The Philippines should expect an upgrade from credit ratings firms in the near future, given the country’s improved economic prospects under the Aquino administration, the government’s chief economic manager yesterday said.
“The Philippines is the most underrated country in the world,” he told a forum organized by the Foreign Correspondents Association of the Philippines, referring the the country’s credit standing with global debt watchers Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, all of which rank the country’s debt notes several notches below investment grade.
Purisima—who is also the de facto head of the Aquino administration’s economic team—expressed confidence that the credit watchers “would catch up with their ratings sooner rather than later,” adding that the country’s rating is, at present, “four levels below where it should be.”
In particular, the finance chief pointed to the country’s improving fiscal situation, its well-managed economy and the good governance drive of the administration as being the main drivers for the country’s expected upgrade.
Sovereign debt ratings determine how much a country—both its government and private corporations—pays to borrow from overseas lenders. The Philippines relies heavily on the offshore debt market to cover its chronic budget deficits, and is the Asia-Pacific’s largest sovereign debt issuer after Japan.
At present, the Philippines is rated by all major debt watchers at two notches below investment grade. The highest level achieved by the country is a notch below investment grade during the Ramos administration.