Fitch raises PH credit rating as investors ignore drug war noise | Inquirer Business

Fitch raises PH credit rating as investors ignore drug war noise

By: - Reporter / @bendeveraINQ
/ 09:43 AM December 11, 2017

fitch ratings

AFP FILE PHOTO

Debt watcher Fitch Ratings on Monday updated the Philippines’ credit rating to ‘BBB’ from ‘BBB-‘ with a stable outlook, citing that the Duterte administration’s war against illegal drugs has yet to deter investors.

With the upgrade, Fitch’s rating on the Philippines is now at the same level as those of Moody’s Investors Service as well as Standard & Poor’s, at one notch above investment grade.

Article continues after this advertisement

“Strong and consistent macroeconomic performance has continued, underpinned by sound policies that are supporting high and sustainable growth rates. Investor sentiment has also remained strong, which is evident from solid domestic demand and inflows of foreign direct investment,” Fitch said.

FEATURED STORIES

According to Fitch, “there is no evidence so far that incidents of violence associated with the administration’s campaign against the illegal drug trade have undermined investor confidence.”

Fitch was also bullish about the administration’s ambitious “Build, Build, Build” infrastructure program, which it said would “support continued robust growth.”

Article continues after this advertisement

“Fitch forecasts real GDP [gross domestic product] growth of 6.8 percent in 2018 and 2019, which would maintain the Philippines’ place among the fastest-growing economies in the Asia-Pacific region,” it said.

Article continues after this advertisement

Even as the government borrowed more to finance its infrastructure plan, Fitch expects the gross general government debt ratio to drop to 34 percent of GDP by yearend, below the average of 41.1 percent across ‘BBB’ rated economies.

Article continues after this advertisement

“The recent appointment of a new central bank governor from within the Bangko Sentral ng Pilipinas has provided continuity and supports monetary policy credibility. We expect inflation to remain within the BSP’s target range of 2-4 percent. A continuation of exchange rate flexibility should help preserve the recent build-up of foreign exchange reserves,” according to Fitch.

As for the comprehensive tax reform program, Fitch said it expects the measure to improve the country’s fiscal profile.

Article continues after this advertisement

“The House of Representatives and Senate have passed their respective versions of the first component of a five-part comprehensive tax reform program, which may be signed into law before the year’s end,” Fitch said

The debt watcher said the bill would be “net revenue positive, reflecting an expansion of the VAT [value-added tax] base and higher taxes on petroleum products, automobiles and on sugar-sweetened beverages, which would more than offset a lowering of personal income taxes.”

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our daily newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

“Passage of the first part of the tax package would bode well for progress on the rest of the package over the next couple of years. The government previously estimated that a full set of tax reform packages would boost revenue by 2 percent of GDP by 2019, with administrative measures to add another 1 percent of GDP over this period,” Fitch said. /cbb

TAGS: BBB-, Business, Credit rating, drug war, Duterte Administration, fitch ratings, Illegal Drugs, Moody’s Investors Service, Standard & Poor’s

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our newsletter!

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

© Copyright 1997-2024 INQUIRER.net | All Rights Reserved

This is an information message

We use cookies to enhance your experience. By continuing, you agree to our use of cookies. Learn more here.