Looking Ahead: What Could the 2026 Fiscal Budget Look Like for Trinidad & Tobago?

MASX
Oct 11
5 min read

As Trinidad and Tobago braces for its 2026 national budget, a complex mix of pressures, constrained fiscal space, and ambition for renewed growth will shape key policy choices. Below are some plausible predictions — and risks — that could define the 2026 budget.

1. A Larger Budget Deficit, But Under Strain of Debt Dynamics

One of the dominant pressures will be the trade-off between social/operational commitments and limited revenue flexibility.

Rumors circulating suggest a deficit in the order of TT$15 billion (or possibly more) for 2025/2026 — a historically large figure.
The government itself has signaled that revenues will be insufficient to cover expenditure in some form (“expenditure proposals are still being examined,” “the budget will be a deficit budget”)
However, with credit rating agencies watching closely, the government may moderate the deficit growth to avoid further rating downgrades. In fact, S&P recently changed Trinidad & Tobago’s outlook to “negative” from stable, citing weakening fiscal buffers and limited progress on diversification. (Source: Investing.com)

Thus, in 2026 we may see:

A deficit that grows, but attempts to cap it under fiscal rules (if any) or debt tolerance thresholds.
A shift in the composition of the deficit — more financed domestically, or more reliance on concessional external borrowing, to avoid crowding out domestic capital markets.

2. Continued Pressure on Non-Energy Revenue Mobilization

Given the volatility and long-term decline in oil & gas prospects, non-energy revenue sources will become ever more crucial.

In the 2025 budget, oil revenue was pegged at TT$14.174 billion, non-oil revenue at TT$35.039 billion, and total revenue around TT$54.224 billion. That budget already projected a fiscal gap of TT$5.517 billion (2.91 % of GDP).
However, the government is under pressure to diversify: proposals such as expanding tax bases, improved compliance, property tax implementation, and transfer pricing enforcement have been floated.
The Special Economic Zones (SEZs) regime is already operational and offers some incentives to spur investment — increasing their effectiveness (or tightening leakages) may figure in 2026 policy. (Source: icatt.org)

Prediction: The 2026 budget will lean more heavily on non-energy revenue enhancement, possibly via:

New or broadened indirect taxes, excises, or environmental levies
Phased implementation of property tax or land taxes
Stricter enforcement or audits (transfer pricing, tax compliance)
Incentivizing digital economy and services taxation

That said, the balancing act is delicate: raising taxes too aggressively could stifle growth or public goodwill.

3. Strategic Cuts, Reallocations & Prioritization

Absent runaway revenue growth, much of the fiscal maneuvering in 2026 will come via trimming and reshuffling expenditures.

Every government promises social spending, infrastructure, healthcare, education — but fiscal constraints mean hard prioritization.
Given external pressures and the decline in energy returns, the government may increasingly adopt “program budgeting” or zero-based review of longstanding subsidies and wage bills.
Certain sectors will likely be protected or prioritized: youth development, education, social safety nets, agriculture, digital infrastructure, and possibly climate resilience. In fact, the current Prime Minister has already said the 2025/2026 budget will be “youth-based.”
Also, some talk suggests that the government may spread out “promises” over multiple years rather than all in one go, given resource limits.

Hence, in 2026 we may see:

Cuts or freezes in lower-priority line items
Reallocation toward capital investment (to stimulate growth)
Phased or conditional increases in public sector wages or transfers
More public-private partnerships (PPPs) to shift capital burden off budget

4. Energy & Natural Resource Policy as Key Revenue Lever

While oil production is challenged, natural gas / LNG remains a lifeline — and the government seems intent on squeezing more yield from it.

Trinidad & Tobago has restructured its LNG contracts to command prices 15%–55% above the Henry Hub benchmark.
Moreover, new projects are on the horizon: for example, the Shell Aphrodite gas field was recently greenlit, expected to produce first gas by 2027 and bolster supply for Atlantic LNG. (Source: Reuters)
On the flip side, the broader decline in oil production and global pressure to decarbonize is a long-term risk.
The government may introduce or raise production taxes, renegotiate royalty terms, or adjust output sharing to extract more rents from the energy sector.

Thus, in 2026:

More aggressive renegotiation of gas / LPG / LNG royalties or profit splits
Incentives (or conversely restrictions) for exploration and development
Perhaps new “energy transition” levies or carbon pricing for downstream products

These measures will be politically sensitive, but may provide one of the few realistic levers to raise significant revenue.

5. Fiscal Anchors & Debt Management Emphasis

Given the rising public debt and constrained buffer, fiscal anchors may be more rigidly enforced, and debt management will be in sharper focus.

As of 2024–2025, Trinidad and Tobago’s adjusted general government debt was ~ 73.7 % of GDP (from ~72.1 %) (Source: icatt.org)
The Heritage and Stabilization Fund (HSF) is also a potential cushion — though its drawdown or replenishment may become contentious.
To maintain credibility (especially in light of S&P’s negative outlook), the government may introduce or reaffirm fiscal rules — e.g., debt ceilings, deficit limits, and expenditure ceilings.
Greater reliance on concessional borrowing or structured refinancing may be needed to avoid crowding out domestic capital markets.

