Econ­o­mist Dr Vaalmik­ki Ar­joon said yes­ter­day the State of Emer­gency (SoE) could im­pact Trinidad and To­ba­go's eco­nom­ic out­look in the eyes of in­ter­na­tion­al rat­ings.

The econ­o­mist stat­ed that Moody's re­cent rat­ings would have like­ly been dif­fer­ent had the SoE been called pri­or to the re­lease of the re­cent as­sess­ment.

Moody's af­firmed Trinidad and To­ba­go’s rat­ing at Ba2 with a sta­ble out­look on De­cem­ber 16, 2024.

"It hap­pened a few weeks be­fore the state of emer­gency was an­nounced. Now, had the re­view tak­en place af­ter the SoE was an­nounced, there's a strong pos­si­bil­i­ty that we could have faced a down­grade, or at min­i­mum an out­look re­vi­sion from a sta­ble to neg­a­tive," said Dr. Ar­joon, who added the SoE could have a neg­a­tive im­pact on tourism and oth­er eco­nom­ic av­enues for Trinidad and To­ba­go.

"Al­though the state of emer­gency is in­deed war­rant­ed, giv­en the chron­ic crime sit­u­a­tion, it is al­so a red flag for height­ened so­cial risks and like­ly eco­nom­ic dis­rup­tions like re­duced for­eign di­rect in­vest­ment, low­er con­sumer spend­ing, low­er tourist ac­tiv­i­ties, weak­er busi­ness con­fi­dence," he said, adding that the Gov­ern­ment may have di­vert or in­tro­duce ad­di­tion­al fund­ing for the SoE.

He ex­plained, "Col­lec­tive­ly, all of these fac­tors in­crease the down­side risks to the coun­try's cred­it pro­file, and could could even trig­ger a rat­ing down­grade in the fu­ture, un­less the State of Emer­gency shows a mean­ing­ful drop in crim­i­nal ac­tiv­i­ties, which is main­tained even af­ter the State of Emer­gency is lift­ed. "

Ar­gu­ing that the Moody's rat­ing was pred­i­cat­ed on promis­ing de­vel­op­ments in the en­er­gy sec­tor con­cern­ing nat­ur­al gas pro­duc­tion, Ar­joon said the Gov­ern­ment would al­so need to im­prove in­vestor con­fi­dence, so that there is greater for­eign di­rect in­vest­ment in the econ­o­my as for­eign ex­change mar­gins re­main a con­cern.

"One would ex­pect, how­ev­er, that these rat­ings are like­ly to im­prove by 2027 when the Man­a­tee nat­ur­al gas comes on stream. In the mean­time, how­ev­er, there are oth­er things we can do, some of which I'm sure the gov­ern­ment is look­ing at al­ready. This would in­cludepur­su­ing leas­es for small­er gas fields, those gas fields that are deemed less fi­nan­cial­ly vi­able by Shell and BP, but can be leased to the small pro­duc­ers be­cause they can yield in­cre­men­tal gains in pro­duc­tion and rev­enue, " the econ­o­mist said.

Ar­joon al­so said the Gov­ern­ment could con­tin­ue to im­prove the fis­cal terms for fu­ture bid rounds.

On the non-en­er­gy sec­tor, the eco­nom­ics lec­tur­er said, "We ought to con­tin­ue to fa­cil­i­tate broad­er eco­nom­ic di­ver­si­fi­ca­tion by re­mov­ing the ob­sta­cles to do­ing busi­ness like for­eign ex­change re­stric­tions, cus­toms and poor de­lays, etc. All of these to­geth­er can help us to re­in­force our ex­ter­nal bal­ances, our ex­port earn­ings, to re­duce the vul­ner­a­bil­i­ties tied to hy­dro­car­bon de­pen­dence, and, of course, en­hance our in­vestor con­fi­dence over the medi­um term. These can all help to boost our cred­it rat­ings."

On Wednes­day, Fi­nance Min­is­ter Colm Im­bert stat­ed in a press re­lease that Moody's rat­ing con­firmed the Gov­ern­ment's di­ver­si­fi­ca­tion plans were be­ing recog­nised.