According to Bangko Sentral ng Pilipinas Governor, the Philippines is on its way to achieve an “A’’ credit rating grade by international debt rating agencies. Since 2013, the Philippines has enjoyed an investment grade rating of BBB/stable from Fitch Ratings. S&P rates the Philippines as BBB+ while Moody’s rates the country a Baa2 with a stable outlook.
In February 2020, Fitch Ratings revised the Philippines’ Outlook to Positive from Stable and affirmed its Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB’. Fitch Ratings considered the country’s macroeconomic position for its rating– GDP growth of 6.4% and 6.5% in 2020 and 2021, strong private consumption and rising Infrastructure projects, overseas remittance inflows, favorable job prospects and a decline in unemployment rate. Fitch also noted that the Philippine economy appears somewhat less vulnerable than regional peers as tourism accounts for less than 3% of GDP.
The Central Bank of the Philippines (BSP) and the Department of Finance (DoF) are working together to ensure that key measures of its previously launched “Road to A” program will be implemented faster. These reforms include the Corporate Income Tax and Incentives Rationalization Act, Passive Income and Financial Intermediary Tax, amendments to the Anti-Money Laundering Act of 2001 and Human Security Act of 2007, amendments to the Agri-Agra Laws and reforms in the financial consumer protection and deposit secrecy.
A credit rating is an assessment of a government’s capability to pay its financial commitments and credit rating of A means lower borrowing interests for the public sector projects and wider access of funds for the private sector from international firms which only invest on A-rated countries.
(Sources: Fitch Ratings; The Philippine Star; Manila Bulletin)