Augustine: S&P rating shows potential for growth

THA Chief Secretary Farley Augustine is optimistic about Standard and Poor's (S&P) BBB- investment grade rating for TT with a stable outlook. In July 2021, the country was given a BBB- investment grade but with a negative outlook.

In an interview with Newsday on Wednesday, Augustine said the latest rating on the country brought “some mildly positive news.”

He said: “It shows that there is a potential for growth. That is expected because where the world is going now in terms of energy prices and with the conflicts happening, Tobago stands to benefit, and so that rating did not really come as a surprise.”

He said this would benefit the economy as a whole because the rating positions the country in a place to have a good credit rating.

He said where facilities for borrowing are available, "governments operate by borrowing money, spending and paying back." But he said it is important "to ensure that what we borrow and our debts is not more than 50 per cent for income at any given time.”

He added: “It is that delicate balancing act that we keep doing all the time. So having a rating from an international agency is always important because it is upon that basis that countries get the opportunity to get loans and also to attract investments from investors far and wide...

"People would definitely look at Tobago and be able to say – here is an island, part of a larger country that is coming out of covid19 and doing much better than when we entered covid19.”

He said that the assembly also intends to engage the services of S&P.

“The THA in the past utilised Moody’s for its ratings and after conversation with the Minister of Finance last week, I have also decided that we would also take our ratings from S&P. it would make sense for both the THA and the Central Government to have their ratings done from the same rating agency. The rating agency will no doubt want to rely on the macroeconomics of the sovereign, which is TT as a whole,before giving a rating specific to Tobago.”

Finance Minister Colm Imbert in a statement recently confirmed this rating saying this is the first time over the last 15 years that S&P took a positive action on Trinidad and Tobago. Imbert said in the current situation facing the world economy, with multiple cases of economic and financial distress, negative rating actions are the norm rather than the exception. The rating, he said, singles out TT very favourably, both regionally and globally, as a safe harbour for investors.

But at the UNC’s weekly media briefing last Sunday, Mayaro MP Rushton Paray said Imbert twisted the truth by saying that this stable outlook is “an investment grade rating reflective of TT’s credit strength." He said the truth is that TT is a speculative risk. The credit rating, he said, is not a statement on economic growth or management, it is a statement on the ability of a nation to repay its debt and we are just one notch above junk status.