Deputy Governor Diwa C. Guinigundo of the Bangko Sentral ng Pilipinas (BSP) predicted that the country will receive another credit rating upgrade from renowned global rating agencies. He based the predictions on Moody’s (Investor Service) positive outlook. Guinigundo said positive reviews after Fitch’s visit in the country are also possible. He further noted that the Philippines is in a better position compared to other countries, particularly in Asia, with its lower debt spread.
The lower debt spread could mean two things for the nation. First, it can be a key indicator that a positive upgrade is possible soon. Second, risks are lower in the Philippines because of its upright macroeconomic fundamentals.
He cited the improving debt-to-GDP ratios of the country in the last 10 years, and its stable current account and balance of payments create a strong foundation. It just shows that the Philippines, which was once one of the most indebted countries in Asia, has improved its liability management standing.
In 2005, debt-to-GDP ratio was at 68.5%. At the end of 2013, the government’s outstanding liabilities were at 49.2%.
Its Asian counterparts, however, didn’t fare well. Malaysia’s ratio increased to 54.8% during last year’s end from 42.1% in 2005. Thailand’s ratio also increased from 26% eight years ago to 32.2% at the end of 2013.