S&P team reviewing PH performance

Representatives of Standard & Poor’s, which earlier raised the probability of a credit-rating upgrade for the Philippines, are in Manila to check the latest macroeconomic developments in the country and to determine whether a rating upgrade is indeed already due.

S&P staff met with officials from the Department of Finance (DoF) and the Bangko Sentral ng Pilipinas Monday night and are expected to meet with other economic officials within the week.

Officials said one thing likely to be assessed by S&P was whether the government has the ability to sustain over the medium term the favorable developments seen recently in its fiscal and monetary sectors.

The Philippines is rated two notches below investment grade by S&P. The agency’s outlook on this rating is “positive,” which indicates the probability of an upgrade within the short term. An actual upgrade will depend on whether positive economic developments earlier noted are sustained and are likely to persist over the medium term.

The country’s economic officials are looking forward to upgrades in the country’s credit ratings, citing the country’s improved economic fundamentals.

The BSP and the DoF cited the national government’s reduced debt burden, increase in reserves of foreign exchange, benign inflation, stable banking system and sustained growth of the economy as reasons why the Philippines deserved an upgrade.

The Philippine national government’s outstanding debt fell from more than 70 percent of gross domestic product (GDP) in the early 2000s to only 55 percent now on the back of various debt management strategies, the DoF said.

On the country’s banking sector, the BSP said it has improved significantly since the Asian crisis of the late 1990s, being able to bring down its exposure to bad debts to pre-crisis levels, raise its capitalization to comfortable ranges and sharply increase profitability.

The Philippines is hoping to get an investment grade rating within the short term, with the economic managers believing that such a development will help the country corner more job-generating foreign direct investments.