Govt eyes ‘A’ rating via panel
Credit to Author: RALPH VILLANUEVA| Date: Wed, 08 May 2019 16:22:12 +0000
THE government said on Wednesday it would form an interagency committee to create a roadmap on and systemize the Philippines’ pursuit of securing an “A” investment-grade credit rating from international debt watchers before President Rodrigo Duterte ends his term.
In a briefing in Malacañang, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the roadmap, to be finalized next week, would show “the commitment of key economic and infrastructure officials and agencies to get our efforts properly credited to ‘A’ before 2022 and help further bring about more benefits to the economy and to our people.”
“We shall direct our efforts in addressing the issue of further increasing our per capita income, enhancing our potential output, strengthening our external payments buffers, keeping prices stable, fortifying public finance and elevating governance standards,” he added.
His statement comes a week after S&P Global Ratings raised the country’s credit status from “BBB” to “BBB+” with a stable outlook. It is two notches above the minimum investment grade rating and a notch away from “A” level ratings.
The Philippines, the credit rating agency said, could expect another upgrade over the next few years if the government makes significant gains in its fiscal reform program or if its external position improves such that its status as a net external creditor becomes more secure over the long term.
According to Guinigundo, the government would gradually move to sustain policy and structural reforms, not only to attain the coveted “A” rating, but also to “sustain our economic growth.”
“We want to make sure that employment opportunities are available and to make a dent in terms of our efforts to reduce poverty in the Phiippines,” he said.
Guinigundo also said the government “must do a Catriona [Gray] swirl to be noticed, to be set apart from the rest,” referring to the Filipino-Australian Miss Universe whose slow-motion twirl during the swimsuit portion of the international beauty competition in Thailand last year made a sensation on the internet.
Also at the briefing, Finance Secretary Carlos Dominguez 3rd called the “BBB+” rating a “definitive win” for the administration and said it would attract more foreign investments.
“It is important to note that institutional investors already consider us ‘single A- rated’ and are willing to accept lower interest rates to invest in our products. They believe we can do it and we must show them that, indeed, we can,” he added.
The upgraded rating, according to him, was a result of President Duterte’s decision to invest in game-changing reforms, such as the Tax Reform for Acceleration and Inclusion (Train) and rice tariffication laws.
The Train law, Dominguez explained, increased the government’s ability to fund public investments, with less reliance on loans.
“When we do borrow, we prioritize official development assistance or ODA, as it has cheaper and longer terms of repayment, as opposed to borrowing from private capital markets,” he said.
The Finance chief urged Congress to pass the remaining tax-reform bills to “complete the process of making the tax system simpler, fairer and more efficient.”
“Generally, S&P is telling us that we need to continue strengthening governance, policy and reform measures,” Dominguez said.
National Treasurer Rosalia de Leon said the rating upgrade would result in interest payment savings of at least P3 billion through 2022.
This, she added, is just from commercial bond issuances.
De Leon also said the upgrade “is really an inspiration for us to do more, to do our best.”
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