Standard and Poors, the international credit rating agency, has affirmed this country's credit rating at BBB-. That is an investment grade rating reflective of the country's credit strength.
S&P has also maintained its stable outlook for T&T.
Providing the rationale for its rating and outlook for T&T, the rating agency said, its expects the country's economic growth will remain weak for the next two to three years due to declining production in the country's important hydrocarbon sector.
"Low growth will contribute to fiscal deficits and rising debt in the near term. T&T's economic, fiscal, and debt metrics are weaker than last year, highlighting the importance of boosting economic performance through, among other things, increased hydrocarbon production and greater economic diversification to stabilise its financial profile in future years."
S&P said recent developments lead it to believe that natural gas production will increase after 2026, supporting GDP growth and government revenues.
"The ratings also reflect a favourable external profile, including a strong external creditor position, which includes assets of the government's Heritage and Stabilisation Fund," said the rating agency.
In a news release, the Ministry of Finance said that the S&P pointed out that "the government's large liquid financial assets mitigate the effect of economic cycles on the country's public finances and it estimates these assets will represent about 47 per cent of (Gross Domestic Product) GDP during the outlook horizon."
The ministry outlined that the S&P anticipates some decline in hydrocarbon production in the near term, leading to a temporary decrease in revenue, before significant improvement occurs in both the availability of natural gas and revenue, as major new gas fields come on stream, in line with Government projections.
“It is clear that the presentations made by the Minister of Finance and his team of technocrats, to S&P, during its annual credit rating visit earlier this year had sufficient credibility for S&P to maintain its investment grade rating for T&T,” the ministry release further stated.
Finance Minister Colm Imbert praised S&P for its balanced and measured view of the country and its validation of the Government's prudent handling of the economy and sound management of its fiscal accounts.
The ministry went on to state that over the last nine years, T&T has demonstrated judicious fiscal discipline and in so doing the country has built up stable public institutions and substantial financial assets, making the country a safe harbour for investors during trying times.
It noted that the Government launched two large, heavily oversubscribed, international bonds over the last year, US$550 million in September 2023 and US$750 million in June 2024, with great success, achieving sovereign spreads over US Treasuries that were among the lowest in the Latin America and Caribbean region (170 bps and 204 bps respectively).
“The Government reiterates its resolve to continue taking responsible financial actions and the correct decisions to build a stronger T&T for a better future, as we navigate through turbulent financial conditions,” Imbert added.
In providing its outlook for the T&T economy, S&P said: "The stable outlook reflects S&P Global Ratings' view that T&T's economy will continue to experience low growth, moderate fiscal deficits, and a slowly increasing debt burden over the next two years, while energy exports will support the country's external balances. We expect broad continuity in key economic policies after national elections due next year."
The international rating agency warned that it could lower T&T's ratings over the next two years if GDP per capita fails to rise in line with our forecast.
"Similarly, failure to take timely corrective steps to ensure long-term balanced economic growth and the sustainability of public finances could erode the country's capacity to respond to economic or other challenges, resulting in a lower rating that reflects institutional shortcomings. We could also lower the rating if T&T's external position materially worsens beyond our base-case scenario," said S&P.
