Finance Secretary Cesar V. Purisima said on Friday that the Philippines is at least a notch underrated in its international credit standing no matter the most recent upgrade by Moody’s Investors Service which upgraded the country two notches over than the minimum investment grade.
“We welcome news of yet another credit-ratings upgrade as a recognition of the robust foundations we built through good governance reforms and prudent fiscal management. Four years down this road, we are growing ever firmer in our conviction that good governance is indeed good economics: this is the 21st positive credit rating action that the country has earned since the Aquino administration took office in 2010,” Purisima said in a statement.
Moody’s upgraded the Philippines’s credit rating from “Baa3” to “Baa2” last week, citing good governance, higher revenues and a decline in the debt burden as the reasons for the credit-rating upgrade.
Purisima said the new credit-rating upgrade attests to the reforms against corruption that the Aquino administration has introduced, and the strategy of reducing the debt as a percentage of the gross domestic product by collecting more revenues and spending more on social services and infrastructure to stimulate the economy.
Purisima said the Bureau of Customs is one of the best examples of reforms in corruption, with collections growing at an average of 18.8 percent this year.
He said that the debt burden now stands at 37.3 percent of GDP as of end-June, a full 6 percentage-point improvement from the 44.3 percent figure in 2010.
The Philippines achieved investment-grade status last year, as Fitch Ratings and Standard & Poor’s (S&P) have also upgraded the Philippines rating to the minimum investment grade in March 2013 and May 2013, respectively. Then in May 2014, S&P further upgraded its credit rating for the Philippines by a notch above the minimum investment grade.
But Purisima said the Philippines is still underrated in terms of credit rating.
“We believe the Philippines is still a notch underrated. There is much work to accomplish as we approach 2016: we look to comprehensive and equitable tax reform to align with our peers in Asean, enhancements in tax administration, the expansion of the Treasury Single Account, as well as the passage of our priority initiatives pending in Congress such as customs modernization, as well as the rationalization and transparency of fiscal incentives,” he said.