by: Sarah Joson
Friday, December 12, 2014 |
Renowned credit rating agency Moody’s Investors Service recently upgraded the credit rating for the Philippines to Baa2 with a stable outlook.
The country’s key strengths include the continuous debt reduction and improvement in fiscal management, limited vulnerability to common risks currently affecting emerging markets, and continuous growth of investors which drives economic growth.
The debt watcher said the Philippines continues to make a mark when it comes to international surveys for institutional quality, which mirrors the current government’s emphasis on good governance. Another pivotal factor would be the efforts of Bangko Sentral ng Pilipinas in upholding its strong track record of maintaining price and financial stability, which is seen to be favorable for the operating environment of the Philippines’ banking system. In fact, it is the only system cited by Moody’s to have a positive outlook.
The Philippines is also said to be resilient against external changes like the slowdown of China. The country’s account surplus is anticipated to shield it from global liquidity conditions from the shifts in US Foreign Exchange.
Moody’s also said the country’s onshore liquidity environment is a good foundation for government-led efforts, because this results to lower borrowing requirements due to narrower deficits.
On the other hand, Moody’s said with the absence of a meaningful and well-crafted budget execution plan, the country’s growth targets may not be reached even if it has been projected that fiscal impulse will be restored during 2015’s first half.
The government’s foreign currency shelf rating was upgraded by the agency to (P)Baa2 and the Bangko Sentral ng Pilipinas’ liabilities were given a Baa2 rating with a stable outlook.
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