University of the West Indies economist Dr Roger Hosein is not surprised that Moody's has downgraded T&T's outlook from stable to negative as the economy "has seen the external market prices for its main export products fall substantively."
In an e-mailed response to the T&T Guardian, he said: "Indeed, the production of our crude oil and natural gas would have shown signs of deterioration in the case of crude oil, and stagnation in the case of natural gas.
"I have said many times that the impulse sent to the economy by these make-work programmes started over a decade ago was not healthy and indeed was the exact opposite of what was required at the time. These dole-like programmes sent the wrong signals to some segments of the labour force and we may have destroyed their long term work ethic."
Noting that persistent fiscal deficits was one of the reasons given for the downgrade, Hosein said there have been many calls for a return to a balanced budget that had not been heeded.
"As the economy stalled, the Government tried to spend its way back into equilibrium. The aspects of government expenditure outlay that was spent on consumption would have helped to ease the employment situation marginally, but the real benefits of the increase in government expenses would only come from that aspect of government expenditure on the capital side," he said.
"For example as the Point Fortin Highway comes fully on stream, vast amounts of under-utilised and unutilised resources from the south-west corridors of the economy will come into productive use. To the credit of the government, they have lowered the budgetary numbers deployed for both oil and gas. This change must not be cosmetic nor short term."
Hosein predicted that there will be no significant improvements in oil and gas prices in the next three years "unless a random shock of significant proportion takes place."
"This is the new normal and the powers that be can use this crisis to reset many things in the economy, including a greater intolerance for crime and poor worker ethic," he said.
The Heliconia Foundation for Young Professionals said the Moody's rating was "even more worrying as it comes on the heels of a downgrade of Petrotrin's credit rating by Standard and Poor's Rating Agency from BBB- to BB+."
The group's president, Michael Coppin, called for a rethinking of current structure of public expenditure on wages, subsidies, and transfers, which accounts for more than 65 per cent of total expenditures.
"It is clear that the current strategy of waiting for oil prices to increase and running large social programmes such as the public assistance grant, food assistance grant, Cepep and URP in the meantime is not sustainable," Coppin said.