THE EDITOR: During the UNC election campaign, the Prime Minister assured the public that there would be no devaluation of the TT dollar if the party assumed office.
However, as the new government prepares to secure the necessary loans to meet its financial commitments – particularly payments to trade unions and other liabilities – doubts about the country’s economic stability grow.
With mounting debt and strained reserves, the government faces increasing pressure to address economic imbalances.
When financial strains become overwhelming, international lenders like the IMF often recommend devaluation as a means to restore competitiveness and stabilise the currency. Such a move can boost exports, attract foreign investment, and help manage debt repayment, but it also risks fuelling inflation and eroding purchasing power domestically.
If devaluation occurs, the Prime Minister could strategically blame the IMF, framing it as an imposed measure beyond her administration’s control.
This tactic is designed to deflect blame from internal mismanagement and portray a government as the victim of external pressure, thus potentially salvaging political capital.
However, the reality is that the previous government’s failure to diversify the economy, control spending, and manage reserves prudently have left the country vulnerable.
Ultimately, devaluation is a last resort that may be inevitable if debt levels continue to escalate and foreign exchange reserves dwindle.
Recognising this, the government must prioritise fiscal discipline, economic diversification, and economic reforms now – before circumstances force a currency devaluation, which could have far-reaching impacts on ordinary citizens and the country’s long-term stability.
GORDON LAUGHLIN
via e-mail
Trinidad and Tobago Newsday
