Thursday, 13 February 2020


JAPAN-BASED debt watcher Rating and Investment Information Inc. (R&I) upgraded its credit rating for the Philippines to “BBB+” from “BBB” on the back of the country’s continued economic growth, and affirmed its foreign currency short-term debt rating of “a-2.”

In a statement on its website, the credit rating agency said the revised rating signified the sufficiency of the country’s creditworthiness, “though some factors require attention in times of major environmental changes.”The a-2, on the other hand, indicates that the “certainty of the fulfillment of a short-term obligation is high, though some factors require attention,” it added.

In explaining the upgrade, R&I noted that “the Philippines’ economy continues to grow, driven by aggressive public investment under President Rodrigo Duterte’s administration. Although this has led to wider fiscal deficit, the government keeps its commitment to fiscal discipline and is confident of achieving the downward trend of the debt ratio.”

“With the steady progress of the government’s reforms to modernize the tax system and socioeconomic agenda, the level of national income is also rising,” it said, adding that the security situation in Mindanao improved after the Bangsamoro Transition Authority was launched.

“In addition to robust private consumption, backed by remittance inflows from overseas Filipinos, investment is increasing its contribution to the economy,” the credit rater said. “Led by the government, which promotes accelerated infrastructure investment, aggressive investment projects are being implemented, notably for a transportation network of roads and railways.”

“These projects are expected to serve as a platform for medium- to long-term growth, in R&I’s view,” it added.

Government officials welcomed the upgrade.

“We welcome the credit rating upgrade from R&I that, in our view, was overdue in light of the positive trends under the Duterte administration that have deepened investor confidence in the Philippine economy,” Finance Secretary Carlos Dominguez 3rd said.

Given that a sovereign credit rating is an assessment of a country’s ability and willingness to pay debts on time and in full, Dominguez said “the Philippines’ strong macroeconomic fundamentals, plus the Duterte administration’s aggressive investment strategy, while maintaining fiscal discipline, show that we deserve the higher rating.”

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the upgrade kept the country on course to attain its desired “A” rating.

“Given significant improvements in the country’s macroeconomic conditions, which are made possible in part by a favorable inflation environment and a sound financial system, hitting an A-scale rating from R&I and the other debt watchers within the next two years is achievable,” he added.

“On the part of the BSP, we will continue to adhere to the sound conduct of monetary policy and banking supervision. We will also vigorously pursue our additional mandates of supervising the country’s payments and settlements system and spearhead efforts to ensure a stable financial system.”

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