It has been sev­en and a half months since the new­ly elect­ed ad­min­is­tra­tion has tak­en of­fice and has had to take a full stock of the chal­lenges fac­ing the coun­try. Since the Unit­ed Na­tion­al Con­gress (UNC) won the April 28 Gen­er­al Elec­tion, the Kam­la Per­sad-Bisses­sar-led Gov­ern­ment has had to fo­cus on triage across all sec­tors of the coun­try, whilst prepar­ing to tran­si­tion in­to the hard and of­ten unglam­orous work of gov­ern­ing.

Against that back­drop, the Prime Min­is­ter’s re­al­i­ty check, sig­nalled to Gov­ern­ment of­fi­cials, that the year ahead will bring a heav­ier work­load, un­der­scores the lev­els of se­ri­ous­ness and in­ten­si­ty re­quired as the Gov­ern­ment seeks to ac­cel­er­ate its agen­da. Trinidad and To­ba­go’s eco­nom­ic, so­cial and in­sti­tu­tion­al prob­lems ex­ist­ed long be­fore the change of ad­min­is­tra­tion, and they re­quired ur­gent at­ten­tion from day one.

Speak­ing at the UNC’s an­nu­al Christ­mas fundrais­er on Sat­ur­day, Per­sad-Bisses­sar at­trib­uted de­lays to sys­tems and bu­reau­cra­cy, while in­sist­ing the Gov­ern­ment would not give up. Per­sad-Bisses­sar high­light­ed that her Gov­ern­ment has al­ready ad­vanced leg­is­la­tion and poli­cies to fight crime, strength­en pub­lic safe­ty, ex­pand the so­cial pro­tec­tion net, and re­build con­fi­dence in state in­sti­tu­tions, but added there is more work to do. There is noth­ing wrong with ac­knowl­edg­ing bu­reau­crat­ic drag or call­ing on of­fi­cials to work hard­er; this is par for the course in the life of an elect­ed pub­lic of­fi­cial.

Moody’s re­cent de­ci­sion to down­grade Trinidad and To­ba­go’s out­look from sta­ble to neg­a­tive rep­re­sents one of the most se­ri­ous eco­nom­ic chal­lenges which the Gov­ern­ment has faced since as­sum­ing of­fice. The Moody’s re­port point­ed square­ly to falling for­eign ex­change re­serves, warn­ing that fis­cal mea­sures may be in­suf­fi­cient to stem a 24 per cent de­cline in liq­uid re­serves over the past year. Stan­dard & Poor’s had al­ready sound­ed a sim­i­lar alarm in Sep­tem­ber.

While Moody’s af­firmed the coun­try’s Ba2 cred­it rat­ing, an out­look down­grade is no mere tech­ni­cal ad­just­ment. A weak­er out­look sig­nals in­creased risk, which has con­se­quences. Fu­ture Gov­ern­ment bor­row­ing, par­tic­u­lar­ly on ex­ter­nal mar­kets, is like­ly to be­come more ex­pen­sive as in­vestors de­mand a pre­mi­um. High­er debt-ser­vic­ing costs would fur­ther squeeze al­ready lim­it­ed fis­cal space, leav­ing less room for de­vel­op­ment spend­ing or so­cial sup­port.

The ef­fects of dwin­dling for­eign ex­change re­serves are equal­ly trou­bling. Busi­ness­es and con­sumers are al­ready feel­ing the strain of per­sis­tent forex short­ages. Im­porters face de­lays, high­er costs and un­cer­tain­ty, all of which can feed in­fla­tion and damp­en eco­nom­ic ac­tiv­i­ty.

Fi­nance Min­is­ter Dav­en­dranath Tan­coo has de­scribed the down­grade as pre­ma­ture, ar­gu­ing Moody’s failed to ful­ly con­sid­er the Her­itage and Sta­bil­i­sa­tion Fund and new pol­i­cy ini­tia­tives which will take ef­fect in fis­cal 2026. Fur­ther, the min­is­ter said the change in out­look to neg­a­tive re­flect­ed what they viewed as short-term down­side risks to the sce­nario which un­der­pins the rat­ing—no­tably based on the de­cline in the Cen­tral Bank’s liq­uid for­eign ex­change re­serves, which, ac­cord­ing to their method­ol­o­gy, does not in­clude the HSF.

The min­is­ter ex­plained that Moody’s’ de­f­i­n­i­tion of for­eign ex­change re­serves ex­clud­ed gold and Spe­cial Draw­ing Rights, and all the sig­nif­i­cant for­eign cur­ren­cy as­sets man­aged by oth­er eco­nom­ic agents, not­ing that Trinidad and To­ba­go’s net in­ter­na­tion­al in­vest­ment po­si­tion cur­rent­ly stands in sur­plus of US$7.5 bil­lion.

An­a­lysts, how­ev­er, cau­tion that chal­leng­ing oil and gas mar­ket con­di­tions could ex­haust bud­get pro­jec­tions if oil prices fail to reach bench­marks.

The bot­tom line is this: the down­grade does not sig­nal col­lapse, but does de­mand se­ri­ous­ness. There is a very clear need for clin­i­cal analy­sis and pru­dent pol­i­cy and de­ci­sion-mak­ing. Fis­cal slip­page, de­layed re­forms or fur­ther ero­sion of re­serves could trig­ger a full down­grade, with deep­er eco­nom­ic pain to fol­low.

Af­ter sev­en and a half months, as the Gov­ern­ment seeks to ac­cel­er­ate its agen­da, the coun­try looks for­ward to clear-eyed lead­er­ship, can­did ac­knowl­edge­ment of risks, and de­ci­sive ac­tion to re­store con­fi­dence.