Palace cites economic reforms for credit upgrade

MANILA, Philippines — It’s the economic reforms under the Duterte administration that enabled the country to get a credit rating upgrade – the highest in its economic history – from Standard & Poor’s, Malacañang said yesterday.

Credit rater S&P has upgraded the Philippines’ credit rating to BBB+ with a stable outlook – a step closer to bagging a single “A” grade.

The credit watchdog cited the country’s consistent growth, solid fiscal accounts and the economy’s sound external settings.

A higher credit rating lowers borrowing costs and gives a borrower access to a wider pool of funds.

“The Palace is pleased with the report from global debt watcher Standard & Poor’s that the Philippines has received a credit rating upgrade of BBB+ stable outlook,” presidential spokesman Salvador Panelo said.

“The economic team of the President has done a splendid job in putting the economic house in order and spearheading bold economic reforms, in cooperation with Congress, in bolstering the domestic economy, which is projected to become the world’s top 25 economy,” he added.

Panelo said among the reforms implemented by the administration are the tax reform package, liberalization of the rice sector, strengthening of the Bangko Sentral ng Pilipinas charter, improving ease of doing business, relaxing the foreign investment negative list and modernizing infrastructure.

He also attributed the country’s economic growth to President Duterte’s campaign against crime.

“The President understands that a thriving economy under an environment free from drugs, crime and corruption is essential to bring our people to a life which is comfortable and secure,” the spokesman said.

“His actions based on this belief have thus promoted our country’s standing not just in peace and order but also in terms of our economy,” he added.

In a statement on Wednesday, S&P said it upgraded the country’s long-term rating to BBB+ from BBB to reflect the Philippines’ strong economic growth trajectory.

“The rating is also supported by solid government fiscal accounts, low public indebtedness and the economy’s sound external settings. These strengths will underpin the sovereign’s improved creditworthiness,” S&P said.

S&P expects the country’s gross domestic product (GDP) growth to pick up to 6.3 percent this year after slowing down to 6.2 percent last year from 6.7 percent in 2017.

“The stable outlook reflects our assumption that the Philippine economy will continue to achieve above-average real GDP growth over the medium term, supporting the sovereign’s credit profile,” it added.

S&P said the Philippine economy is growing at a consistently faster pace than that of its neighbors and that strong economic growth is expected to continue as projected as long as investment is maintained.

“The Philippine economy is among the fastest growing in the world on a 10-year weighted average, per capita basis – a reflection of its supportive policy dynamics and improving investment climate. The country has a relatively diversified economy with an increasingly strong track record of high and stable growth,” it said.

S&P said the Philippine government is enacting increasingly effective fiscal policies, marked by improvements in the quality of expenditures, manageable fiscal deficits and low levels of general government indebtedness.