United States-based ratings agency Moody's has reaffirmed the Baa1 government bond rating of Trinidad and Tobago, with an economic outlook regarded as "stable" for the country.
The New York offices of the company released the report on Trinidad and Tobago Wednesday on its website.
Key drivers of the rating action, Moody's said, were:
• Continued resilience of the government's balance sheet despite some deterioration of government debt.
• Significant fiscal savings in a sovereign wealth fund and a strong external position supported by persistent current account surpluses and a large foreign exchange reserve buffer.
• A challenging growth outlook contingent on the resumption of activity in the energy sector following a protracted recession.
"Trinidad and Tobago's Baa1 sovereign rating continues to be supported by the government's robust balance sheet, fiscal savings, and a strong external liquidity position that mitigate susceptibility to event risk; a solid institutional framework with a high degree of policy coherence and continuity; and relatively high income per capita. The rating is constrained by the small size of the economy, a limited degree of diversification, concerns about medium-term growth prospects and the relative deterioration of fiscal and debt metrics," Moody's said.
The company said despite the economy's strengths, concerns remain about Trinidad and Tobago's growth prospects.
"The economy continues to face headwinds even after GDP contracted at an average annual rate of 1.4 per cent between 2009 and 2012. We expect that growth of less than one per cent in 2012 will be followed by a modest recovery in 2013 given a projected two per cent increase in GDP. Risks to this forecast remain tilted to the downside driven by an uneven performance in the energy sector, weak domestic demand, and poor regional growth prospects," the report said.