Tobago Central Bank criticises Moody's downgrade as unjustified

The Central Bank of Trinidad and Tobago issued a statement Friday calling the recent downgrade to the country's debt ratings unjustified.

Moreover, the Central Bank of Trinidad and Tobago assured that the country is able to fully meet all its debt obligations.

The central bank statement predicted the twin-island nation would continue to experience healthy current account surpluses and strong foreign direct investment despite the sharp drop in oil prices.

Trinidad and Tobago's natural gas-based economy is firmly supported by its strong external asset position, low external vulnerability and stable political system, the statement said.

The international ratings agency Moody's Investors Service downgraded the twin-island nation's government bond and issuer ratings from Baa1 to Baa2 and changed the outlook from stable to negative on Thursday.

The rating agency said that persistent fiscal deficits and challenging prospects for fiscal reforms were the key reasons for the downgrade, pointing out that the country's fiscal accounts have been reporting recurring deficits since 2009.

In addition, the agency believed that the rigid structure of public expenditure, where wages, subsidies and transfers account for more than 65 percent of total expenditures, limits the country's fiscal flexibility.