by: Sarah Joson
Monday, September 28, 2015 |
The Philippines received an upgraded outlook from “stable” to “positive” from international credit rating agency Fitch Ratings on the back of steady improvements in governance standards and competitiveness under the Aquino administration. Fitch’s affirmed rating for the Philippines is “BBB-.”
Fitch noted that corruption, transparency, and economic freedom indicators have also considerably improved. These improvements, if sustained properly, would be positive for the credit past the next election cycle.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the revised outlook is a sign for a long overdue rating upgrade for the country, adding that the Philippines stood steadfast against external headwinds that threatened global economies, supported by its strong fundamentals, and will be able to recover quickly once the dust settles.
Meanwhile, Finance Secretary Cesar Purisima said the credit rating upgrade is an indication that the country is underestimated and is consistent in performing strongly even with potential threats from external risks. In line with that, he said financial markets see the country’s debt better than what a BBB-rating shows.
Initial statement from Fitch stated that the Philippine economy could only grow 6.3 percent this year because of delimited public spending, resulting to a slowdown in public investment. As for the agency’s overall review for the second quarter, they are seeing a narrow revenue base which will further drive public spending.
The weaker government spending resulted to a slow first quarter GDP growth at 5.2 percent, which is lower than the 5.6 percent during the same period of last year.
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