Tancoo: Moody’s report can hurt investment into Trinidad and Tobago

The content originally appeared on: Trinidad and Tobago Newsday

Davendranath Tancoo –

FOREIGN direct investment (FDI) in Trinidad and Tobago fell last year by $3 billion and could fall further after a recent Moody’s report, Oropouche West MP Davendranath Tancoo warned on Saturday, laying blame squarely at the feet of the Government.

Moody’s expected a “strong recovery” next year of 5.9 per cent, but noted a 90 per cent debt-to-GDP ratio amid pandemic pressures and slightly downgraded TT’s credit rating from Ba1 to Ba2, on a nine-tier scale from Aaa (best) to C (worst) where Ba is fifth best, with each tier split into three levels from 1 (best) to 3 (worst).

Ba1 has speculative elements, while Ba2 is speculative, with both sub-tiers having “a substantial credit risk.”

The agency said the cost of handling the pandemic had weakened TT’s credit profile to Ba2.

However, Moody’s improved TT’s outlook from negative (where the rating could fall in the medium-long term) to stable (suggesting it should stay at the same level.)

Finance Minister Colm Imbert last Friday complained the Moody’s report on TT’s credit ratings clashed with a recent IMF report on TT’s debt management during the pandemic.

“This decision by Moody’s collides with the policy advice we have received from all international organisations to protect our country and support the recovery in the current circumstances.

“It helped avoid destruction of the economic and social fabric and was both sensible and sensitive in our view.”

Tancoo, in a statement last Saturday, accused Imbert of “a desperate act of conmanship and deception” and of trying to trivialise TT’s downgrade.

Saying Moody’s was one of the world’s top rating institutions whose work was used by the World Bank and the IMF, Tancoo blamed the fall in TT’s rating on Imbert’s alleged failure to enact policies to safeguard the economy while encouraging investment.

“The issue is that the Moody’s rating and the IMF mission report on TT do not cancel each other out, nor ‘collide’ as Imbert implies.

“Instead, we see our deteriorating economy not exacerbated by the covid pandemic as the minister and the PNM Government would the public believe, but rather by their own wilful incompetence and mismanagement, which has led to the collapse of investment in TT.”

Tancoo said the 2021 UN Conference on Trade and Development said over the past fiscal year TT had lost US$439 million ($3 billion) in FDI, estimated as the Caribbean’s worst performer.

“It is not accidental that Minister Imbert did not mention IMF’s concern about the size of the fiscal deficit and growing public debt. It simply did not fit the narrative of Minister Imbert’s story.”

Tancoo said Moody’s rankings were used to make by serious investment decisions, with a low/falling grade warning investors about the country’s ability to repay its debt.

“What Moody’s is warning about already is that this Government’s borrowing policy has put the country in a position where international credit rating agencies and investors as a result cannot be sure that this Government can meet its obligations.” He said the report said the debt was increasingly intergenerational, with future generations crippled by the Government’s borrowing allegedly without transparency or investment to build capacity or diversify to generate new revenue streams which can repay the debt.

“Instead of levelling with the country, Imbert continues to mislead and misrepresent,” Tancoo alleged.

“The lack of confidence in the economy means that this can only get worse! It means the country will find it increasingly difficult to borrow from credible sources.

“It means investment needed to kick-start the economy, to create jobs, and sustainable growth will not be attracted to this country.”

He alleged spin-doctoring and cover-up by Imbert, instead of sensible analysis and crafted solutions.

“He has to continue raiding the HSF (Heritage and Stabilisation Fund) to prop up his deficit and foreign exchange crisis, continue the sale of the nation’s patrimony, and escalate borrowing from local and international sources, and the imposition of more taxation on an already overburdened population.”

Tancoo said Imbert must not hide away, but tell the country the truth.

“Imbert’s failure and refusal to confront this problem head-on means that things will only get worse for this country.”