After the International Credit Rating Agency Revised the Country’s Outlook from ‘Stable’ to ‘Negative’
PORT OF SPAIN – The Trinidad and Tobago government has blamed inaccurate figures for the decision by the United States-based rating agency, Standard and Poors (S&P), to revise the country’s outlook from stable to negative.
The Ministry of Finance in a statement said that new rating was because the rating agency expects macroeconomic and external imbalances to persist over the next two years.
S&P, in determining its outlook, has pointed to, among things, persistent gas supply shortages noting that it does not expect crude oil production, which, together with oil exploration represents 17 per cent of the energy sector, to increase over the next two years, due to natural decline and uncertainty surrounding new sources of production.
But in its statement, the Ministry of Finance said that with respect to the outlook, it was faced with the challenge of overcoming inaccurate forecasts of oil and gas production given by the Ministry of Energy and Energy Industries to S&P.
“These inaccurate forecasts were based on 2017 estimates which bore no relationship to the actual production of gas in 2018.
“Indeed, whereas the average production of natural gas in Trinidad and Tobago in 2017 was 3.37 billion standard cubic feet per day, by January 2018, gas production had improved to 3.91 billion standard cubic feet per day, an increase of 16 per cent over the 2017 average.”
The Ministry said that “S&P was unfortunately given lower forecasts of gas production by the Ministry of Energy and Energy Industries than the actual 2018 production, as well as inaccurate forecasts of oil production”
It said that the latest data available to the Ministry of Finance indicates that economic growth for Trinidad and Tobago in 2018 is now projected to be between 1.5 and 1.8 per cent and that the forecast is consistent with the figures given by S&P in its latest credit rating update for Trinidad and Tobago.
According to the Ministry of Finance, the estimated economic performance in 2017, that was given in the last budget statement, delivered in October 2017, has also improved now that all of the economic data for the second half of 2017 is in.
“The improved performance for 2017 is based on better than expected increases in the production of natural gas. For the last three years, the production of gas in the first half of any given year had generally turned out to be greater than the production of gas in the second half of the year, because production was declining. However, there was a turnaround in the latter half of 2017, with a significant increase in gas production.”
The Ministry of Finance said that in the first half of 2017, gas production averaged 3.24 billion standard cubic feet a day, whereas in the second half of 2017, the average gas production increased to 3.49 billion standard cubic feet per day, an increase of eight per cent in the second half of the year compared to the first half of the year. In fact, in December 2017, gas production shot up to 3.82 billion standard cubic feet per day and went to 3.91 billion standard cubic feet in January 2018.
“As a result, the estimate of -2.6% growth in GDP given in the 2017 Review of the Economy, which was based on gas production from January to June 2017 is now being revised to closer to minus one per cent for 2017, a 50 per cent improvement.
“Regrettably, however, because of inaccurate estimates of gas production given by the Ministry of Energy and Energy Industries earlier this year, which were transmitted to the International Monetary Fund (IMF), but which bore no relationship to the actual production figures in 2018, the IMF’s current projections of economic growth for Trinidad and Tobago are lower.
“The Ministry of Finance will correct this misinformation in the annual Article 4 consultation with the IMF, which is scheduled to take place within the next two months,” the statement added. – CMC