Andrea Perez-Sobers
Senior Reporter
andrea.perez-sobers
@guardian.co.tt
The recent decision by Moody’s ratings agency to shift T&T’s outlook from stable to negative has sparked political debate, but economists say the move reflects long-standing economic pressures rather than any abrupt change in circumstances.
Economist Dr Dave Seerattan told Guardian Media yesterday the downgrade followed a predictable pattern in the global ratings industry, where one agency’s move often signals similar action by others.
“Once the first agency changes the outlook from stable to negative, everybody else tends to follow,” Seerattan said. “They are all looking at the same data and applying very similar models.”
He noted that the concerns now being highlighted did not emerge in 2025. The first change in outlook occurred in 2024, when Standard and Poor’s adjusted its assessment based on weakening indicators.
“Since then, there were already things in the data that would lead agencies to downgrade or move the outlook to negative,” Seerattan said. “And those conditions, in my view, have not changed significantly from the end of 2024 to now.”
While debate has focused on whether the downgrade timing was premature, Seerattan stressed that ratings agencies operate independently of political timelines.
“These agencies do their ratings on a cycle,” he explained. “If a report is scheduled for a particular period, it comes out then. It does not stop because there is a new government.”
Seerattan indicated that the real test for the administration will come at the next rating cycle, when agencies evaluate how policies have actually been implemented.
“That rating will be a commentary on how the government has started and how it is dealing with the problems,” he said. “Until then, I would expect the ratings we have seen since 2024 to remain largely the same.”
A key factor behind the negative outlook remains pressure on foreign exchange reserves, driven largely by challenges in the energy sector. Seerattan said ratings agencies do not expect a near-term turnaround.
“Because of the problems on the energy side, they do not see things improving in the near future,” he said. “Most forecasts point to improvement closer to 2027, when new oil and gas supplies are expected to come on stream.”
He added that energy revenues are only one part of the ratings equation. Agencies also assess the broader macroeconomic framework.
On the foreign exchange crunch, Seerattan said the long-term solution is clear but challenging.
“In the long run, the solution is to earn more foreign exchange,” he said. “That means greater international competitiveness and a stronger focus on exports.”
However, he acknowledged that competitiveness cannot be transformed quickly.
“These things do not change in a couple of years,” Seerattan said. “They take time.”
In the short term, Seerattan said there are policy measures that could ease pressures at the margins, including better alignment of interest rate policy with domestic conditions and a more coherent macroeconomic framework.
Economist Dr Jamelia Harris also described the latest Moody’s report as disappointing but not unexpected. She pointed out that the assessment was based on year-on-year changes between August 2024 and August 2025, during which import cover declined noticeably.
Harris noted that while the Government has announced initiatives such as improving international tax compliance, restarting Petrotrin, signing memoranda of understanding with countries like the United Arab Emirates, and supporting the non-energy sector through the Eximbank, these measures will take time to yield results.
“Any gains from these initiatives will materialise in the medium to long term,” she said, adding that the same applies to energy deals expected to begin contributing around 2027.
She cautioned, however, that T&T faces an immediate foreign exchange problem that requires attention on both the supply and demand sides.
“Most initiatives focus on earning more foreign exchange, which is necessary,” Harris said.
Harris warned that some recent policy decisions could increase foreign exchange demand and potentially weigh on future ratings, including changes to vehicle import rules and public-sector wage increases, which may drive higher imports and overseas travel.
