S&P affirms vote of confidence on Philippines

MANILA, Philippines — Economic managers said the decision of S&P Global Ratings to uphold the Philippines’ BBB+ credit rating and stable outlook is a vote of confidence for the country amid the coronavirus pandemic.

The debt watcher upheld the country’s credit rating and outlook amid a wave of downgrades and negative outlook revisions worldwide as the coronavirus disease 2019 or COVID-19 outbreak wreaks havoc on productivity of economies.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said this is a big vote of confidence coming from S&P on the post-pandemic recovery of the Philippines.

“The Philippines is defying the global trend of rating downgrade and negative rating outlook as an aftermath of the health crisis and the subsequent containment measures of many governments,” he said.

Diokno said there is room for the BSP to do more, even as it has already implemented a long list of COVID-19 response measures.

“Thanks to critical institutional reforms and sound policy management, we are in the advantageous position of having monetary space to carry out further easing, if necessary,” he said.

According to Diokno, the BSP has taken decisive actions to complement the national government’s relief efforts, including the 125 basis points rate cuts, the lowering of the reserve requirement ratio by 200 basis points, and the P300 billion worth of repurchase agreement with the Bureau of the Treasury.

The central bank also decided to advance remittance of P20 billion worth of dividends to state coffers as well as a wide range of regulatory relief measures that give banks and other supervised financial institutions the flexibility to extend loans to vulnerable sectors of the economy.

“While being mindful of our price and financial stability mandates, we are thinking outside the box to enact policies that ultimately help safeguard the lives and livelihoods of our people. Such is our solemn responsibility in this unprecedented crisis, and I am confident that our approach will demonstrate the resilience of our country,” the BSP chief said.

Finance Secretary Carlos Dominguez III said the affirmation is an unequivocal recognition by S&P of the resilience of the Philippine economy to regain its high-growth trajectory in the “new normal.”

“President Duterte’s prudent approach to fiscal management coupled with the implementation of bold economic reforms since he took over in 2016 have kept the country’s financial position strong and steady ahead of this   pandemic that has wracked the global economy,” Dominguez said.

Dominguez also said the government is confident that its four-pillar strategy with a combined value of P1.74 trillion, or 9.1 percent of GDP, to deal with the pandemic would see the country through this global health emergency as the government remains focused on saving lives and protecting communities while gradually lifting mobility restrictions to restart the economy and get people back to work.

The strategy includes emergency support for vulnerable groups and individuals, marshaling of resources to fight COVID-19, fiscal and monetary actions to finance emergency initiatives and keep the economy afloat, as well as an economic recovery program focused on getting businesses back on their feet to sustain and create jobs.

Dominguez said President Duterte’s reform agenda continues amid the coronavirus outbreak, particularly with the latest push in   Congress for the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill to serve as the “largest economic stimulus ever for businesses in the country.

For his part, acting Socioeconomic Planning Secretary Karl Kendrick Chua said the government’s economic recovery program entails helping small businesses to bounce back, such as through ample access to credit, supporting workers and their families through targeted wage subsidies, and cash-for-work programs.

Chua said the program also entails fast-tracking of programs like the Build Build Build infrastructure drive and a contact tracing initiative that aims to hire 136,000 contact tracers to help mitigate the spread of COVID-19 and increase employment.