CariCRIS reaffirms ‘high’ creditworthiness ratings for the government of the Republic of Trinidad and Tobago

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      • CariAA (Regional Scale Foreign Currency)
      • CariAA (Regional Scale Local Currency)
      • ttAAA (Trinidad and Tobago National Scale Local Currency)

PORT OF SPAIN, Trinidad – Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the sovereign issuer credit ratings assigned to the Government of The Republic of Trinidad and Tobago (GORTT) of CariAA (Foreign and Local Currency Ratings) on its regional rating scale. These ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other rated obligors in the Caribbean, is high.

CariCRIS has also maintained a stable outlook on the ratings. The stable outlook is based on projected macroeconomic stability over the next 12 to 18 months, led by:

(i) a return to real GDP growth in 2022 and continued expansion in 2023; (ii) robustness in T&T’s sovereign wealth fund over the medium term; (iii) improvement in fiscal balances as COVID-19 impacts draw to a close, along with some positive tax receipts improvements and expenditure control measures; (iv) resultant expectations for reduction in debt to GDP; (v) continued financial sector soundness and (vi) adequacy in international reserves and import cover.

The ratings are driven by the following strengths:

(1) Trinidad and Tobago (T&T) is a large regional economy, supported by both energy and non-energy activities;

(2) there are satisfactory financial sector, monetary and exchange rate conditions;

(3) T&T retains comfortable debt service coverage, and

(4) T&T has strong underlying balance of payments characteristics and adequate international reserves.

These rating strengths are tempered by the following factors: (1) fiscal performance is linked to energy supply and prices, which can be volatile; performance is also hampered by high expenditure, (2) social vulnerabilities persist, worsened by rising unemployment and heightened crime levels, and (3) there are continued inadequacies in statistical compilations.

Rating sensitivity factors

Factors that could, individually or collectively, lead to an improvement in the Ratings and/or Outlook include:

  • A decrease in total general government debt to below 65 percent of GDP over the next 12 months;
  • A sustained improvement in debt servicing capability to above 7 times over 2 consecutive years;
  • A fiscal surplus in excess of 3 percent of GDP sustained over 2 consecutive years;
  • A rise in import cover to 12 months or more over the next 24 months.

Factors that could, individually or collectively, lead to a lowering of the Ratings and/or Outlook include:

  • An increase in total general government debt to above 100 percent of GDP over the next 12 months;
  • A sustained deterioration in debt servicing capability to below 3 times over 2 consecutive years;
  • A fiscal deficit in excess of 10 percent of GDP sustained over 2 consecutive years;
  • A fall in import cover to 6 months or less over the next 12 months;
  • Real GDP growth of < 1% in 2022 and/or growth of < 2% in 2023.

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