The Government must answer to the people of Trinidad and Tobago as to why our nation has been downgraded by two international credit rating agencies ; Standard and Poor’s as well as Moodys subsequently leading to our plummet into junk status. Only one year ago the previous ratings received were “hopeful”, but now they have slipped into an indicator of economic doom and possible economic catastrophe.
So what has led to this disastrous change ? The fact is the current administration has managed the economy in a very haphazard and ineffective manner .
The rationale given by the international agencies of a mixture of poor economic management by the Government to cover it’s expenditure coupled with over extensive Government borrowing effectively reflects the modus operandi of this Government which has operated in the past year without vision, without a sustainable economic plan, without developing sufficient diversification measures as well as a clear absence of innovation to move the national economy forward.
The question that must be posed as a result of these downgrades is; ” Has the current outstanding debt of State Enterprises been placed into Jeopardy as these downgrades have truly tarnished our nation’s image on the borrowing market?”
The danger and volatility created by this situation besides the future difficulty of borrowing money on the international and local market is the fact that many state enterprises especially those based in the energy sector have unsecured loans which are not supported by collateral , so Government must now inform the population if the international and local creditors will be calling upon these state owned Companies to secure the outstanding owed value.
One must understand that the possibility of such a situation emerging where creditors call on Government to put forward some form of guarantee as to how outstanding public sector loans will be repaid is quite plausible given that these loans would have been issued unsecured during an economic period when this nation’s credit ratings demonstrated the effective ability to successfully fulfill it’s debt obligations.
Now that ratings suggest this nation is in “junk status” based on improper economic management by Government the pertinent question that those in authority must answer is how will the Government deal with this issue if it arises and what resources will be used as collateral to secure these debts?
Dr. David Lee