S&P Raises Trinidad and Tobago Outlook

S&P has affirmed its A minus rating on Trinidad and Tobago and revised its outlook on the rating to positive from stable. The move reflects continuing fiscal and current account surpluses that, in turn, strengthen macroeconomic stability and external flexibility. At the same time, the implementation of legislation establishing the Heritage and Stabilization Fund, which is estimated to reach 9% of GDP in 2007, will provide an increasingly important buffer for the country’s open, energy-based economy, says S&P analyst Roberto Sifon Arevalo. “Trinidad and Tobago’s strong current account surplus performance is expected to continue, and is forecast to reach 24% of GDP in 2007 and at about 22% in 2008,” says Sifon Arevalo. “At the same time, the fiscal performance is expected to remain positive on the back of strong energy prices,” he adds. The agency also notes a falling government debt burden with inflationary pressures that have resulted in the central bank increasing open market operations to an expected 7% of GDP in 2007 from 1.8% of GDP in 2004.