Govt working to bag ‘A’ credit rating by 2022
Credit to Author: Tyrone Jasper C. Piad| Date: Wed, 12 Feb 2020 17:33:43 +0000
THE government remains steadfast in working to attain an “A” investment-grade credit rating for the Philippines, up from the current “BBB,” in the next two years, the Bangko Sentral ng Pilipinas (BSP) said after Fitch Ratings upgraded its outlook for the country.
In a statement on Tuesday night, BSP Governor Benjamin Diokno said that, “as part of our Road to ‘A’ agenda, we are more vigorously communicating the economic milestones, as well as the governance and institutional strengthening the Philippines achieved in recent years.”
“At the same time, we are meticulously tracking how the economy is progressing in terms of achieving a wide array of metrics that will solidify our position as an ‘A’ rated economy in two years,” he added.
The country deserves “a credit rating upgrade from Fitch, and the ‘positive’ outlook should soon lead us there,” the central bank chief said.
Diokno’s statement comes almost a day after Fitch Ratings raised its outlook for the Philippines from stable to positive, citing its “sound macroeconomic policy framework” that is seen to “support high growth rates with moderate inflation.”
It also cited progress on the Philippines’ fiscal reforms that would allow government debt to stay within “manageable levels.”
Fitch Ratings set the country’s economic growth projection at 6.4 percent and 6.5 percent in 2020 and 2021, respectively, on the back of strong private consumption and increasing public infrastructure spending.
According to Diokno, a rating upgrade would attract more investors to the country, leading to more jobs created.
In a message to reporters also on Tuesday night, Finance Secretary Carlos Dominguez 3rd said the country was looking forward “to the further alignment of its credit ratings to its level of creditworthiness, as indicated by a decreasing debt-to-GDP (gross domestic product) ratio and positive economic prospects from record investment levels in infrastructure and human capital.”
According to him, a better credit rating would allow the economy to grow further because it would encourage more spending.
“A higher credit rating is crucial to the quest for a more inclusive growth, because it will lower borrowing costs for the government and private-sector investors, and eventually lower interest rates for the loans of ordinary Filipinos,” the Finance chief explained.
“Both will spur greater investments, which, in turn, will mean faster growth and more jobs,” he said.
The improved outlook could also be attributed to government efforts to strengthen macroeconomic policies, including its comprehensive tax reform packages, according to Dominguez.
Meanwhile, Socioeconomic Planning Secretary Ernesto Pernia said “the Philippines is actively paving the way toward its next stages of economic development, and the gains should be acknowledged by credit rating agencies like Fitch.”
WITH A REPORT FROM PNA