S&P affirms Trinidad and Tobago

Standard & Poor's said it affirmed the Republic of Trinidad and Tobago's A- long-term and A-2 short-term foreign-currency sovereign credit ratings and its A+ long-term and A-1 short-term local-currency sovereign credit ratings.

The outlook is stable.

S&P said the ratings on Trinidad and Tobago reflect the country's booming energy economy, which underpins continuing fiscal and current account surpluses and, in turn, improves fiscal and external flexibility; and the country's public sector, which is in a net external creditor position of about 50% of current account receipts in 2006.

The ratings are constrained by an increasing nonenergy fiscal deficit due to slow development of the more labor-intensive nonenergy sector, which is compounded by the rapid growth in government expenditure; and by the contingent liability posed by off-budget nonfinancial government-owned entities, some of which suffer from persistent losses and heavy indebtedness, the agency said. The nonenergy deficit (overall deficit minus energy revenue) increased to about 16% of GDP in 2005 from 8% of GDP in 2004 and is expected to be higher in 2006.

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