Financial Crime World

Trinidad and Tobago Takes Swift Action to Contain COVID-19 Impact

Port of Spain, Trinidad and Tobago - In response to the rapid spread of COVID-19, the government of Trinidad and Tobago has taken swift action to contain its economic impact. The country’s authorities have implemented a range of measures aimed at mitigating the effects of the pandemic on its financial sector.

Containment Measures

To date, the government has:

  • Closed the country’s borders
  • Imposed travel restrictions
  • Shut down schools and universities
  • Implemented these measures to slow the spread of the virus, reduce the number of cases, and prevent further transmission

Fiscal Policy Measures

The authorities have announced a series of fiscal support measures totaling approximately TT$3.7 billion (2.3% of GDP), including:

  • Providing salary relief for up to three months to temporarily unemployed workers and those whose incomes have been reduced
  • Offering VAT and income tax refunds to individuals and small firms

Monetary Policy Measures

The Central Bank of Trinidad and Tobago (CBTT) has taken the following measures:

  • Lowered its policy rate by 150 basis points to 3.5%
  • Relaxed the reserve requirement on commercial bank deposits by 300 basis points to 14%
  • Temporarily relaxed regulatory treatment for restructured bank loans, allowing for payment deferrals, rate reductions, and waivers of penalty charges

Financial System Structure

The country’s financial system is:

  • Large and diversified, with assets nearly twice the size of its GDP
  • Dominated by six bank-led and two insurance-led groups, which account for approximately half of total financial sector assets
  • Identified 11 Systemically Important Financial Institutions (SIFIs), including four bank groups, two insurance groups, and five statutory corporations

Risk Assessment

Potential vulnerabilities in the financial sector include:

  • Energy dependence: the economy is highly dependent on the energy sector, which could pose financial stability risks if there are prolonged downturns or shocks
  • Household debt
  • Regional interconnectedness
  • Sovereign exposures
  • Conglomerate structures

The government’s swift response to contain the spread of COVID-19 has helped mitigate some of these risks, but further reforms are needed to strengthen oversight and ensure the long-term resilience of the financial sector.