The country’s prospects remained buoyant for an international ratings agency, as the Philippines’s strength is sustained amid global volatilities.
In its Asia Pacific Sovereign Credit Overview in November this year, Fitch Ratings said: “The Philippines’s ratings are anchored by a resilient economy, a credible monetary-policy framework and a large net external creditor position,” Fitch said in its latest report on sovereign credit overviews in the region.
Fitch reiterated its stable outlook for the country, citing its external finances and macroeconomics as its strength; its structural issues as its weakness; and a neutral view on public finances.
The international credit watcher further noted that the country’s steady inflow of overseas Filipino workers remittances and the increase in the business-process outsourcing industry as the major supporters to the country’s healthy growth performance for the year despite the tighter monetary conditions set by the central bank this year.
“Continued current account surpluses over 3 percent of GDP [gross domestic product] have turned the Philippines into a large net external creditor, at 7 percent of GDP in 2013,” Fitch noted.
“Strong growth and small fiscal deficits have led to a sustained decline in public-debt ratios,” the credit watcher added.
Among the key rating drivers that may turn the country’s outlook to positive is the sustained and strong GDP growth that would improve the income and development levels.
The credit watcher also seeks a further reduction in the general government debt-to-GDP ratio.
However, Fitch said the low income and poor governance compared with other similarly rated peers lingered as the country’s key weaknesses.
The credit watcher also said a period of economic overheating or financial instability may provide downside risks to the country’s rating.
Likewise, a deterioration in governance standards may also be detrimental to the country’s ratings, according to Fitch.