PORT OF SPAIN, Trinidad, CMC – The Trinidad and Tobago government said that it recognises that the latest ratings by the United States-based Standard & Poor’s (S&P) is a confirmation of the country’s economic resilience and a call to action to address structural challenges, including stagnant gross domestic product (GDP) growth and the limited effectiveness of past policies to diversify the economy.
“The S&P report emphasises Trinidad and Tobago’s resilience and underscores its position as a trusted place for international investors, particularly during periods of global uncertainty. At the same time, the revised outlook highlights the need for transformative reforms to advance economic diversification, strengthen fiscal discipline, and ensure long-term growth,” said Finance Minister Davendranath Tancoo.
S&P affirmed Trinidad and Tobago’s investment grade rating at BBB-, while revising the outlook from stable to negative, warning also “there is at least a one-in-three chance we could lower the ratings over the next six to 24 months”.
It noted that Trinidad and Tobago’s “fiscal and external buffers have eroded gradually over many years”, reflecting limited progress in boosting economic growth and strengthening fiscal management.
“On September 25, S&P Global Ratings revised the outlook on the Republic of Trinidad and Tobago to negative from stable. At the same time, we affirmed our ratings on the country, including our ‘BBB-/A-3’ long- and short-term foreign and local currency sovereign credit ratings.
“The transfer and convertibility assessment remains ‘BBB’,” it said, adding that the negative outlook reflects the risk of a downgrade unless meaningful and timely steps are taken to strengthen public finances, ensure balanced economic growth, and maintain the country’s strong external position.
“The negative outlook reflects our view that there is at least a one-in-three chance we could lower the ratings over the next six to 24 months. The country’s fiscal and external buffers have been gradually weakening over time, and its long-term economic growth has been low. “Despite many efforts, there has been only limited progress by previous administrations in diversifying the economy, leaving it vulnerable to volatile energy prices while output from the oil and gas sector has recently declined”.
S&P said that the country faces United States dollar shortages, which have weakened local businesses’ ability to pay suppliers and import key goods. It was heavily managed.
“The newly elected government, together with the Central Bank, has signalled its intent to address US dollar shortages. We believe chronic US dollar shortages could complicate the country’s efforts at economic diversification.
“The Central Bank has sustained a quasi-fixed exchange rate since 2016. Since then, US dollar shortages have constrained economic activity, weakening local businesses’ ability to pay suppliers and obtain key imports,” the US-based rating agency said.
“At the start of the pandemic, the Central Bank lowered its repurchase rate to 3.5 per cent from five per cent in a more accommodative monetary policy stance, and has kept the rate unchanged since then. The interest rate differential between local securities and US Treasuries has narrowed, but
“Inflation has historically been low, averaging 2.7% over the past five years, and we expect price-level growth to average two percent in the next three years,” S&P said in its report.
It stated that its ratings reflect Trinidad and Tobago’s long-established democracy, characterized by smooth government transitions and continuity in key economic policies.
“However, over many years, the country’s fiscal consolidation efforts have failed to reverse a rising government debt burden. Similarly, there has been only limited progress by past administrations in strengthening public institutions to boost fiscal revenues, bring greater spending discipline, diversify the economy, and restore fiscal and external buffers that allow the small, open economy to absorb external shocks.”
It stated that the five-month-old government of Prime Minister Kamla Persad Bissessar has signaled early efforts to focus on economic diversification.
“The Government announced that it would cancel the proposed Revenue Authority planned by the previous government, opting instead to boost resources at the Board of Inland Revenue. It also cancelled a recently introduced property tax, eliminated State funding for some security services and property rentals, and increased health care and education spending.
“The Government plans to strengthen public finances, but it could be difficult to meet these objectives if low economic growth continues to limit Government revenues and erode fiscal buffers,” it said. S&P said that the local economy remains heavily dependent on oil, gas, and petrochemicals.
“Projects last year that would have allowed Trinidad and Tobago access to Venezuelan gas reserves have been cancelled. We expect production to increase in 2027; however, a portion of the new supply will help offset decreases in existing fields.
“Furthermore, we believe new projects will largely occur in deeper waters, which can be more difficult and costly to access,” it said, forecasting that Henry Hub natural gas will average US$3.50 per million Btu (mmBtu) for the
It also projects that West Texas Intermediate (WTI) crude will average $55 per barrel (bbl), while Brent crude will average $60 per barrel for the remainder of the year.
Economic growth is projected at 1% this year and in 2026, with real GDP per capita expected to reach US$19,173 by 2025.
S&P said Trinidad and Tobago’s large liquid financial Stabilisation Fund (HSF) helps mitigate economic cycles. Tancoo noted that accelerating economic diversification is no longer optional.
“It requires a comprehensive strategy and coordinated efforts, which are central to our Manifesto. In the upcoming Budget, I will announce key measures to support this agenda and tackle bottlenecks to long-term growth”.
He stated that the government is committed to taking decisive action to address challenges and build a stronger Trinidad and Tobago in a manner that is shared by all and sustainable for future generations.
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