trinidad and Tobago
Christina Daseking and
Irineu de Carvalho Filho (IMF)
Glass Half Full or Half Empty?

Growing energy dependence but nonenergy is not doing so bad either...
50
12
T&T: Energy GDP/Total GDP and Growth of Non-Energy GDP
(In percent)
45
10
Growth of Non-Energy
GDP, right scale
40
8
35
6
30
4
25
Share of Energy
GDP, left scale
2
20
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
T&T has been one of the fastest
growing energy-producing economies...
220
Real GDP
(1997=100)
TTO
200
180
RUS
160
140
ECU
120
SAU
VEN
100
80
1997
2000
2003
2006
...is running one of the highest
current account surpluses...
29
Current Account Balance
(In percent of GDP)
SAU
24
TTO
19
14
VEN
9
RUS
4
ECU
-1
-6
-11
1997
2000
2003
2006
...has greatly strengthened its net
international investment position...
20
Trinidad & Tobago: Net Foreign Asset
(In percent of GDP)
0
-20
-40
-60
-80
-100
-120
1970
1976
1982
1988
1994
2000
2006
...and has improved its public
finances.
7
70
Trinidad & Tobago: Public Sector Debt (In percent of GDP)
PS gross debt
60
6
CG gross debt
Heritage and Stabilization Fund
50
5
NFPS Balance, right scale
40
4
30
3
20
2
10
1
0
0
02/03
03/04
04/05
05/06
06/07p
But...

fiscal policy has been highly
procyclical adding to volatility
120
Oil prices in 2007 US$, right scale
50
Non-oil deficit as percent of non-oil GDP
100
40
80
30
60
20
40
10
20
0
0
1971
1976
1981
1986
1991
1996
2001
2006
and...

nonenergy exports remain very
low,...
95
Share of energy exports in total exports
(In percent)
TTO
SAU
85
VEN
75
65
55
ECU
45
RUS
35
25
15
1997
2000
2003
2006
while...

oil and gas reserves will soon be
exhausted.
100
Reserves to Production Ratio
(In years)
KAZ
VEN
80
BOL
60
RUS
40
IDN
ECU
TTO
20
COL
0
1
Government’s Vision 2020





Improve quality of education
Improve infrastructure
Strengthen governance
Increase R&D
Ensure stable macro environment
Challenge: Balance Costs of
Diversification Strategy With Sound
Fiscal Policy



Share wealth with future generations
Ensure fiscal stability and sustainability
Support development of non-energy
export sector by reducing Dutch
disease
Fiscal Policy Recommendations


Reduce nonenergy deficit now to
build up net assets that permanently
finance future deficits (constant in
real terms or GDP)
Avoid procyclical stance
The Choice