The assessment of two international rating firms on the Philippines’ credit-worthiness is simply outdated, according to Finance Secretary Cesar Purisima, who believes that the country deserves a better credit grade than what has been assigned to it.
In fact, the Philippines merits a credit rating just a notch below investment grade, if not better, Purisima said during a roundtable discussion with the Inquirer’s staff Wednesday night.
Moody’s Investors Service and Standard & Poor’s both rated the Philippines at two notches below investment grade.
Last November, S&P raised the country’s credit rating from three to two notches below investment grade. Moody’s did the same last month.
But Purisima believes that the country deserves a much better credit assessment.
“The two [rating firms] are behind [in their credit assessment of the Philippines]. We should be rated at least a notch below investment grade,” Purisima said.
He said only Fitch Ratings rated the Philippines at a notch below investment grade.
Purisima cited the country’s improved fiscal position, improving tax collection since the start of the Aquino administration, as well as the significant decline in the country’s debt over the past years to be reasons enough for a credit upgrade.
In early 2000s, the country’s debt, including those of the government and the private sector, was equivalent to over 70 percent of the economy’s total output.
As of end-2011, the debt is just 55.4 percent of the country’s gross domestic product.
Purisima also pointed out that the country was on track of meeting its goal to reduce the government’s budget deficit to 2 percent of GDP by 2013.
Last year, the deficit-to-GDP ratio stood at 3.2 percent.
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo echoed Purisima’s sentiments, saying that results of a central bank study showed that the Philippines deserved a credit rating higher than what had been assigned to it.