After the boom years of the 1970s, the recession of the 1980s came as a rude awakening. The government was forced to adopt a more cautious attitude towards spending and taxation. After enjoying an average annual GDP growth of 5.5 percent between 1974 and 1981, Trinidad and Tobago saw its GDP shrink by an average of 6.1 percent between 1982 and 1987, forcing the government to cut its spending, slash public-sector workers' salaries, and restrict imports with high taxes. Following the advice of the International Monetary Fund (IMF), the government raised taxes through the introduction of a value-added tax (VAT) and devalued the currency. Since the mid-1990s, the economic situation has been much
|Exchange rates: Trinidad and Tobago|
|Trinidad and Tobago dollars (TT$) per US$1|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
more stable. There has been steady growth and relatively low levels of inflation , averaging 4 percent annually. The TT dollar stood at 6.26 to the U.S. dollar in 2001, representing a fall in value from 4.25 in 1993, when it was allowed to float freely against the U.S. dollar.
Trinidad and Tobago has a strong domestic banking sector, with 2 of the 5 principal banks under local, private-sector control. The country is also a regional center for financial services, with Trinidadian banks holding interests in subsidiaries elsewhere in the Caribbean. The Central Bank of Trinidad and Tobago acts as the country's central bank, controlling the flow of currency and setting interest rates. The Trinidad and Tobago Stock Exchange, which opened in October of 1981, listed 23 local companies and 4 companies from Barbados and Jamaica in 1999.