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PORT OF SPAIN – Trinidad and Tobago’s business community concludes a tumultuous 2025 marked by three prime ministers, multiple states of emergency, and global economic shifts, now facing a new suite of fiscal measures effective January 1, 2026. The government has implemented a series of revenue-generating initiatives including bank asset levies, rental income surcharges, and increased energy costs for commercial users, alongside heightened traffic fines for public compliance.

Confederation of Regional Business Chambers President Vivek Charran characterized these measures as a ‘necessary evil’ given the government’s precarious fiscal position. In an exclusive interview, Charran revealed that upon taking office in May, the administration discovered a $4.42 billion budgetary shortfall, forcing month-to-month operational funding.

The new tax structure targets specifically thriving sectors including property development and food and beverage industries. Commercial banks and insurance companies now face a 0.25% asset levy expected to generate $575 million annually. Landlords must register with revenue authorities, facing 2.5-3.5% surcharges on rental income that should yield at least $70 million. Industrial electricity consumers will pay an additional $0.05 per kWh, contributing approximately $269 million to state coffers.

Despite these burdens, business leaders express willingness to support taxation if accompanied by improved government services and reduced bureaucratic obstacles. Charran emphasized that diversification efforts remain hampered by inefficient licensing processes that can take years for basic permits like farming certifications.

The private sector maintains cautious optimism according to recent chamber surveys. Over half of executives reported worsened financial performance in recent months yet remain confident about medium-term investment prospects. Employment expectations show cautious expansion intentions despite persistent structural challenges.

Opposition figures warn the government’s revenue projections may be overly optimistic, with former Finance Minister Colm Imbert predicting a potential $7-10 billion deficit rather than the official $3.8 billion estimate, citing inaccurate oil price assumptions and unbudgeted expenditures including public sector wage increases.

Business leaders now await tangible improvements in public service efficiency following recent public sector compensation increases, hoping 2026 will bring both fiscal stability and operational reforms to support economic diversification.

The story of Caribbean aviation connectivity began in 1956 when entrepreneurs L.W. Magruder and Frank Delisle established Leeward Islands Air Transport Services (LIAT) with a temporary permit from the Colonial government. What started as a single-engine aircraft operating from Delisle’s backyard airstrip in Montserrat would evolve into a vital regional carrier serving numerous Eastern Caribbean islands.

During its formative years, LIAT operated under the stewardship of British West Indian Airways (BWIA), which provided substantial financial and operational support. Between 1962 and 1970, BWIA absorbed management costs and guaranteed loans while LIAT accumulated debts exceeding $5.6 million. Despite this support, BWIA recognized by 1971 that LIAT’s expansion requirements exceeded its financial capabilities.

This realization prompted BWIA to sell its 75% stake to British company Court Line Limited, marking a significant departure from its policy of maintaining West Indian ownership. The transition included safeguards allowing Caribbean governments future participation. However, Court Line’s bankruptcy in 1974 forced eleven Caribbean nations to intervene, forming LIAT (1974) Ltd with regional government ownership.

The airline persisted for decades with various aircraft configurations until the COVID-19 pandemic precipitated its collapse. Following months of operational struggles and unsuccessful bailout negotiations, LIAT (1974) Ltd ceased operations in January 2024 and entered liquidation.

In a remarkable revival effort, Antigua and Barbuda partnered with Nigerian carrier Air Peace to establish LIAT 2020 in July 2020. The new entity features a 70-30 ownership structure, with Air Peace securing citizenship through Antigua’s Investment Programme to satisfy CARICOM ownership requirements. The partnership involved $85 million in combined investments and leased E145 aircraft from Air Peace.

Despite this rebirth, significant challenges persist. The FAA’s Category II rating for the Organization of Eastern Caribbean States prevents LIAT 2020 from operating routes to US territories. Additionally, high airport charges and taxes continue to hamper regional air connectivity, presenting ongoing obstacles for the revitalized carrier’s sustainable operation.

The year 2025 marked a period of significant economic transition, setting the stage for 2026 to become a decisive year for policy implementation and fiscal management. With a new administration taking office, the country witnessed comprehensive changes across its financial institutions, including the appointment of a new Central Bank governor and restructuring of banking boards amid persistent state ownership.

Economic indicators throughout 2025 revealed concerning trends. Central Bank Governor Larry Howai reported in September that the economy showed signs of softening, evidenced by declining retail sales, reduced cement sales, and dropping LPG production. These challenges emerged within a context of constrained fiscal space and diminished external buffers.

The first quarter recorded a 2.1% GDP contraction, while market liquidity constraints continued to hamper credit expansion. Particularly affected were automotive loans and bridging finance, with non-energy sector performance remaining consistently lackluster.

By November, the Central Bank’s monetary policy report projected a deteriorating outlook. Inflation, previously contained, was expected to rise due to disruptive US tariff policies and adverse weather conditions. The closure of state employment programs like Cepep further threatened to exacerbate labor market pressures.

While energy sector stabilization appeared promising through new gas field developments and agreements, setbacks such as the controlled shutdown of the Nutrien facility posed additional challenges. The bank characterized the overall economic situation as ‘delicate.’

The situation intensified when Moody’s Ratings revised the country’s outlook from stable to negative, citing a substantial 24% decline in liquid foreign exchange reserves (excluding gold, drawing rights, and sovereign funds including the HSF).

In response, the new UNC government presented a $59.2 billion budget strategy centered on growth through sustained public spending—including public sector compensation—and institutional strengthening, while implementing various duty increases to supplement revenues.

Finance Minister Davendranath Tancoo defended the government’s approach following Moody’s assessment, arguing the ratings agency acted prematurely and employed an overly narrow definition of foreign reserves. However, Moody’s had cited similar concerns about liquid foreign exchange reserve drawdowns in its previous downgrade under the PNM administration in June 2024.

As the government approaches its mid-year review in early 2026, the administration’s honeymoon period will conclude, mounting pressure for more assertive economic interventions and tangible results.

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.