Business and finance experts are not surprised by Standard and Poor’s (S&P) downgrade of T&T from stable to negative.
On December 24, the rating agency made its announcement that it was downgrading T&T.
The agency had said: “The change in outlook to negative from stable reflect an, at least one-in-three chance that prolonged low energy prices and potentially poor GDP growth prospects could result in a steadily rising debt burden, leading to a downgrade in the next two years.”
In an interview yesterday, former energy minister Conrad Enill said he was not surprised by the downgrade. He said once the energy prices were no longer at the high level that they were at, then T&T would have expected a downgrade. He added that government’s expenditure had not changed but revenues had.
Enill suggested that: “Despite the fact that you have less revenue from the oil companies, the Government has decided to maintain the current level of expenditure at will, and fill the gap between income and expenditure by borrowing, selling and a couple other things. As far as internally is concerned, it is business as usual.”
He said one of the challenges ahead was the satisfaction of demand for US currency because if the demand remained high and the revenues from the energy sector were low they might not be able to fulfil that demand.
The rating agency’s downgrade came ahead of Prime Minister Dr Keith Rowley’s address to the nation tomorrow. And stating his predictions about what the Prime Minister would say to the nation, Enill said the changed conditions in T&T’s economy would be one of the items on the agenda.
“We need to get more efficient as a society, the way in which we use the resources have to change. We can no longer go after consumer spending, in the manner in which we had grown accustomed. We basically have to look at using the dollar for investment and savings. And waste wherever it exists cannot be tolerated.”
Enill added that if the Prime Minister makes his address around the points he highlighted, it means that the population would have to re-think how it does business. A devaluation is “madness” and would not be a prudent move, Enill said.
“The Government does not get up one morning and decide that it would devalue...the whole question of a devaluation or talk of a devaluation should really not be on the agenda. What should be on the agenda is how we use the resources we currently have, to create more value and at the same time, to recognise that if we do not become more productive we would be pricing ourselves out of the international market where we expect to trade with other countries.”