The “solid” fundamentals despite a change in leadership this year will sustain the Philippines’ economic growth in the medium term, such that Japan-based debt watcher Rating and Investment Information Inc. (R&I) kept its investment grade credit rating for the country.
In a statement, the government’s Investor Relations Office (IRO) said R&I last Friday affirmed its “BBB” rating—one notch above minimum investment grade—for the Philippines, as well as assigned a “stable” outlook.
According to the IRO, R&I took note of the sustained growth not only of consumption but also investments in the Philippines, which were expected to help achieve the government’s 6 to 7 percent growth target this year as well as the higher 6.5-7.5 percent goal for next year.
“The favorable credit perception of the Philippines comes on the back of efforts of the Duterte administration not only to maintain economic gains of the past but to substantially build on those to achieve inclusive growth,” Finance Secretary Carlos G. Dominguez III was quoted by the IRO as saying.
For his part, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said “the affirmation of the Philippines’ BBB rating by R&I was consistent with the projection of the BSP that the inflation outlook stays well anchored and demand conditions remain firm, which bode well for economic growth.”
Credit ratings are a measure of a government’s creditworthiness. As the stability of state finances is also related to a country’s performance, credit scores serve as a proxy grade for the economy.
Also, improved ratings allow the government to demand lower rates when it borrows from lenders, which could translate to lower interest rates for consumers and businesses borrowing from banks using government-issued debt paper as benchmarks for their loans. —Ben O. de Vera