Apr 2017 Financial News

S&P projects recovery for TT

Apr 26, 2017

INTERNATIONAL ratings agency Standard and Poors (S&P) is confident that Government’s fiscal and monetary policy adjustments, together with exchange rate policies, will lead to, “modest economic recovery over the medium term period 2017 to 2020.” This was the position advanced by the Finance Ministry yesterday.

In a statement, the ministry noted that while S&P lowered its long term credit rat- ings for TT from A- to BBB+ last Friday, it also revised this country’s economic outlook from “negative” to “stable.” S&P also maintained this country’s investment grade rating and affirmed TT’s “A-2 short term sovereign credit ratings.” The ministry said S&P believes that current economic policies being pursued by Government, including efforts to attract foreign investment to the energy sector and fiscal consolidation, will result in the country’s debt burden stabilising over the next two years. S&P also noted there was a decline in inflation to around three percent at the end of last year.

The ministry said S&P is also projecting that that despite economic challenges,”the local banking sector will maintain an average net external asset of 105 percent of current account receipts during 2017 to 2020 with public external debt remaining low, despite the global bond issue of US$1 billion in July 2016.” The ministry said this country’s stable outlook is also based on substantial financial buffers of more than adequate international reserves and a Heritage and Stabilisation Fund (HSF) of US$5.5 billion representing 25 percent of GDP. The ministry further indicated that provisional liabilities from the financial sector and non-financial public enterprises such as the National Gas Company and Petrotrin have been assessed as limited.

S&P cited the increased debt burden as one factor in lowering TT’s long term credit rating. The ministry said it is important to note that the significant increase in the debt to GDP ratio between 2014 and 2015 was largely attributable to significant downward revisions by the Central Statistical Office (CSO) of the nominal GDP for those years.

The CSO’s estimate for 2014 was revised down from $174,756.9 million to $167,764.3 million.

The estimate for 2015 was reduced from $165,286.1 million to $150,246.6 million.

The ministry said these revisions were deemed necessary on account of downward adjustments of the originally projected values of the output of energy companies following the sudden collapse of international energy prices in late 2014 and again in 2015.

Source:
Newsday
Wednesday April 26, 2017

http://www.newsday.co.tt/business/0,242824.html