Moody’s revises T&T outlook to stable

An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

In­ter­na­tion­al rat­ings agency Moody’s has re­vised Trinidad and To­ba­go’s sov­er­eign out­look from neg­a­tive to sta­ble while af­firm­ing the coun­try’s Ba2 cred­it rat­ing, re­vers­ing a move it made just six months ago amid con­cerns over de­clin­ing for­eign ex­change re­serves and ex­ter­nal vul­ner­a­bil­i­ties.

The Min­istry of Fi­nance dis­closed the de­vel­op­ment in a re­lease is­sued yes­ter­day, de­scrib­ing the re­vi­sion as a sign of grow­ing in­ter­na­tion­al con­fi­dence in the coun­try’s eco­nom­ic man­age­ment.

The lat­est de­ci­sion marks a sig­nif­i­cant shift from De­cem­ber 2025, when Moody’s af­firmed T&T’s Ba2 rat­ing but low­ered the out­look to neg­a­tive from sta­ble.

At the time, the agency al­so re­vised down­ward the out­looks of ma­jor state-owned en­ter­pris­es, in­clud­ing Her­itage Pe­tro­le­um Com­pa­ny, the Na­tion­al Gas Com­pa­ny (NGC), and Port-of-Spain Wa­ter­front De­vel­op­ment Lim­it­ed, align­ing them with the sov­er­eign out­look.

In its De­cem­ber re­view, Moody’s warned that T&T faced height­ened ex­ter­nal vul­ner­a­bil­i­ties due to a sharp de­cline in for­eign ex­change re­serves de­spite cur­rent ac­count sur­plus­es.

The agency high­light­ed per­sis­tent for­eign ex­change short­ages across the econ­o­my and con­cerns over the coun­try’s abil­i­ty to com­fort­ably meet fu­ture ex­ter­nal debt oblig­a­tions be­fore ma­jor en­er­gy projects come on stream from 2027.

The new sta­ble out­look fol­lows the In­ter­na­tion­al Mon­e­tary Fund’s re­cent Ar­ti­cle IV con­sul­ta­tion and re­flects im­proved con­fi­dence in the coun­try’s medi­um-term prospects.

Moody’s high­light­ed the Gov­ern­ment’s debt man­age­ment strat­e­gy, in­clud­ing the in­ter­na­tion­al bond is­suance com­plet­ed in Jan­u­ary, which al­lowed for a par­tial re­demp­tion of the US$1 bil­lion bond due in Au­gust 2026 and im­proved the coun­try’s debt ma­tu­ri­ty pro­file.

The rat­ings agency al­so point­ed to T&Ts sub­stan­tial fi­nan­cial buffers.

Com­bined cash and equiv­a­lent re­serves, in­clud­ing as­sets held in the Her­itage and Sta­bil­i­sa­tion Fund, were es­ti­mat­ed at ap­prox­i­mate­ly 32 per cent of gross do­mes­tic prod­uct.

Moody’s al­so not­ed that the coun­try’s in­ter­est-to-rev­enue ra­tio re­mains be­low 14 per cent.

Look­ing ahead, the agency ex­pects hy­dro­car­bon pro­duc­tion to re­ceive a sig­nif­i­cant boost from late 2027, sup­port­ing eco­nom­ic growth, ex­ports, and ex­ter­nal bal­ances.

The re­vi­sion comes de­spite con­tin­ued con­cerns raised by the IMF about the coun­try’s for­eign ex­change mar­ket.

In its May 2026 Ar­ti­cle IV con­sul­ta­tion, re­leased on Fri­day, the IMF warned that de­clin­ing re­serves and per­sis­tent for­eign ex­change short­ages could even­tu­al­ly re­quire greater ex­change rate flex­i­bil­i­ty.

The Fund pro­ject­ed in­ter­na­tion­al re­serves would fall to ap­prox­i­mate­ly US$4.8 bil­lion in 2026 from US$6.9 bil­lion in 2021.

Im­port cov­er is al­so ex­pect­ed to de­cline to about 5.5 months from 7.5 months over the same pe­ri­od.

Econ­o­mist Dr Ralph Hen­ry wel­comed the lat­est as­sess­ment but cau­tioned that the coun­try’s for­tunes re­main close­ly tied to the en­er­gy sec­tor.

“If that is so, it’s good, but one has to be care­ful about rest­ing on lau­rels be­cause our sit­u­a­tion de­pends crit­i­cal­ly on what hap­pens in the oil and en­er­gy sec­tor,” Hen­ry told Guardian Me­dia yes­ter­day.

“It’s in­ter­est­ing that some weeks ago, Moody’s was sug­gest­ing some­thing neg­a­tive, and now they’ve come back and said, based on what they’ve heard from the IMF, that it’s pos­i­tive. That’s good. To the ex­tent that we could look pos­i­tive in the eyes of the IMF and oth­er in­sti­tu­tions, that’s good. It’s good for the coun­try.”

How­ev­er, Hen­ry said the coun­try’s long-stand­ing chal­lenge re­mains eco­nom­ic di­ver­si­fi­ca­tion.
“It doesn’t negate the fact that we face a chal­lenge as a coun­try, which is to di­ver­si­fy the econ­o­my such that we are less re­liant on what hap­pens to the oil and en­er­gy sec­tor. The fi­nal analy­sis is what it is all about. We’ve been say­ing so for don­key’s years,” he said.
Greater San Fer­nan­do Cham­ber of Com­merce pres­i­dent Ki­ran Singh al­so wel­comed the de­vel­op­ment.
“The Cham­ber ap­plauds Moody’s de­ci­sion to up­grade Trinidad and To­ba­go’s out­look from neg­a­tive to sta­ble while af­firm­ing the coun­try’s Ba2 rat­ing. This pos­i­tive de­vel­op­ment, to­geth­er with the re­cent IMF as­sess­ment, sends a strong sig­nal that in­ter­na­tion­al con­fi­dence in Trinidad and To­ba­go’s eco­nom­ic man­age­ment is im­prov­ing,” Singh said.
He cred­it­ed the gov­ern­ment’s ef­forts to strength­en fis­cal dis­ci­pline, im­prove debt man­age­ment, and main­tain fi­nan­cial sta­bil­i­ty.
At the same time, Singh not­ed that busi­ness­es con­tin­ue to face sig­nif­i­cant chal­lenges.
“Chal­lenges such as for­eign ex­change short­ages, ris­ing op­er­at­ing costs, crime, and ac­cess to fi­nanc­ing con­tin­ue to im­pact many busi­ness­es, par­tic­u­lar­ly SMEs,” he said.
Singh said the im­proved out­look should be used as an op­por­tu­ni­ty to ac­cel­er­ate in­vest­ment and di­ver­si­fi­ca­tion in sec­tors in­clud­ing man­u­fac­tur­ing, tourism, agri­cul­ture, ar­ti­fi­cial in­tel­li­gence, and ex­ports.