MANILA, Philippines - The Philippines obtained its highest sovereign rating after receiving a one-notch upgrade from Tokyo-based Japan Credit Rating Agency Ltd. (JCR) yesterday.
In a report posted on its website, JCR said it has upgraded the sovereign credit rating of the Philippines from BBB to BBB+, which is just a notch away from the minimum score in the “A” category.
The latest upgrade from JCR is the 22nd positive rating action for the Philippines from major international credit rating agencies including Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings.
This development places the Philippines’ credit rating two notches ahead of Indonesia’s BBB- and at par with that of India, whose economy is seven times the size of the Philippines.
BSP Governor Amando Tetangco Jr. led government economic officials in welcoming the upgrade, which marked the third positive rating action from JCR over the past five years.
“The latest ratings decision of JCR, which makes the Philippines very close to securing a rating within the ‘A’ category, appropriately reflects the strength exhibited by the economy. Inflation has remained low, external liquidity ample, and banking system sound. All this has been achieved despite a challenging external environment,” Tetangco said.
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Finance Secretary Cesar Purisima said the upgrade to BBB+ is a recognition partly of how the country’s fiscal sector has transformed since 2010.
“Fiscal reforms, both legislative and administrative, have resulted in more buoyant revenue collections, manageable deficits, and lower debt service burden. The pace by which the debt burden has declined over the years is one solid proof of the rare kind of fiscal discipline that the Philippines exercises,” Purisima said.
The report prepared by JCR chief analyst Yoshihiko Tamura and senior analyst Makoto Ikushima said the upgrade reflected the government’s improving fiscal position; sound external position; generally stable political and social situations; and increased prospects for sustained high economic growth fueled by strong household consumption supported by remittances from overseas Filipinos as well as rising capital investments.
The new credit rating is assigned a “stable” outlook.
According to JCR, the Philippine government is committed to hold the fiscal deficit to gross domestic product (GDP) ratio within its two percent target from 2015 onward through enhanced tax collection efficiency along with proactive debt liability management.
The ratio stood at 0.6 percent in 2014 due partly to slower budget implementation particularly on infrastructure projects.
JCR said the government aims to increase its annual spending on infrastructure development to at least five percent of GDP by 2016 and plans to further enhance its tax base through rationalization of fiscal incentives and enhanced tax collection efficiency.
Japan agency raises Philippines' credit rating | Business, News, The Philippine Star | philstar.com
