S&P Downgrades TT

Credit rating agency Standard and Poor’s (S&P) has downgraded Trinidad and Tobago sovereign ratings.

In its rationale, S&P said, “The downgrade reflects lower-than-expected energy production and economic growth that we believe will weaken the government’s revenue base and delay plans to balance its budget by the 2020-2021 fiscal year.

“It also reflects delays in making institutional reforms to strengthen tax revenue collection and to improve the provision of timely economic data. These factors weaken the country’s resilience against external shocks.”

S&P overview in its Research Update of July 9, 2019 noted:

• The Republic of Trinidad and Tobago’s lower-than-expected energy production and economic growth will weaken the government’s revenue base and delay its plans to balance the budget by fiscal year 2020-2021.
• At the same time, institutional reforms to strengthen revenue collection and improve the provision of timely economic data have taken longer than expected, and we do not expect to see material dividends from these reforms in the near term.
• These factors weaken the country’s resilience against external shocks.
• As a result, we are lowering our long-term foreign and local currency sovereign credit ratings on Trinidad and Tobago to ‘BBB’ from ‘BBB+’ and are affirming our short-term foreign and local currency sovereign credit ratings at ‘A-2’.
• We are also revising down our transfer and convertibility assessment to ‘BBB+’ from ‘A’.
• The stable outlook reflects our expectation that Trinidad and Tobago’s large government financial assets will continue to provide a fiscal and external safeguard that will mitigate economic volatility.

Ratings Scale

*Source: www.thebalance.com