The National Economic and Development Authority said the Philippines’ credit rating upgrade by Japan-based Rating and Investment Information Inc. will enhance the country’s investment climate and creditworthiness.
“Wider fiscal space enables the country not only to spend more on infrastructure but also invest in ‘suprastructure’”•quality education and science and technology innovation ecosystem required for the Philippines to become a globally-competitive knowledge economy,” NEDA director-general Ernesto Pernia said in a statement over the weekend.
R&I upgraded the Philippines’ credit rating by a notch, from “BBB” to “BBB+,” bolstering the country’s momentum toward the Republic’s goal of securing single “A” rating by 2022.
The “BBB+” rating is just a step away from the minimum score within the sought-after “A” scale. The new rating was also assigned a “stable” outlook, which indicates the absence of factors that may cause the rating to change within the short term.
“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,” said Finance Secretary Carlos Dominguez III.
“Declining poverty incidence and a lower unemployment rate, massive investments in infrastructure and human capital development have resulted in consistently high growth and more jobs. A series of socioeconomic reforms in Congress intended to achieve greater economic inclusion have impressed upon the international business community the unwavering commitment of President Duterte to sustain the growth momentum and improve the lives of our people,” Dominguez said.
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.”
“Credit rating upgrades will not only benefit the government and private sector investors through lower borrowing rates when they invest in projects for economic expansion, but will also mean ordinary Filipinos will subsequently pay lower interest rates on their loans. All of these will translate into larger investments and more opportunities for Filipino workers,” he said.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the upgrade from R&I kept the Philippines on course toward the “Road to A” agenda, a government interagency initiative for which the BSP’s Investor Relations Office serves as secretariat.
Diokno said securing the “A” rating is not an end in itself, emphasizing that the overarching objective is a stronger, stable and a truly inclusive economy.
“For the government, an ‘A’ rating will translate to lower borrowing cost for the government. For ordinary citizens, this means that the government’s ‘savings’ from reduced borrowing cost may be used to fund more roads, urban transport, mass housing, education and health services, and social welfare. Over time, interest rates on loans may also decline, thus benefiting individuals and firms securing loans for consumption and investments,” Diokno said.