BSP: ‘A’ credit rating for Philippines possible in 2 years

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is optimistic the country would be able to achieve an “A” credit rating within the next two years as the government continues to push for more structural reforms and the development of infrastructure.

In a press briefing, BSP Governor Benjamin Diokno said getting an A credit rating upgrade within two years would be an achievable feat for the Philippines.

“With additional structural reform measures, and as long as the national government is able to implement the Build Build Build program, I think the “Road to A” strategy can be accomplished in two years’ time. I’m very optimistic,” Diokno said.

Last year, S&P Global Ratings upgraded the Philippines’ long-term sovereign credit rating from “BBB” to “BBB+”, two notches above investment grade rating.

Higher credit ratings translate to lower borrowing costs and favorable investment environment, which will support economic growth.

Diokno said achieving an “A” credit rating within the next two years would help offset the projected increase in interest rates that would come along with the Philippines’ advancement into an upper-middle income economy.

“That is just in time because by next year, we will graduate into an upper-middle income and therefore our cost of borrowing will be higher. So now with the upgrade, then we’ll have lower borrowing costs,” he said.

To achieve the government’s credit rating target, Diokno said the BSP would push for the immediate passage of four legislative reforms that aim to improve the monetary and financial sectors.

These include the amendments to the Anti-Money Laundering Act of 2001 (AMLA), and the Human Security Act of 2007.

Diokno said the approval of these measures would make the country compliant with international anti-money laundering and counter-terrorism financing standards.

In addition, the central bank chief said the government also seeks to introduce reforms in the Agri-Agra Reform Act of 2009, as these would enable banks to enhance the management of their lending to the farm sector.

He said the BSP is also supporting reforms on consumer protection policy and deposit secrecy.