Therefore, in 2026 one might see:

Tighter debt ceilings (e.g. max debt to GDP ratio levers)
More transparency around contingent liabilities
Phasing of amortization/restructuring for legacy debt
Use of development finance rather than commercial borrowings

6. Social Measures & Political Realities

Budgetary decisions will also reflect political considerations, especially with visible needs in health, safety, crime, and public services.

In recent years, crime and public safety have become acute issues; budget allocations for security, policing, and social protection may rise.
The fiscal budget must balance cost-of-living pressures, inflation, and public expectations for relief packages or subsidies.
Pressure from pensioners, civil servants, marginalized areas (e.g., rural, Tobago) will push the government to sustain or increase transfers or targeted subsidies.
The timing and substance of announcements may also be influenced by electoral cycles and public optics.

Hence, some “populist” or high-visibility measures may be included:

Tax relief for low-income households
Conditional cash transfers
Infrastructure projects in swing regions
Subsidies or support for agriculture, food, utilities

But such carve-outs may be limited to what is fiscally feasible; the broader trend will push toward structural rather than ad hoc subsidies.

7. Risks & Wild Cards to Watch

Any forecast must recognize constraints and upside/downside risks. Key uncertainties include:

Energy Price Swings: A collapse (or surge) in global gas/oil prices will dramatically alter revenue outcomes.
Political Shocks or Change: Changes in government, social unrest, or unanticipated demands can force ad hoc deviations.
Credit Rating Dynamics: If rating agencies downgrade further, borrowing costs rise and fiscal flexibility shrinks.
External Shocks: Natural disasters, pandemics, global recessions or supply chain disruption could force reallocations or emergency borrowing.
Underperformance in Non-Energy Growth: If diversification fails or non-energy sectors lag, revenue assumptions will become strained.
Implementation Capacity: Good intentions may flounder if bureaucratic or institutional capacity to enforce tax compliance or manage capital projects is weak.

8. Overall Outlook & Narrative

Putting all this together, the 2026 Budget is likely to be a balancing act between ambition and realism. My broad guess is:

A deficit in the ballpark of TT$12–20 billion, constrained by rating risks and debt pressures
More assertive non-energy revenue measures (wider tax base, enforcement, new levies)
Redirected spending toward growth (infrastructure, youth, agriculture, digital)
A somewhat tighter debt management framework or reaffirmation of fiscal rules
Heavy reliance on natural gas / LNG renegotiation or expansion to buttress revenue

If executed well, the 2026 budget could begin the shift toward fiscal consolidation and sustainable growth. But missteps — especially overestimating revenue or underestimating public expectations — could expose the government to credibility risks and renewed stress.

As Trinidad and Tobago braces for its 2026 national budget, a complex mix of pressures, constrained fiscal space, and ambition for renewed growth will shape key policy choices. Below are some plausible predictions — and risks — that could define the 2026 budget.

1. A Larger Budget Deficit, But Under Strain of Debt Dynamics

One of the dominant pressures will be the trade-off between social/operational commitments and limited revenue flexibility.

Rumors circulating suggest a deficit in the order of TT$15 billion (or possibly more) for 2025/2026 — a historically large figure.

The government itself has signaled that revenues will be insufficient to cover expenditure in some form (“expenditure proposals are still being examined,” “the budget will be a deficit budget”)

Thus, in 2026 we may see:

A deficit that grows, but attempts to cap it under fiscal rules (if any) or debt tolerance thresholds.

A shift in the composition of the deficit — more financed domestically, or more reliance on concessional external borrowing, to avoid crowding out domestic capital markets.

2. Continued Pressure on Non-Energy Revenue Mobilization

Given the volatility and long-term decline in oil & gas prospects, non-energy revenue sources will become ever more crucial.

In the 2025 budget, oil revenue was pegged at TT$14.174 billion, non-oil revenue at TT$35.039 billion, and total revenue around TT$54.224 billion. That budget already projected a fiscal gap of TT$5.517 billion (2.91 % of GDP).

However, the government is under pressure to diversify: proposals such as expanding tax bases, improved compliance, property tax implementation, and transfer pricing enforcement have been floated.

The Special Economic Zones (SEZs) regime is already operational and offers some incentives to spur investment — increasing their effectiveness (or tightening leakages) may figure in 2026 policy. (Source: icatt.org)

Prediction: The 2026 budget will lean more heavily on non-energy revenue enhancement, possibly via:

New or broadened indirect taxes, excises, or environmental levies

Phased implementation of property tax or land taxes

Stricter enforcement or audits (transfer pricing, tax compliance)

Incentivizing digital economy and services taxation

That said, the balancing act is delicate: raising taxes too aggressively could stifle growth or public goodwill.

3. Strategic Cuts, Reallocations & Prioritization

Absent runaway revenue growth, much of the fiscal maneuvering in 2026 will come via trimming and reshuffling expenditures.

Every government promises social spending, infrastructure, healthcare, education — but fiscal constraints mean hard prioritization.

