DOF eyes ‘A’ credit rating for Philippines in 2 years

MANILA, Philippines — The Department of Finance (DOF) expects another credit rating upgrade from S&P Global Ratings in two years, as the government continues to pursue financial reforms and maintain fiscal discipline while implementing a massive infrastructure program.

In an interview with reporters, Finance Secretary Carlos Dominguez said the DOF is eyeing an “A-” sovereign credit rating from S&P in the next two years, after the Philippines achieved the highest rating of “BBB+” from S&P last week.

“We want to do it in two years. They (S&P) say it’s possible in two years. We’re going to certainly put all our effort to do it,” Dominguez said.

S&P upgraded the Philippines’ long-term sovereign credit rating from “BBB” to “BBB+” — two notches above investment grade rating — with a “stable” outlook.

This is so far the highest credit rating that the Philippines has received. Dominguez said this is at par with the credit rating of Peru, Thailand and Mexico, and is only a notch below the investment grade of economies like Spain and Malaysia.

Dominguez said S&P, in a report, laid out the reforms that the government should pursue in order to get another upgrade.

“What S&P is saying is this is the roadmap to a second upgrade. It’s right there, all you have to do is follow it: complete the tax reform program, sustain the deficit at three percent, lower your debt-to-gross domestic product ratio. It’s all there,” Dominguez said.

Dominguez said the DOF would continue to maintain fiscal discipline even as the government substantially increases its spending on infrastructure and human capital development.

“We will continue working down our debt service even as we empower progressive governance with our recurrent revenues,” he said.

He said the DOF also expects the approval of the remaining packages of the Comprehensive Tax Reform Program (CTRP) despite the upcoming election of new lawmakers in Congress.

Dominguez emphasized the achievements of the government in implementing the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which resulted in a 108-percent achievement of the law’s revenue target.

He also mentioned the enactment of the Rice Tariffication Act, which he described as a “politically difficult” reform measure.

“While the achievements mentioned are certainly encouraging, we will not allow ourselves to become complacent. Even more work is needed to ensure that we reap the benefits of such accomplishments and continue to institute and implement meaningful reforms – not just to get that sterling ‘A’ rating, but, more importantly, to achieve a more comfortable life for all law-abiding Filipinos,” Dominguez said.