Finance Minister Colm Imbert has boasted that Trinidad and Tobago’s credit rating has not been downgraded by international credit rating agency S&P, despite the agency changing its outlook for this country to negative from stable.
Imbert in a release on Wednesday said, “Trinidad and Tobago’s long term sovereign credit rating has been affirmed by S&P at BBB-, which is an Investment Grade Rating, and we have thus not been downgraded.”
Imbert continued to quote an excerpt S&P statement which assessed positive indicators for the economy’s recovery, and thus allowed for the rating to remain unchanged.
He said in the release, “Further, the first line in the Overview in S&P’s Update states that “Trinidad and Tobago’s expected fiscal consolidation and its sizable Government assets will continue to support the investment-grade rating.”
He continued, “All that has occurred is that Trinidad and Tobago’s outlook has been adjusted from stable to negative as a result of the negative impact of the COVID-19 pandemic and economic challenges in the energy sector. However, it is well established that a change in outlook is not a rating change and is merely a projection of the potential, i.e. a one in three chance, of a rating change over the next one to two years.”
However the S&P overview, did also assess other factors which could negatively affect the economy and lead to a potential downgrade.
S&P said it expected the decline in energy production to reverse over the next two years, and the economy to return to growth by next year and that 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.”
The release added while Trinidad and Tobago’s expected fiscal consolidation and its sizable government assets will continue to support the investment-grade rating S &P were still wary of the pandemic’s impact.
The overview said the agency expects “the impact of the COVID-19 pandemic, together with the domestic energy sector downturn that began before, but was exacerbated by, the pandemic, will result in per capita income that is 19% lower this year than it was a decade ago.”