In its concluding monetary policy assessment for 2025, released on December 31, the Central Bank of Trinidad and Tobago has issued a cautious economic outlook for 2026. The institution emphasized the critical challenge of maintaining equilibrium between protecting the nation’s foreign reserves and cultivating conditions for sustainable economic expansion.
The bank identified significant factors that could disrupt this delicate balance, particularly wage adjustments and aggregate demand pressures. Notably referenced was the ten percent salary increase for public servants implemented by the United National Congress following their April 28 general election victory, with partial disbursements commencing in December. These fiscal measures are projected to boost household incomes in coming months, potentially stimulating consumer activity.
Against this backdrop, the Central Bank highlighted Trinidad and Tobago’s substantial import dependency, making the preservation of international reserves critically important. This warning comes alongside recent downward revisions of TT’s economic outlook by major rating agencies Moody’s and S&P, primarily citing declining foreign reserves.
While acknowledging a modest stabilization in reserves—climbing from US$4.6 billion in October to US$5.3 billion by mid-December—the bank cautioned that significant challenges persist. International reserve adequacy indicators continue to warrant close monitoring.
The report noted encouraging developments in the energy sector, with natural gas production witnessing an 11.7 percent year-on-year increase during Q2 2025. This resurgence was fueled by inaugural production from bpTT’s Cypre field and the bpTT/EOG Mento fields. Correspondingly, petrochemical outputs showed mixed results with ammonia and urea production expanding by 23.6 percent and 51.3 percent respectively, while methanol output declined by 12.7 percent.
However, these energy sector gains were partially offset by continued softening in non-energy sector performance. The distribution, construction, and manufacturing industries demonstrated weaker results, though improvements were observed in finance and utilities.
Financial conditions remain precisely balanced, with system liquidity constraints easing despite ongoing government borrowing and increased interbank activity. Commercial banks’ excess reserves at the Central Bank averaged $4.4 billion in November, rising to $5.3 billion by mid-December.
Conversely, private sector credit expansion has moderated, growing at 6.3 percent year-on-year in October compared to 8.6 percent in June. This deceleration was attributed to more restrained business credit growth and slowed consumer lending, particularly in credit cards, automotive, and bridging finance.
In response to these complex economic crosscurrents, the Monetary Policy Committee has maintained the repo rate at 3.5 percent. The Central Bank affirmed its readiness to implement necessary monetary policy measures to preserve the crucial balance between foreign reserve protection and fostering favorable funding conditions for domestic economic activity.