S&P sustains Philippines’ ‘BBB+’ Rating, ‘stable’ outlook
MANILA – The Bangko Sentral ng Pilipinas expressed its appreciation to international debt watcher S&P Global which affirmed the country’s investment grade credit rating of “BBB+” with a “stable” outlook, which it described as a vote of confidence the Philippines continues to enjoy favorable medium-term growth prospects against headwinds brought by COVID-19.
The BSP said the Philippines continues to defy the wave of credit rating downgrades and negative outlook revisions across the globe, with the economic toll of the pandemic dampening the credit profiles of many other countries.
The Philippines’ “BBB+” rating from S&P is the highest among its ratings with international debt watchers while the country is rated one notch lower at “BBB” by Fitch Ratings and its equivalent Baa2 by Moody’s Investors’ Service. It is also a step away from the minimum rating within the stellar “A” territory. The “stable” outlook indicates the absence of factors that could trigger an upward or downward adjustment in the rating over the short term.
“We believe the Philippines will continue to have good economic recovery prospects once the COVID-19 pandemic is contained, and that the government’s fiscal performance will strengthen accordingly,” the BSP quoted S&P’s statement released today.
S&P forecasts that the Philippines will grow by 7.9 percent this year, which marks a solid rebound from last year’s contraction and is higher than the government’s own projection of 6.0 to 7.0 percent.
“Despite the unprecedented economic shock, the Philippine economy remains among the fastest growing in the world on a 10-year weighted average per capita basis. The country has a relatively diversified economy with a strong track record of high and sable growth, a reflection of its supportive policy dynamics and improving investment climate,” S&P said.
Meanwhile, Finance Secretary Carlos Dominguez III said the Philippines suffered from the shocks brought about by health and economic crises associated with COVID-19.
“But solid financial buffers and prudent fiscal management have placed the Philippines in a relatively strong position to generate the needed funds for COVID-19 response without touching off a worrisome debt situation down the road,” Secretary Dominguez said in a statement.
He said the government has significantly increased public spending to contain the virus and save lives as well as induce economic recovery, the Philippines managed to keep the debt metrics within manageable levels and S&P’s affirmation of its “BBB+” rating supports the optimism shared by the Executive Branch that once the health emergency is contained, the government will be able to bring back the deficit and debt ratios and growth pandemic to their pre-pandemic levels.
BSP Governor Benjamin E. Diokno said S&P’s move to keep the country’s BBB+ credit rating echoes the government’s views that the impact of the COVID-19 crisis on the economy will remain transitory and the Philippines continues to enjoy bright medium-term growth prospects.
“Prior to the pandemic, the Philippines was already on the verge of becoming an upper middle-income economy and had already posted significant strides in poverty reduction. We expect to go back to that trajectory soon, as vaccination rollout continues and as we push for vital economic reforms,” he added. (Melo M. Acuña)
Finance Secretary Carlos G. Dominguez III (left) and Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno. (File Photos/Melo M. Acuna)
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