Structural Fiscal Policy in an Oil-Based Economy: A Proposal for Trinidad and Tobago
This paper presents an estimation of the structural fiscal balance for Trinidad and Tobago, and discusses the current situation of the country in meeting the preconditions for the establishment of a structural fiscal balance target. The authors makes some recommendations, which include a budgeting process that is centralized in the ministry of finance and in which the political discussions is focused on the composition of spending and associated priorities, rather than on the level of spending. The level of total spending should be defined using a macroeconomic framework that provides a foundation for the projected structural fiscal revenue and the targeted structural fiscal balance. Other recommendations to improve the methods of fiscal policy involve deepening the transparency of fiscal data, including revenues, expenditure, debt, and contingent liabilities.