MANILA – Standard and Poor’s has revised to “positive” from “stable” its outlook on the Philippines, giving the country’s long-term sovereign credit rating an investment grade of “BBB” while short-term sovereign rating was at “A-2.”
The S&P cited the Philippines’ continued strong external position and improving policymaking that led to sustained improvement in its fiscal position and domestic growth, among others.
“The positive outlook reflects our view that improvements to the Philippines’ policymaking settings could support a track record of more sustainable public finances and balanced growth over the next 24 months,” S&P said in a statement released Thursday night.
The government “is enacting increasingly effective fiscal policies marked by improvements to the quality of expenditures, still-limited fiscal deficits, and low levels of general government indebtedness,” it explained.
According to the S&P, the current administration “broadly retained” the previous administration’s economic development policies and even “pursued more aggressive expenditure plans.”
The S&P forecasted an increase in general government deficit to around 2.3 percent of the gross domestic product (GDP) by 2021 against the 0.3 percent in 2014-2017 but noted that this “will lead to a relatively stable net general government indebtedness position, averaging 27.2 percent of the GDP” in 2018-2021.
In addition, the Philippines’ institutional capacity “started to improve” and this “can be seen in its increasingly sustainable public finances,” said the credit rater.
“Strong economic growth could continue over the forecast period if investment picks up speed,” it said while pointing out that the low level of per-capita income continues to be a constraint.
“A welcome pat on the back” was how Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. described the S&P’s decision and Japan Credit Rating Agency’s decision to keep its “BBB+” rating with a “stable” outlook on the country.
“The BSP is committed to its price and financial stability mandates, which have provided an environment conducive for economic growth and stability over the years,” Espenilla said in a statement.
Meanwhile Finance Secretary Carlos Dominguez III told reporters that “we appreciate this affirmation of the effectivity of the Duterte administration’s economic agenda.”
“It’s a result of good teamwork within the administration and with the Legislature, for the benefit of the entire nation,” he told journalists via the messaging platform Viber. (PNA)
