Economists are urging Trinidad and Tobago’s government to conduct a rigorous assessment of the nation’s economic standing following Moody’s recent revision of the country’s financial outlook from stable to negative. While credit ratings remain unchanged, this development signals heightened scrutiny from international agencies.
Dr. Vaalmikki Arjoon, a prominent UWI economist, contextualized the decision within global energy market cycles. “Our ratings trajectory consistently correlates with energy performance,” he explained. “They strengthen during periods of elevated production and pricing that boost export earnings and fiscal revenues, while weakening when production declines or prices drop.”
The core concern centers on dramatically shrinking foreign exchange reserves, which have plummeted from approximately US$11 billion in early 2015 to roughly US$4.6 billion by October this year. This deterioration stems primarily from a sustained decline in natural gas output, which has fallen from over 4 billion standard cubic feet per day (bscf/d) in January 2015 to approximately 2.7 bscf/d currently.
Arjoon identified multiple contributing factors: “Seven consecutive years without exploration block awards (2015–2022), combined with fiscal rigidity, policy uncertainty, investor caution, protracted commercial negotiations, and aging infrastructure have severely weakened the pipeline for new gas projects.”
With energy commodities constituting 80% of export earnings, sustained production declines directly translate to reduced export receipts, diminished forex inflows, and declining reserves—the fundamental factors underpinning the negative outlook.
Former finance minister Mariano Browne characterized Moody’s report as predictable, highlighting additional pressures from unresolved wage demands that will further strain foreign exchange resources. “The absence of any realistic market-based approach to solving the forex crisis has led to rapidly declining reserves,” Browne stated.
Both experts acknowledge governmental efforts to prioritize smaller, lower-cost gas fields with shorter development timelines. Major projects including Manatee, Ginger, and Coconut are anticipated to deliver first gas from 2027 onward, potentially improving forex inflows and strengthening reserves medium-term.
Moody’s report specifically noted liquid forex reserves have fallen 24% over the past year to $3.2 billion as of August 2025—below previous projections of stabilization at approximately $4 billion. This intensifies forex shortages and reduces coverage for upcoming external debt payments.
The rating agency emphasized that while new hydrocarbon projects should eventually bolster reserves, this remains unlikely before 2027. The negative outlook reflects concerns that the government’s newly announced measures—enhancing Eximbank’s focus on key exporters, advancing transfer pricing legislation, strengthening financial crime enforcement, and intensifying economic diversification efforts—may prove insufficient to arrest the decline before new energy projects commence operations.
Arjoon suggested that the government’s proposed blueprint could drive further diversification and attract foreign direct investment (FDI), generating new forex earnings. However, he emphasized that lasting rating improvement will require continued structural adjustment: “Expanding non-energy export capacity and attracting FDI that generates sustainable foreign-exchange earnings are essential.”
Browne criticized recent administrative changes—including board replacements at commercial banks and the dismissal of Exim bank’s Navin Dookeran—as insufficient to address fundamental structural issues assessed by rating agencies. “There are policy gaps and weak measures that don’t address the fundamental issues,” he observed. “They merely give the appearance of effort without addressing the basics: without adequate revenue, you must cut expenditure; without sufficient forex earnings, you must address pricing.”