Given external pressures and the decline in energy returns, the government may increasingly adopt “program budgeting” or zero-based review of longstanding subsidies and wage bills.

Certain sectors will likely be protected or prioritized: youth development, education, social safety nets, agriculture, digital infrastructure, and possibly climate resilience. In fact, the current Prime Minister has already said the 2025/2026 budget will be “youth-based.”

Also, some talk suggests that the government may spread out “promises” over multiple years rather than all in one go, given resource limits.

Hence, in 2026 we may see:

Cuts or freezes in lower-priority line items

Reallocation toward capital investment (to stimulate growth)

Phased or conditional increases in public sector wages or transfers

More public-private partnerships (PPPs) to shift capital burden off budget

4. Energy & Natural Resource Policy as Key Revenue Lever

While oil production is challenged, natural gas / LNG remains a lifeline — and the government seems intent on squeezing more yield from it.

Trinidad & Tobago has restructured its LNG contracts to command prices 15%–55% above the Henry Hub benchmark.

Moreover, new projects are on the horizon: for example, the Shell Aphrodite gas field was recently greenlit, expected to produce first gas by 2027 and bolster supply for Atlantic LNG. (Source: Reuters)

On the flip side, the broader decline in oil production and global pressure to decarbonize is a long-term risk.

The government may introduce or raise production taxes, renegotiate royalty terms, or adjust output sharing to extract more rents from the energy sector.

Thus, in 2026:

More aggressive renegotiation of gas / LPG / LNG royalties or profit splits

Incentives (or conversely restrictions) for exploration and development

Perhaps new “energy transition” levies or carbon pricing for downstream products

These measures will be politically sensitive, but may provide one of the few realistic levers to raise significant revenue.

5. Fiscal Anchors & Debt Management Emphasis

Given the rising public debt and constrained buffer, fiscal anchors may be more rigidly enforced, and debt management will be in sharper focus.

As of 2024–2025, Trinidad and Tobago’s adjusted general government debt was ~ 73.7 % of GDP (from ~72.1 %) (Source: icatt.org)

The Heritage and Stabilization Fund (HSF) is also a potential cushion — though its drawdown or replenishment may become contentious.

To maintain credibility (especially in light of S&P’s negative outlook), the government may introduce or reaffirm fiscal rules — e.g., debt ceilings, deficit limits, and expenditure ceilings.

Greater reliance on concessional borrowing or structured refinancing may be needed to avoid crowding out domestic capital markets.

Therefore, in 2026 one might see:

Tighter debt ceilings (e.g. max debt to GDP ratio levers)

More transparency around contingent liabilities

Phasing of amortization/restructuring for legacy debt

Use of development finance rather than commercial borrowings

6. Social Measures & Political Realities

Budgetary decisions will also reflect political considerations, especially with visible needs in health, safety, crime, and public services.

In recent years, crime and public safety have become acute issues; budget allocations for security, policing, and social protection may rise.

The fiscal budget must balance cost-of-living pressures, inflation, and public expectations for relief packages or subsidies.

Pressure from pensioners, civil servants, marginalized areas (e.g., rural, Tobago) will push the government to sustain or increase transfers or targeted subsidies.

The timing and substance of announcements may also be influenced by electoral cycles and public optics.

Hence, some “populist” or high-visibility measures may be included:

Tax relief for low-income households

Conditional cash transfers

Infrastructure projects in swing regions

Subsidies or support for agriculture, food, utilities

But such carve-outs may be limited to what is fiscally feasible; the broader trend will push toward structural rather than ad hoc subsidies.

7. Risks & Wild Cards to Watch

Any forecast must recognize constraints and upside/downside risks. Key uncertainties include:

Energy Price Swings: A collapse (or surge) in global gas/oil prices will dramatically alter revenue outcomes.

Political Shocks or Change: Changes in government, social unrest, or unanticipated demands can force ad hoc deviations.

Credit Rating Dynamics: If rating agencies downgrade further, borrowing costs rise and fiscal flexibility shrinks.

External Shocks: Natural disasters, pandemics, global recessions or supply chain disruption could force reallocations or emergency borrowing.

Underperformance in Non-Energy Growth: If diversification fails or non-energy sectors lag, revenue assumptions will become strained.

Implementation Capacity: Good intentions may flounder if bureaucratic or institutional capacity to enforce tax compliance or manage capital projects is weak.

8. Overall Outlook & Narrative

Putting all this together, the 2026 Budget is likely to be a balancing act between ambition and realism. My broad guess is:

A deficit in the ballpark of TT$12–20 billion, constrained by rating risks and debt pressures

More assertive non-energy revenue measures (wider tax base, enforcement, new levies)

Redirected spending toward growth (infrastructure, youth, agriculture, digital)

A somewhat tighter debt management framework or reaffirmation of fiscal rules

Heavy reliance on natural gas / LNG renegotiation or expansion to buttress revenue

If executed well, the 2026 budget could begin the shift toward fiscal consolidation and sustainable growth. But missteps — especially overestimating revenue or underestimating public expectations — could expose the government to credibility risks and renewed stress.