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The Trinidad & Tobago Business Guide (TTBG, 2009-10)

8 TTBG

8 TTBG 09/10

a townhouse or apartment for under TT$1.5 million (about US$238,000). Endorsement from international agencies ... The optimists were bolstered by encouraging reports in late 2008 from Moody’s and the IMF, both of which saw Trinidad and Tobago as being well placed to cope with a downturn. The country has US$11 billion in external reserves and its Heritage and Stabilisation Fund, nearly a year’s import cover, and a debtto-GDP ratio of 1:3. Its sovereign rating for forex long-term debt with Standard and Poor’s is A, and with Moody’s Baa1 (March 2009). The effect was somewhat dampened in February when the CL Financial bailout rattled the ratings agencies. But the IMF’s Article IV executive assessment, released in March, complimented the government’s spending cuts and fiscal policy, while warning of the risks of contagion and the need to cut spending in the context of lower energy prices. (The IMF mission and the government disagreed over exchange rate policy.) Government spending has been a topic of popular debate ... Public concern about the impact of slower growth, generally tighter conditions and fear of job losses gradually blunted earlier anxiety about the high level of government spending, which Prime Minister Patrick Manning says is essential to modernise the country and earn “developed nation status” by 2020. Current expenditure more than doubled between 2002 and 2007, and capital expenditure multiplied ten times, from TT$732 million to $7.9 billion. Some of the results are already visible, including the International Waterfront development in Port of Spain (costing TT$2 billion plus), with its 22-storey office blocks, a 26-storey Hyatt, and a huge amount of conference space (Port of Spain is being marketed in 2009 as a conference destination). The headquarters of the ill-fated Free Trade Area of the Americas might well have been sited here. It is now to house Trinidad and Tobago’s proposed International Financial Centre, which had attracted interest from the likes of Lehman Brothers and Merrill Lynch before their recent tribulations. Opposite the waterfront, a new “government campus” is taking shape (TT$1.6 billion) to house ministries and state agencies; a mile or so away, on the southern side of the Queen’s Park Savannah, a massive Performing Arts Academy (TT$517 million) should be complete this year or early in 2010. A companion is being built in San Fernando. A magnificent new residence “Helped by a booming energy sector, Trinidad and Tobago has achieved an impressive improvement in economic indicators and has established itself as the Caribbean’s main industrial and financial center ... The direct impact from the global financial crisis has been limited, reflecting a liquid and well-capitalized banking sector that has relied little on foreign borrowing. Resilience also arises from large international reserves and low debt ratios ... During 2002–07, real GDP growth averaged 9 percent; per capita income doubled in U.S. dollar terms; both the unemployment rate and the public debt ratio were halved; and the country has acquired one of the strongest credit ratings in the region. Improvements in social, political, and competitiveness indicators, however, have lagged the country’s economic successes.” IMF Article IV Mission to Trinidad and Tobago, March 2009Trinidad and Tobago’s investment grade rating expresses Moody’s positive view about the ability of Trinidad and Tobago to respond to a downturn in the commodity cycle without a significant increase in credit risk relative to its rating peers ... The massive increase in energy output over the past few years should serve to protect the economy from the ongoing dramatic fall in prices and the fallout thereof. Trinidad and Tobago is the world’s largest exporter of ammonia and methanol and supplies the U.S. with almost 60% of its liquefied natural gas needs. In addition, diversification in the downstream industry has created the possibility for a higher concentration of local content in the energy sector.” Moody’s Investor Services, December 2008 for the prime minister, with an adjoining diplomatic centre, is already complete. ... but investment in transport has been largely welcomed ... Investment in transport has been more warmly received. There are well over half a million cars on the move in Trinidad, an island barely 70 miles by 70 with only 800 kilometres (500 miles) of roadway; queues of commuters spend hours every day inching into and out of the city. Road maintenance continues to be a problem, and public transport consists of unpredictable buses and fleets of private mini- 09/10 TTBG 9

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