DOF: Political chatter no dampener to sound economy

The head of the Duterte administration’s economic team insists political “noise” is not turning off foreign investors as macroeconomic fundamentals remain strong.

On Moody’s Investors Service raising concerns on the political scene, Finance Secretary Carlos G. Dominguez III was quoted by the government’s Investor Relations Office (IRO) as saying that “the continued strong investor confidence in the domestic economy—as illustrated by the surge in foreign direct investments (FDIs) to a record $10 billion in 2017—proves the political chatter emanating from certain quarters has failed to dampen the interest of the international business community in the Philippines’ exciting growth narrative.”

Late on Friday, Moody’s maintained its credit rating for the Philippines at Baa2, one notch above minimum investment grade, and with a stable outlook, mainly on the back of strong economic growth prospects.

Moody’s cautioned, however, that “the Philippine president’s contentious policies on law and order over the past two years as well as other political controversies may have a negative impact on the Philippines’ attractiveness to financial and physical asset investors.”

Moody’s was referring to President Duterte’s “war” against illegal drugs, which was highly criticized on the international stage, drawing scathing remarks from world leaders.

For Dominguez, economic reforms outweigh political concerns.

“Within two years in office, the Duterte administration has significantly boosted the government’s revenue take through decisive tax reform and enhanced administrative efforts,” Dominguez said, citing the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr., for his part, was quoted as saying that the central bank was committed to price stability.

Moody’s highlighted that “policymakers face challenges in managing the current inflationary pressures.”