Oct 2006 Financial News

S&P affirms T&T rating

Oct 19, 2006

Trinidad and Tobago’s rating by Standard & Poor’s has been affirmed based on a stable outlook rating.

S&P affirmed its “A-” for long-term foreign and “A+” for long-term local currency sovereign credit ratings.

It also affirmed its “A-2” short-term foreign and “A-1” short-term local currency sovereign credit ratings on T&T.

S&P said the ratings reflect a booming energy economy, which underpins continuing fiscal and current account surpluses which improves fiscal and external flexibility.

It noted that the public sector, which is in a net external creditor position of about 50 per cent of current account receipts in 2006, is considerably stronger than the “A” median’s 23 per cent.

S&P pointed out that the ratings were constrained by an increasing non-energy fiscal deficit due to slow development of the more labour-intensive non-energy sector and the liability posed by off-budget non-financial government-owned entities, some of which suffer from persistent losses and heavy indebtedness.

S&P noted that the GDP’s performance along with T& T political and macroeconomic stability and high energy prices, boosts policy flexibility and underpins strong economic growth prospects over the medium term.

“At the same time, and due to an expansionary fiscal stance and to slow development and tax reductions in the more labour-intensive non-energy sector, the non-energy deficit (overall deficit minus energy revenue) increased to about 16 per cent of GDP in 2005 from 8 per cent of GDP in 2004 and is expected to be even higher in 2006.

This highlights the country’s heavy exposure to changes in energy prices, a risk that is compounded by large increases in government expenditure,” the report noted.


Source:

The Trinidad Guardian
Thursday 19th October, 2006

http://www.guardian.co.tt/business2.html