Tancoo's Budget Faces a Gas Economy in Transition

As Finance Minister Davendranath Tancoo prepares his October 13 budget, declining gas output, a heavy debt load and a stubborn foreign-exchange shortage test the UNC government's promise of brighter days.

Trinidad and Tobago's government will lay out its spending plans for fiscal 2027 on Monday, October 13, 2026, when Finance Minister Davendranath Tancoo rises in the House of Representatives to deliver his second national budget. The presentation, the first full-year statement crafted entirely under Prime Minister Kamla Persad-Bissessar's United National Congress administration, arrives at an awkward moment for an economy that still lives and dies by natural gas. Persad-Bissessar has promised that brighter days lie ahead, a pledge she repeated on her return from the United Nations General Assembly, but the numbers Tancoo inherits leave little room for celebration. Opposition Leader Pennelope Beckles is scheduled to respond on October 17, under the Standing Orders.

The energy picture is one of managed decline rather than collapse. Natural gas production averaged 2,541 million standard cubic feet per day in 2025, roughly flat on 2024, but preliminary figures compiled by EnergyNow put first-quarter 2026 output near 2,427 MMscf/d, about 4.5% below the 2025 average and well short of the near 3 billion cubic feet per day the country routinely produced earlier in the decade. There is a brighter thread. Liquefied natural gas production rose to 17.6 million cubic meters in 2025 from 16.6 million in 2024, the first year-on-year increase since 2022, and the National Gas Company reported profit after tax of $3.46 billion for 2025, its best result in more than a decade.

The Dragon in the room

No single project shadows this budget more than Dragon, the shallow-water gas field that straddles the maritime boundary with Venezuela and holds more than 4 trillion cubic feet of reserves. Shell and the National Gas Company hold a 30-year production-sharing contract granted by Caracas in December 2023, and former prime minister Keith Rowley once spoke of drawing some 350 million cubic feet per day from it once developed. The path has been anything but smooth. Washington revoked the project's sanctions licenses in April 2025, then reversed course in October 2025 as Shell prepared to resume preliminary work, and by February 2026 Trinidad said it had received two US general licenses covering Dragon and the neighboring Manakin-Cocuina field. Drilling is targeted for the second quarter of 2027, subject to a final investment decision.

The complication is political as much as commercial. On September 30, 2025, US Secretary of State Marco Rubio told Persad-Bissessar that American support for Trinidad's access to Dragon depends on steps to ensure the arrangement does not provide significant benefit to the Maduro government, according to a State Department statement. Port of Spain has moved carefully, announcing a bilateral cooperation roadmap with Caracas on September 3, 2025, and the prime minister met acting Venezuelan President Delcy Rodriguez in New York on September 23. For a budget preview, the lesson is plain. None of Dragon's potential revenue can yet be banked, and the field will not supply gas in time to ease next year's shortfall.

Deficits, debt and the forex question

Tancoo's first budget, delivered October 13, 2025, projected expenditure of $59.232 billion against revenue of $55.367 billion, for a deficit of $3.865 billion, on assumptions of oil at US$73.25 per barrel and gas between US$4.25 and US$4.35 per MMBtu. At the mid-year review in June 2026, the minister said the deficit had been narrowed to 4% of gross domestic product, down from 5.8%, and that the Heritage and Stabilisation Fund had grown to US$6.6 billion. Central Bank data for the first seven months of the fiscal year showed the overall deficit narrowing to $1.72 billion from $3.86 billion a year earlier, with a primary surplus of $2.14 billion. Moody's revised its outlook on the country to stable from negative.

The debt load remains heavy. The Central Bank put adjusted general government debt at $148.1 billion, or 84.7% of GDP, as of April 2026, and economist Mariano Browne has warned that a model relying on energy rents to fund fuel subsidies and transfers is no longer viable, noting the International Monetary Fund projects Trinidad and Tobago growth of just 0.7%. Former finance minister Colm Imbert has noted that only $92 million of the mid-year supplement went to developmental programs, and the American Chamber of Commerce has voiced unease about the limited focus on growth-oriented investment.

For the business community, the recurring worry is foreign exchange. Chambers from Greater San Fernando to Chaguanas and Tobago have described forex shortages as a persistent constraint on stocking shelves, forecasting and profitability, with Greater San Fernando president Kiran Singh calling for a more equitable distribution system. The Trinidad and Tobago Manufacturers' Association, under president Dale Parson, is pressing for uninterrupted access to ports, customs and foreign exchange as it targets a 71% rise in non-energy exports by 2030. Analysts want measurable diversification targets rather than aspirations, and they will read Monday's statement for whether revenue-led consolidation can hold without stronger private-sector growth. The Tobago House of Assembly, for its part, has asked for a $4.12 billion allocation.

What Tancoo signals on Monday, whether he leans on local-market borrowing, tighter revenue collection at the Inland Revenue Division, or the promise of Venezuelan gas, will set the tone for the UNC's first full year in office. The government has pointed to a run of upstream agreements, including bpTT's Cypre field, which began producing in April 2025, and the Coconut and Aphrodite developments expected to deliver first gas in 2027, as evidence that production can be stabilized. Whether that is enough to ease the foreign-exchange squeeze, sustain the subsidies citizens expect, and still narrow the deficit is the question the budget must begin to answer.