Japanese debt watcher affirms Philippine credit grade

MANILA, Philippines — Tokyo-based debt watcher Rating and Investment Information Inc. (R&I) affirmed the investment grade rating of the Philippines as the economy is expected to post solid growth on the back of the government’s aggressive infrastructure buildup.

The Japanese rating agency retained the one notch above the minimum investment grade rating of BBB for the Philippines on a stable outlook.

“The Philippines’ economy is expected to post solid growth, driven by aggressive infrastructure investment under the Rodrigo Duterte administration,” it said in a statement.

Government economic managers pegged the gross domestic product (GDP) growth target at seven to eight percent over the medium term as the Duterte administration launched the Build Build Build program where it intends to spend between $160 billion and $190 billion for much needed infrastructure projects.

On the other hand, the Bangko Sentral ng Pilipinas (BSP) set an inflation target of two to four percent between 2017 and 2020.

“R&I will keep an eye on whether solid economic growth will bring about a steady rise in income levels. Going forward, given

likely inflation pressure from tax reforms, higher oil prices and the weaker currency, as well as from buoyant domestic demand, consumer price trends and the way the central bank controls the situation would draw our attention,” the debt watcher said.

It explained inflation would not be a drag on the economy amid upward pressure arising primarily from oil prices trends and tax reforms.

R&I said it is essential to sustain the momentum of investment from inside and outside the country by improving the business environment through continued reforms.

“In addition to robust private consumption backed by stable remittance inflows from overseas Filipinos, growth in investment has been increasing in recent years. With the rising share of investment in GDP, the aggressive public investment program initiated by the Duterte administration would serve as a platform for economic growth in the foreseeable future,” it said.