Standard & Poor’s has affirmed its ‘BBB-‘ long-term sovereign credit rating for Trinidad and Tobago.
In its assessment published yesterday, it says, “We expect declining near-term hydrocarbon production will drive marginal GDP growth over the next few years, which will challenge the government’s fiscal consolidation efforts, resulting in a rising debt burden that is slightly higher than expected last year. Nevertheless, stable institutions and still-strong external assets offset these risks and support the ratings.”
It also states, “The stable outlook reflects our expectation that economic, fiscal, and debt metrics will stabilize near current levels over the next two years before improving when major new gas fields come online.”
It also identified and listed “downside” and “upside” scenarios as follows:
DOWNSIDE SCENARIO
We could lower the ratings over the next two years if GDP per capita fails to rise in line with our forecast. Similarly, failure to take timely corrective steps to ensure long-term balanced economic growth and the sustainability of public finances could erode the country’s capacity to respond to economic or other challenges, resulting in a lower rating that reflects institutional shortcomings. We could also lower the rating if Trinidad and Tobago’s external position materially worsens beyond our base-case scenario.
UPSIDE SCENARIO
We could raise the rating over the next 24 months if stronger economic performance and favorable long-term GDP growth prospects lead to a sustained fall in the government’s net debt burden and improve the country’s external profile.
In his response to the S&P assessment, Finance Minister Colm Imbert said it was clear that the presentations made to S&P during its annual credit rating visit earlier this year had sufficient credibility to maintain the investment grade rating for T&T.
He adds that Government will “continue taking responsible financial actions and the correct decisions to build a stronger T&T for a better future, as we navigate through turbulent financial conditions.”
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