Imbert upbeat despite Standard & Poor's 'negative' outlook for Trinidad and Tobago

Finance Minister Colm Imbert says despite a negative Standard & Poor's (S&P) outlook for Trinidad and Tobago, its unchanged credit rating "validates" Government's management of the economy despite the financial challenges of the covid19 pandemic.

In a statement on Tuesday evening, Imbert said S&P reaffirmed an investment grade of BBB-, a sign that the country is "a safe investment place."

In its last review, in March 2020, S&P downgraded TT from BBB to BBB- on its sovereign credit rating observing that the economy was stable but at risk of another downgrade should declines in oil and gas prices, and the effects of covid19, "contribute to a larger economic contraction; a deterioration of external liquidity or debt beyond our current expectation."

In Tuesday's report, S&P revised the outlook from stable to negative on a "weaker economy."

It affirmed BBB-/A-3 for long- and short-term foreign and local currency sovereign credit ratings; and its BBB transfer and convertibility assessment on the country.

However, it again cautioned that the pandemic and downturn in the energy sector would impact the economy and "will result in per capita income that is 19 per cent lower this year than it was a decade ago.

"The negative outlook incorporates the risks that poor economic performance and only modest GDP growth prospects prevent Trinidad and Tobago from recovering the economic resilience lost in recent years, as measured by GDP per capita.

"The negative outlook reflects our view that there is at least a one-in-three chance we could lower the ratings over the next 12-to-24 months. We expect the decline in energy production to reverse over the next two years, and the economy to return to growth by next year. This uptick should significantly reduce the government's fiscal deficit and eventually stabilise its net debt-to-GDP figures. However, it remains uncertain whether this improvement will be sufficient to bring per capita income back toward earlier levels, following five years of negative real GDP per capita growth, on a sustained basis."

However, Imbert said, "While S&P has affirmed the rating with a negative outlook in light of such exceptional headwinds, it has kept the view that conservative and competent policy management, including large financial buffers, attested to the high shock absorption capacity of the country. The rating agency highlighted that 'unlike many commodity exporters, during the boom years Trinidad and Tobago saved excess fiscal revenues,'" Imbert stated.

“This decision validates our strategy to support the economy in the short term while having a clear plan to put our public finances back under control.”