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  • 2 months ago
The global ratings agency S&P has just delivered a sobering update on Trinidad and Tobago's economic outlook, revising the country's credit rating outlook from stable to negative.

While the country's official rating remains at 'BBB-', the change signals rising concern about long-term fiscal stability, shrinking energy revenues, and a lack of economic diversification.

Urvashi Tiwari Roopnarine looks at what this downgrade warning could mean for the economy, public spending, and the pockets of ordinary citizens.
Transcript
00:00The Global Ratings Agency, S&P, has just delivered a sobering update on Trinidad and Tobago's economic outlook,
00:07revising the country's credit rating outlook from stable to negative.
00:12While the country's official rating remains at BBB,
00:16the change signals rising concern about long-term fiscal stability,
00:21shrinking energy revenues and a lack of economic diversification.
00:25Tonight, Urvishitawar Ribnarein looks at what this downgrade warning could mean for the economy,
00:31public spending and the pockets of ordinary citizens.
00:36International Ratings Agency, S&P Global, has revised its outlook on Trinidad and Tobago's credit rating,
00:43shifting it from stable to negative, while affirming the country's long-term sovereign credit rating at BBB.
00:50This move reflects growing concerns over the country's weakening fiscal and external buffers,
00:56stagnant economic growth and continued dependency on the energy sector.
01:01S&P says Trinidad and Tobago's efforts to diversify its economy and strengthen public finances
01:07have had limited successes over the many years,
01:10leaving it vulnerable to fluctuating energy prices and declining oil and gas production.
01:16The agency warns that there's at least one in three chance of a further downgrade within the next two years
01:24if the government fails to implement meaningful reforms.
01:28Specifically, S&P is urging stronger fiscal discipline,
01:31sustainable economic growth policies and action to maintain the country's external financial stability.
01:38Following her party's victory earlier this year,
01:40Prime Minister Kamala-Pasad-Basasa's administration
01:42has already cancelled plans for a revenue authority,
01:46scrapped a newly introduced property tax and shifted spending toward health and education.
01:52But analysts caution that without stronger revenue streams and greater economic diversification,
01:59progress will be difficult.
02:00GDP growth is forecast at just 1% for 2025 and 2026.
02:05Government deficit is expected at 6% of GDP this fiscal year.
02:11Net government debt to remain above 30% of GDP per capita projected at just over $19,000.
02:20Energy still makes up 80% of exports.
02:23While the country still holds significant financial reserves,
02:26including the Heritage and Stabilization Fund,
02:29which covers about 20% of GDP,
02:32S&P notes that falling energy revenues and growing deficits
02:35are putting increased pressure on these buffers.
02:39The agency says Trinidad and Tobago's long-term credit outlook could improve
02:42if the government manages to implement stronger fiscal policies,
02:47boost non-energy growth,
02:49and address persistent U.S. dollar shortages.
02:52The country's reliance on oil and gas,
02:54which has underpinned economic growth for decades,
02:57is now proving to be a double-edged sword.
03:00Declining production,
03:02cancelled gas projects with Venezuela,
03:04and the global shift away from fossil fuels
03:06are accelerating the need for reform.
03:09The bottom line,
03:10Trinidad and Tobago is at a fiscal crossroads.
03:13Without urgent reforms,
03:15the country faces the risk of a future downgrade
03:17that could raise borrowing costs
03:19and further pressure up public finances.
03:23Ravishi Tomori, Rupnarain, TV6 News.
03:26Finance Minister Devendranath Tanku,
03:28in an immediate response,
03:29states that the government recognizes S&P's assessment
03:32as both a confirmation of Trinidad and Tobago's economic resilience
03:36and a call to action to address structural challenges,
03:40including stagnant GDP growth
03:42and the limited effectiveness of past policies
03:46to diversify the economy.
03:47The Minister of Finance says he welcomes S&P's findings,
03:51stating,
03:52the S&P report emphasizes Trinidad and Tobago's resilience
03:55and underscores its position as a trusted place
03:59for international investors,
04:01particularly during periods of global uncertainty.
04:03At the same time,
04:04the revised outlook highlights the need
04:06for transformative reforms
04:08to advance economic diversification,
04:11strengthen fiscal discipline,
04:12and ensure long-term growth.
04:14The Minister elaborated on the government's strategy,
04:18adding,
04:19accelerating economic diversification is no longer optional.
04:24He says it requires a comprehensive strategy
04:26and coordinated efforts,
04:28which are central to our manifesto.
04:31In the upcoming budget,
04:32he promises key measures to support this agenda
04:35and tackle bottlenecks to long-term growth.
04:38you
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