Peace deal to boost PH credit rating

Agriculture, where Mindanao has a comparative advantage, is one sector that could benefit the most from the potential increase in investments, according to Moody’s. FILE PHOTO

Moody’s Investors Service said the latest peace agreement between the government and a major Muslim rebel group could further boost the credit rating of the Philippines.

In a statement, Moody’s cited the positive impact on the country’s investment climate of the recently signed agreement between the government and the Moro Islamic Liberation Front (MILF).

Moody’s, which gave the Philippines an investment grade in October, said the potential rise in investments could, in turn, help accelerate the already robust growth of the domestic economy.

The sectors that could benefit the most from the potential increase in investments would be mining and agriculture, where Mindanao has a comparative advantage, it said.

“The pact promises to boost growth and investment in what is one of the poorest, although resource-rich, parts of the country,” Moody’s said in a report titled “Philippines Peace Agreement with Muslim Separatists is Credit Positive.”

“The truce should facilitate greater investor interest across the several provinces in the island of Mindanao,” it also said in the report, which was authored by Christian de Guzman, a senior analyst and vice president for the sovereign risk group of the credit-rating firm.

The credit watchdog noted that several countries, including Canada, United Kingdom, and the United States, currently have advisories restricting travel to the Autonomous Region in Muslim Mindanao (ARMM) and surrounding areas due to insurgent activities.

With the peace agreement, Moody’s said that foreign investors and tourists might eventually be encouraged to visit Mindanao.

Citing 2012 figures, Moody’s said the regional gross domestic product growth of ARMM stood at a mere 1.2 percent, paling in comparison with the 8.2 percent for the whole of Mindanao and the 6.8 percent for the entire Philippines.

Moody’s expects the contributions of ARMM to the entire economy to improve later on.