By Bianca Cuaresma
THE Philippines won yet another credit upgrade from Tokyo-based credit watcher Japan Credit Rating Agency (JCRA), no matter the sharply diminished growth prospects of some of its peers in the region and around the world.
The country’s credit standing had been raised from “triple B” (“BBB”) to “triple B” plus (“BBB”+), effectively lifting the $272- billion economy’s credit stature just a notch lower than its “A”-rated neighbors, such as Singapore or Thailand, for example. The latest upgrade is thus far the highest the economy has achieved.
JCRA also assigned a “stable” outlook to the ratings, which means that the adjustment is unlikely to change in the short term.
“JCRA is of the view that the Philippine economy will, by and large, sustain an annual growth of around 6 percent in the years to come, driven by strong domestic demand,” the rating agency said in a report released on Monday.
This development, according to the Investor Relations Office (IRO), places the Philippines two notches higher than Indonesia’s “triple B” minus” (“BBB”-) but at par with India’s.
JCRA acknowledged that the Philippines has the capacity to maintain a sound fiscal position, attain high external liquidity and solid economic growth even against a background of external and local headwinds.
It also cited general stability in the country’s political situation, even as potential candidates for national positions gear up for the 2016 elections.
Although the Philippines still has much to do to attain sustainable and equitable local expansion, the JCRA said the declining poverty rate in the country has given analysts reason to remain optimistic on continued expansion down the line. Local economic managers welcomed the upgrade.
“The latest ratings decision of JCRA, 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,” Bangko Sentral ng Pilipinas Gov. Amando M. Tetangco said in reaction.
“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,” Finance Secretary Cesar V. Purisima also said.