In a vote of confidence, international debt watcher S&P Global upgraded the country’s credit rating from “BBB” to “BBB+” with a “stable” outlook.
In a report released Tuesday, 30 April 2019, S&P recognized the strengths of the Philippine economy that affirms the country’s creditworthiness.
S&P observed, “The Philippines has above-average economic growth, a healthy external position, and sustainable public finance.” The stable outlook on the rating, “reflects our view that the Philippine economy will maintain its momentum over the medium term, in combination with contained fiscal deficits and stable public indebtedness.”
The upgrade from S&P follows sustained robust economic growth—which has consistently settled above the 6.0-percent mark for the last 15 quarters despite global economic challenges. It comes after the continued exercise of fiscal discipline as the government invests more in much needed infrastructure and human capital development.
The upgrade recognizes implementation of vital policy and infrastructure reforms seen to fuel robust, sustainable, and more inclusive economic growth for the Philippines. Major reforms include laws on tax reform, liberalization of the rice sector, and strengthening of the Bangko Sentral ng Pilipinas’ charter, as well as initiatives to increase the ease of doing business and relax the foreign investment negative list.
In response to the favorable rating action by S&P, Finance Secretary Carlos Dominguez III said: “S&P Global’s credit rating upgrade for the Philippines by one notch higher to “BBB+” is an undeniable tribute to President Duterte’s unwavering commitment to bold reforms and sound economic policies as embodied in the 10-point Socioeconomic Agenda of the administration and his strong political will to get these tough initiatives done at the soonest.”
“To his credit, President Duterte has transcended all the political chatter and stayed focused on pursuing policy initiatives, such as tax reform, trade liberalization and infrastructure modernization, that are necessary to sustain the growth momentum, attract investments and ensure financial inclusion for all Filipinos on his watch. We also want to thank the legislature for their support of the President’s socioeconomic program,” Dominguez added.
National Treasurer Rosalia De Leon, welcomed the news, stating that “The upgrade is a recognition of our sound policies on liability management. We have kept our debt in check—even as we invest more on infrastructure and social services. We are committed to fiscal discipline, and this makes the Philippines a truly creditworthy sovereign in the eyes of the international financial community.”
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said S&P’s favorable rating action is recognition of sound economic management, prudent monetary policy, and strong financial sector supervision.
“Over the years, the BSP has remained committed to its price and financial stability mandates, providing an enabling environment for the economy to flourish. Armed with a new charter that strengthens its ability to carry out its primary mandate of price stability and supervise the banking sector, the BSP will continue to lend support to the economic development goals of the country,” Diokno said.
The new rating is just a notch away from “A minus” rating which is within the sterling “A” credit-rating territory.