PH credit rating upgraded

S&P’s BBB classification highest ever given to country


The Philippines has obtained its highest credit rating in history (BBB classification from S&P) in recognition of the reforms undertaken by the Aquino administration which have allowed the country to outperform its Southeast Asian neighbors in terms of economic growth.

MANILA, Philippines—The Philippines has obtained its highest credit rating in history in recognition of the reforms undertaken by the Aquino administration which have allowed the country to outperform its Southeast Asian neighbors in terms of economic growth.

Standard & Poor’s (S&P) on Thursday announced a fresh rating upgrade for the Philippines’ long-term peso and dollar bonds.

From the previous rating of “BBB-,” S&P now rates the Philippines at “BBB,” one notch above minimum investment grade.

This is the best grade the Philippines has ever received from any of the three major credit rating agencies.

“This is further proof of President Aquino’s belief that good governance is good economics,” said Finance Secretary Cesar Purisima.

“We will continue to institutionalize good governance so our country’s economic growth is both sustainable and inclusive,” he said.

Sustained boom

The S&P said it expected recent reforms that had paved the way for the country’s economic boom to be sustained beyond President Aquino’s term.

“We expect ongoing reforms on a broad range of structural, administrative, institutional and governance issues to endure beyond the term of the current administration,” it said in a statement.

A sovereign rating is the credit rating of a government and serves as an indicator for the perceived health of a national economy as well as its attractiveness to foreign investors. This is in addition to the more immediate effect of lowering the interest costs of the government and local corporations whenever they borrow funds from overseas.

S&P is one of the so-called “Big Three” credit rating agencies that make these evaluations. The other two are Moody’s Investor Service and Fitch Ratings.

Last year, the economy expanded by 7.2 percent, faster than the previous year’s 6.8 percent and better than the government’s goal of 6-7 percent for the year.

The country’s growth was also the fastest among all major Southeast Asian economies.

This, despite the damage caused by Super Typhoon Yolanda last November in large parts of the Visayas, which most observers expected would lead to a sharp slowdown in growth.

More ambitious targets

The government has a more ambitious growth target of 6.5 to 7.5 percent. By 2016, it aims to drive economic growth to as much as 8.5 percent.

“The Philippines proved that it is able to sustain high economic growth despite external volatility and in the case of last year, successive domestic natural disasters,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said in a statement.

“This rating upgrade is also a recognition that the structural reforms that we have put in place continue to gain traction, as demonstrated by the significant improvements in the country’s position in international governance and competitiveness surveys,” he said.

S&P said it was optimistic that the gains in revenue generation, spending efficiency and improvements in public debt profile and the investment environment would be sustained under the next administration, regardless of who succeeds Aquino.

Revenue reforms

Before Thursday’s upgrade, the government’s economic managers had already expressed optimism about another upgrade from credit rating agencies, since investors both here and abroad had already been pricing Philippine debt instruments at rates that are equivalent to those of higher-rated nations.

Reforms implemented since 2010 have focused mainly on improving transparency and accountability in government, in line with the goal of promoting economic growth and poverty reduction.

Among these reforms are the Bureau of Internal Revenue’s efforts to plug the loopholes in the country’s tax regime, as well as the agency’s crackdown on tax evaders.

Last year, the budget deficit stood at the equivalent of 1.4 percent of gross domestic product (GDP). The government wants to contain the budget shortfall below the “sustainable” level of 2 percent of GDP, even as it ramps up spending for infrastructure projects and social safety nets.

S&P also cited the country’s strong external liquidity and international investment position coupled with an effective monetary policy framework that has sustained low inflation and interest rate as supportive to the rating upgrade.

Fitch Ratings and Moody’s Investor Service both have the Philippines at minimum investment grade, one notch lower than S&P’s new score.

Fitch’s announcement of this grade rating for the Philippines earlier this year disappointed the country’s economic managers who all felt the Philippines deserved a higher score.

Moody’s has a “positive” outlook for the Philippines, which implies a possible upgrade in the next 12 to 18 months.


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  • Komokoro

    It seems that economic growth is not felt by the majority of the population during its infancy. This is the same thing happen in China wherein they are posting an average 10% growth during the early 2000’s. It took them a decade to uplift a percentage of the population from lower class to middle class. I would like to be optimistic about this because our potential has been there ever since. However in order for us to sustain growth we need more foreign investment and a transition from consumer based economy to production base economy. Our population median age is very ripe right now with the median age of 24 yrs old compared to aging countries like Japan and Europe. Most of my 2010 batch colleagues are already employed like me, some locally and some from abroad. I think the best move for the government right now is to radically boost infrastructure. Having a railway system connecting the entire Philippines will be a good start.

  • Arnel Garcia

    It’s not pointless to show off especially if an insitution like S&P was the one who published the news. If we surpassed or outperformed the economic growth in South East Asian neighbor then well and good – a good shoulder tap to our good President and his good governance! Btw, cheers to Sec Purisima for the big words that he stated here. I was happy and truly believe that Good Governance means Good Economics. This only shows that the Aquino Administration is doing it’s best to improve the Philippine Economy.

    Now, about the poverty, unemployment and corruption issues, wherever you go, there is always endless issues like these but please try to understand that our President is not God nor can do miracle in a snap – we need all National and Local Governments to do their part too, and for us who keeps on whinning about these issues, try to be active in community service. I’m sure our little effort will somehow ease the lives of others.

  • AstroJackson

    All these pointless upgrades that look good on paper and only benefit the small percentage of rich that are in the Philippines.

    The growth is no inclusive and thus poverty, unemployment, and even corruption continues to increase under the Aquino Administration.

    Aquino is going to want to show off this upgrade but in all honesty he has done nothing to deserve credit. he is merely pointing and passing the blame while credit grabbing.

  • enzo1012i

    These rating will make the peso stronger than any foreign currency and encourage the government to borrow more money with low interests but technically we are still very dependent with remittances coming from OFW, and we are on top in ASEAN for jobless!!This will be another burden for our OFW`s who regularly sends money to their respective families..!!Where did S&P get their data though??

  • PinoyPower1

    9 years of the corrupt arroyo regime was not able to attain this. Her reign actually had the worst ratings.

    Clearly, PNoy is making a big difference and the Philippines is slowly but surely recovering under his incorruptible leadership.

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