International ratings agency Moody\u2019s has revised Trinidad and Tobago\u2019s outlook from stable to negative, citing short-term risks tied to falling official foreign exchange reserves.<\/p>\n
This marks the second time in three months that an international ratings agency has revised the country\u2019s outlook from stable to negative.<\/p>\n
However, Finance Minister Davendranath Tancoo yesterday pushed back on the timing of the move, saying that Moody\u2019s acted \u201ctoo prematurely\u201d before the Government\u2019s new fiscal and growth measures could take effect.<\/p>\n
Moody\u2019s yesterday said it had shifted the country\u2019s outlook to negative, citing short-term downside risks.<\/p>\n
The agency pointed specifically to a drop in the Central Bank\u2019s liquid foreign exchange reserves, which under its methodology exclude the Heritage and Stabilisation Fund (HSF).<\/p>\n
According to the Central Bank\u2019s most recent data, Trinidad and Tobago\u2019s net official reserves stood at US$4.6 billion at the end of October, representing 5.4 months of import cover.<\/p>\n
\u201cNet Official Reserves\u201d is a metric that outlines the foreign exchange available to defend the Trinidad and Tobago dollar and to pay for the country\u2019s import bill and all government foreign obligations.<\/p>\n
In a release from the Finance Ministry, Moody\u2019s maintained the Government of Trinidad and Tobago\u2019s long-term local and foreign currency issuer and senior unsecured ratings at Ba2.<\/p>\n
Moody\u2019s said the rating reflects the country\u2019s strong credit profile, including substantial fiscal buffers such as the Heritage and Stabilisation Fund and cash-equivalent assets totalling 45% of GDP, as well as expected gains in oil and gas production by 2027.<\/p>\n
\u201cWhile our credit rating was maintained just as we expected my only recommendation was that Moody\u2019s should have taken a few more months to ascertain the impact of the recently implemented Government strategies \u2013 a comprehensive policy agenda aimed at rebalancing growth, revitalising the economy, securing a sustainable fiscal trajectory and stabilising foreign exchange reserves,\u201d Tancoo stated in the release.<\/p>\n
\u201cTo adjust in December prior to affording the measures the opportunity to take effect in Fiscal 2026 was too premature in our view,\u201d he said.<\/p>\n
Narrow definition of forex reserves<\/p>\n
Tancoo said Moody\u2019s negative outlook was driven largely by its narrow definition of foreign exchange reserves.<\/p>\n
\u201cThe decline in Moody\u2019s narrow definition of foreign exchange reserves happened to be the contributing factor in their negative outlook. Their definition of foreign exchange reserves not only excludes gold and Special Drawing Rights, but, more critically, ignores all the significant foreign currency assets managed by other economic agents,\u201d Tancoo said.<\/p>\n
\u201cIndeed, Trinidad and Tobago\u2019s net international investment position currently stands in surplus of US$7.5 billion; in other words, our country holds US$7.5 billion more of US dollar assets, than US dollar debts,\u201d he said.<\/p>\n
Tancoo said this underscores the country\u2019s foreign-currency resilience and shows that, on a net debt-to-GDP basis, Trinidad and Tobago outperforms many countries in Latin America and the Caribbean.<\/p>\n
\u201cI am confident that the prudent and foresightful management of our significant foreign exchange reserves, in addition to the dynamism of our Government\u2019s new macro-fiscal approach, will foster greater economic resilience and drive a stabilisation of our outlook in the near future, as we work towards rating upgrades,\u201d Tancoo said.<\/p>\n
On December 16 last year, Moody\u2019s affirmed Trinidad and Tobago\u2019s Ba2 rating with a stable outlook.<\/p>\n
The agency said the rating reflected the country\u2019s return to sustained growth, led mainly by the non-energy sector.<\/p>\n
Moody\u2019s noted then, however, that the outlook remained stable due to a decline in the country\u2019s foreign exchange reserves in early 2024, caused by lower energy receipts amid falling gas prices.<\/p>\n
S&P revises outlook<\/p>\n
In September international rating agency Standard and Poor\u2019s affirmed T&T\u2019s investment grade rating at BBB-, while revising the outlook from stable to negative.<\/p>\n
\u201cS&P\u2019s affirmation of Trinidad and Tobago\u2019s investment grade status reflects the country\u2019s long established democratic institutions, economic stability, favourable external profile and buffers (\u2018This profile includes a strong external creditor position, supported by assets in the Heritage and Stabilisation Fund (HSF)\u2019). However, S&P has revised the outlook from stable to negative, signalling the need for reforms to enhance fiscal sustainability and improve economic diversification,\u201d the Finance Ministry stated in a release on September 25.<\/p>\n
\u201cWe could revise the outlook to stable over the next 24 months if we believe government policies will improve fiscal sustainability, and lead<\/p>\n
to more favourable long-term GDP growth prospects and sustain the country\u2019s external profile,\u201d S&P stated.<\/p>\n","protected":false},"excerpt":{"rendered":"International ratings agency Moody\u2019s has revised Trinidad and Tobago\u2019s outlook from stable to negative, citing short-term risks tied…\n","protected":false},"author":2,"featured_media":314604,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,8929,50,56,54,55],"class_list":{"0":"post-314603","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-local","11":"tag-news","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/314603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=314603"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/314603\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/314604"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=314603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=314603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=314603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}