Malacañang assured on Friday that the government is already addressing “persistent weaknesses” in the Philippines’s credit profile cited by credit-rating agency Moody’s Investors Service in its recent report on the country’s economy.
Communications Secretary Herminio B. Coloma Jr. said that, among others, infrastructure development is being “accelerated” and that “productive sectors such as agriculture, will receive more focused attention.”
“Please add tourism and manufacturing,” Coloma told the BusinessMirror when asked about measures being taken by the government to redress the “weaknesses” reported by Moody’s.
Coloma said the government was also giving “priority attention on high poverty-incidence provinces to promote inclusive growth.”
This developed as Palace Spokesman Edwin Lacierda cited Pulse Asia’s Ulat ng Bayan on its November 2014 nationwide survey which reported that “88 percent, or almost nine in 10 Filipinos, view the coming year with hope.”
Lacierda said this was “in spite of the challenges that the Philippines faced in 2014,” including the most recent Typhoon Ruby.
“Hope and optimism have always been characteristic of the Filipino people, who, throughout history, have consistently refused to give in to negativity, or to be cowed by challenges,” he said.
Lacierda added that the Aquino administration itself had witnessed that “we are a government borne of our people’s belief that the tide can turn in the Philippines; that good governance can replace an entrenched culture of corruption.”
In its report, Moody’s said the “weaknesses” threatening to hobble the $270-billion economy include continued subpar government revenue, rather high foreign currency-denominated debt and the country’s low per-capita gross domestic product (GDP).
It cited an earlier World Bank report which indicated that per-capita GDP in the Philippines reached $1,581.01 as of latest, or 13 percent of the global average.
Moody’s also noted that “the government’s revenue” as measured against GDP ”is low, and debt affordability remains weak when compared to investment-grade peers; although both ratios have improved in recent years.”
But Moody’s also warned that the amount of loans the country takes from foreign sources makes the country vulnerable to sharp foreign-currency fluctuations, citing the relatively high proportion of government debt denominated in foreign currency that, it said, renders the Philippines susceptible to currency risks even as this, Moody’s noted, “has also improved recently.”
“In addition, the country’s GDP per capita is among the lowest for investment-grade countries,” the credit watcher also said. “Policy-makers may also face the challenge of sustaining the positive trajectory of institutional quality through the political cycle,” it added.