Jun 2006 Financial News

Trinidad, Barbados on separate tracks

Jun 12, 2006

STANDARD & POOR'S (S&P) says Barbados and Trinidad have many things in common but their economies are on two divergent tracks.

In a commentary on the economies of the two Caribbean states entitled Sovereign Ratings In The Caribbean, S&P said that economic prospects and credit standing have diverged over the past five years.

"While Barbados' debt burden and external position have deteriorated, Trinidad and Tobago's have improved sharply due to the development of oil and gas reserves that have propelled high economic growth, averaging over seven per cent over the last five years," the ratings agency stated.

Noting that Barbados was assigned an A- long-term foreign currency sovereign credit rating from December 1999 to August 5, 2004, S&P said this contrasted with Trinidad which received an improved rating on five occasions.

In July, S&P raised Trinidad's long-term foreign currency sovereign credit rating from BBB+ to A- , while it revised Barbados' outlook from stable to negative.

"In Barbados, large current account deficits combined with a moderate decline in international reserves have resulted in weakening external indicators over the last two years. In contrast, continuing surpluses in fiscal and external accounts in Trinidad helped boost policy flexibility and underpin strong economic growth prospects over the medium term," it pointed out.

"Per capita GDP was US$9 433 in Barbados and US$6 970 in Trinidad and Tobago in 2001. . . by 2006, however, per capita GDP is expected to converge at just over US$11 000 in both countries, with Trinidad and Tobago's rapid growth, driven by the burgeoning energy sector, fuelling its convergence".

The ratings agency said despite the divergence in the ratings of the two countries, both were "solidly in the investment-grade category and are rated much higher than most of their peers in the region". (GE)


Daily Nation
June 12, 2006
http://www.nationnews.com/story/298441087773730.php