The Caribbean Information and Credit Rating Services Limited (CariCRIS) yesterday reaffirmed the sovereign issuer credit ratings assigned to the Government of the Republic of Trinidad and Tobago (GORTT) of CariAA (foreign and local currency ratings) on its regional rating scale.
The ratings indicate that the level of creditworthiness of T&T, adjudged in relation to other rated obligors in the Caribbean, is high.
In a news release yesterday, CariCRIS said the ratings are driven by the following strengths:
* T&T is a large regional economy, supported by both energy and non-energy activities;
* There are satisfactory financial sector, monetary and exchange rate conditions;
* T&T retains comfortable debt service coverage; and
* T&T has strong underlying balance of payments characteristics and adequate international reserves, notwithstanding some deterioration.
According to the rating agency, these rating strengths are tempered by the following factors:
1) Fiscal performance is linked to energy supply and prices, which can be volatile. Performance is also hampered by high expenditure;;
2) Social vulnerabilities persist, worsened by heightened crime levels;
3) There are continued inadequacies in statistical compilations.
CariCRIS also maintained a stable outlook on the ratings.
“The stable outlook is based on projected macro-economic stability over the next 12 to 18 months, led by:
(i) An increase in real GDP growth in 2023 and continued, albeit slower, growth in 2024;
(ii) Consequent expectations for relative stability in the debt to GDP ratio over the medium term;
(iii) Continued financial sector soundness;
(iv) Robustness in T&T’s sovereign wealth fund over the medium term; and
(v) Continued adequacy in international reserves and import cover.
Rating sensitivity factors
CariCRIS said among the factors that could, individually or collectively, lead to an improvement in the ratings and/or outlook include:
• A decrease in total general government debt to below 65 per cent of GDP over the next 12 months;
• A sustained improvement in debt servicing capability to above seven times over two consecutive years;
• A fiscal surplus in excess of 3 per cent of GDP sustained over 2 consecutive years; and
• A rise in import cover to 12 months or more over the next 24 months
Factors that could, individually or collectively, lead to a lowering of the ratings and/or outlook include:
• An increase in total general government debt to above 100 per cent of GDP over the next 12 months;
• A sustained deterioration in debt servicing capability to below three times over two consecutive years
• A fiscal deficit in excess of 10 per cent of GDP sustained over two consecutive years
• A fall in import cover to six months or less over the next 12 months
• Annual economic contraction of greater than 2 per cent over the next two years
About T&T
Trinidad and Tobago (T&T) are the two southernmost islands of the Caribbean chain and lie just seven miles off the north-eastern coast of Venezuela. The islands are outside of the usual path of hurricanes and have largely been spared the annual devastation that some of their northern neighbours have endured from storms and weather-related troughs.
The population, estimated to be 1.41 million people, comprises descendants of primarily India and Africa.
The reported adult literacy rate is above 98 per cent and education is free up to the secondary school level, with significant subsidisation of tertiary education.
The expansion of T&T’s oil industry in the 1950s moved the country from a sugar-based to an energy-based economy. The vast petroleum and natural gas reserves have enabled the country to develop downstream industries such as the production of liquefied natural gas, methanol and nitrogenous fertilizers.
The country also has strong financial services, manufacturing, and wholesale & retail distribution sectors. Tourism is a growing sector in the economy.
