by: Karen Cayamanda
Tuesday, January 19, 2016 |
With its strong macroeconomic fundamentals, the Philippines may be getting another positive credit rating very soon, according to Finance Secretary Cesar Purisima. He is optimistic that the country will get its 24th positive rating in the next few weeks.
Aside from fundamentals, the Philippines has a strong external position and macro-environment. The business process outsourcing (BPO) sector and OFW remittances continue to be key revenue generators. Moreover, the country has less exposure to external volatilities such as the slowdown in China and US Federal Reserve rate increase. Purisima added that the country is least vulnerable to these risks.
Another factor that fuelled the finance chief's optimism for a credit upgrade is the decline of the Philippines' foreign debt to gross domestic product (GDP). Moreover, foreign borrowing went down, as 85 percent of financing was done locally. The economy's current position is better now compared to about five years ago, with its wider fiscal space, appetite to do business here, and investor confidence.
International credit rating agencies Fitch Ratings, Moody's, and Standard & Poor's all granted the Philippines credit ratings in 2013. These were then followed by an upgrade of BBB from S&P's and Baa2 from Moody's.
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