Business

Trinidad faces ratings downgrade from Standard and Poor's

BY ALEXIS MONTEITH
Observer writer

Friday, July 12, 2019

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At a time when Jamaica has a positive outlook, Trinidad and Tobago's sovereign ratings have been downgraded by credit rating agency Standard and Poor's (S&P).

An S&P overview stated that “we are low­er­ing our long-term for­eign and lo­cal cur­ren­cy sov­er­eign cred­it rat­ings on Trinidad and To­ba­go to 'BBB' from 'BBB+' and are af­firm­ing our short-term for­eign and lo­cal cur­ren­cy sov­er­eign cred­it rat­ings at 'A-2'.”

S&P's transfer and convertibility assessment, the overview stated, would also be adjusted to 'BBB+' from 'A'.

In the meantime, Jamaica, which has not received an S&P update since last year, currently holds a 'B' for its long-term and short-term foreign and local currency sovereign credit ratings, and a 'B+' transfer and convertibility assessment. It's outlook was also improved from stable to positive in 2018.

The credit agency's downward revisions for Trinidad and Tobago were adjusted for “lower-than-expected energy production and economic growth” which it anticipates will soften the country's revenue base and impede the planned balancing of the budget by fiscal year 2020-2021.

The review also cited delays in the “institutional reforms to strengthen revenue collection and improve the provision of timely economic data” as reasons for its revision.

However, Trinidad's prime minister, Dr Kei­th Row­ley, says he remains optimistic because of positive expectations for the future and confidence in the Government, and noted that S&P, despite the downgrades, has upgraded Trinidad and Tobago's outlook from negative to stable.

“The rea­son for this is our favourable ex­ter­nal pro­file and our sta­ble democ­ra­cy,” the prime minister was quoted as saying by the Trinidad Guardian. “They al­so say it re­flects on the coun­try's sol­id lev­el of gov­ern­ment fi­nan­cial as­sets and good fis­cal and ex­ter­nal per­for­mance.”

Rowley assured that the Government will be working to avert the predicted fall in oil production and issued a reminder that it has been making adjustments for the challenging economy citing reductions of the last two budgets.

“Any Gov­ern­ment that is not pre­pared to take the hard de­ci­sions for the peo­ple's in­ter­est is a Gov­ern­ment that you have no use for,” he said.

Last year, S&P indicated that Jamaica's ratings were constrained by its high debt and interest burden as well as GDP which remained low despite slow and modest gains.

It anticipated that within a year the country could be upgraded again if these slight gains in GDP continued, external liquidity was further strengthened and high primary surpluses and tight fiscal policies persisted.

It warned, however, that if a turnaround from Jamaica's improved external position occurred and if fiscal targets were missed, it would result in a downward revision of the outlook to stable.


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