Business
Trinidad & Tobago rating stable – Moody’s Investor services
International credit rating agency, Moody’s Investors Service, has affirmed Trinidad & Tobago’s Baa1 government bond rating, adding that the twin-island republic’s economic outlook “remains stable”.
The Wall Street-based Moody’s said the “key drivers” of the rating action are “continued resilience of the government’s balance sheet,” despite some deterioration of government debt metrics, and “significant fiscal savings in a sovereign wealth fund and a strong external position supported by persistent current account surpluses and a large foreign exchange reserve buffer”.
In addition, Moody’s said a “challenging growth outlook contingent on the resumption of activity in the energy sector following a protracted recession” contributed to the rating action.
The rating agency said Trinidad & Tobago’s Baa1 sovereign rating continues to be supported by the government’s “robust balance sheet, fiscal savings, and a strong external liquidity position that mitigate susceptibility to event risk; a solid institutional framework with a high degree of policy coherence and continuity; and relatively high income per capita”.
Moody’s, however, said that the rating is constrained by the relatively small size of the economy, a limited degree of diversification, concerns about medium-term growth prospects and the relative deterioration of fiscal and debt metrics.
“The government’s balance sheet continues to be a source of strength for the rating, despite some recent deterioration as debt metrics remain in line with those of its rating peers,” it said, adding the government responded to the economic downturn with an “aggressive fiscal stimulus program”.
In this context, Moody’s said the execution of public sector capital projects “has been weak while current expenditure has increased, driven by wages and transfers to public enterprises”.
