Trinidad and Tobago: S&P Revises Trinidad and Tobago’s Debt-Rating Outlook to Negative

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Standard and Poor’s (S&P), a global debt-rating agency, has revised Trinidad and Tobago’s debt-rating outlook to negative. This change indicates potential risks for the government if immediate corrective actions are not implemented. The agency has identified three critical areas of concern that could lead to a downgrade of the country’s credit rating.

Firstly, S&P has pointed to the sustainability of public finances as a significant issue. These finances have been under strain due to prolonged deficits, which have been exacerbated by various government policies. The report specifically mentioned the dismantling of the Revenue Authority and the non-collection of property tax, alongside increased expenditures in certain sectors. S&P has warned that if the government does not take timely steps to address these financial issues, a downgrade could occur within the next six to 24 months.

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In addition to public finances, S&P has downgraded its growth projections for Trinidad and Tobago from an anticipated 2.3 percent to just 1 percent. This adjustment reflects a weakening economy that may lead to stagnation. Contributing factors to this decline include lower energy prices, rising unemployment, and diminished business and investor confidence.

The external sector has also been flagged as a risk. Reduced foreign exchange inflows are impacting the economy, and tariffs imposed by the United States, which is Trinidad and Tobago’s largest trading partner, have reportedly affected exports and worsened the balance of trade.

As the government prepares its budget, it faces significant challenges in balancing political promises with economic realities. This situation raises concerns about fiscal discipline and the potential impacts on investment and economic activity. The government will need to navigate these challenges carefully to avoid further deterioration of the country’s financial standing.

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In summary, S&P’s negative outlook serves as a warning for Trinidad and Tobago, emphasizing the need for immediate action to address public finance sustainability, economic growth, and external sector vulnerabilities. The coming months will be crucial for the government as it seeks to implement strategies that can stabilize the economy and restore investor confidence.