A Japanese credit rater said on Tuesday that it is keeping the Philippines’ investment grade rating unchanged at BBB+, which is just a notch away from a rating within the “A” category, as it believes that the economy will keep growing robustly under the Duterte administration.
This rating given by the Japan Credit Rating Agency (JCR) is the highest the country has received. It is above the investment-grade ratings (Baa2) given by Moody’s Investors Service and Standard & Poor’s BBB, and and well above the BBB- grade assigned by Fitch.
JCR assigned the rating as a “stable” outlook, which indicates absence of factors at the moment that can drag (or lift) the country’s creditworthiness in a span of at least 12-18 months.
JCR is also of the view that the Philippine economy will grow over 6 percent this year from last year’s growth of 5.9 percent.
On the fiscal front, it cited the continued decline in the debt burden, with the national government debt declining, as a percentage of gross domestic product, from 45.4 percent in 2014 to 44.7 percent in 2015.
On the external payments front, JCR cited the country’s current account surplus that is supported by robust inflows of remittances, business process outsourcing (BPO) revenues, and tourism receipts.
It noted that the country’s current account has been in surplus since 2003. The surplus was recorded at $447 million in the first quarter of 2016 following the surplus of $8.4 billion for the full year of 2015.
The credit rater also cited the Philippines’ gross international reserves, which at $83 billion as of end-March 2016 exceeded the country’s external debt of $77.6 billion as of the same period.
The monetary and finance managers of the government welcomed JCR’s rating decision, noting that this cement views that the Philippines has what it takes to remain a bright spot amid a challenging external environment.
“Consistently registering one of the fastest growth rates in the region and the world, the Philippines has proven that boom-and-bust cycles are a thing of the past. We credit our economic gains to a solid foundation that consists of decades of structural reforms, including pursuit of sound fundamentals,” said Diwa Guinigundo, the deputy governor of the Bangko Sentral ng Pilipinas (BSP).
Guinigundo said fundamentals–including benign inflation, healthy external payments position, and stable banking system—will continue to help the Philippines build on its gains to become a more inclusive economy.
Finance Secretary Carlos Dominguez 3rd described JCR’s decision as a vote of confidence in the Duterte administration’s resolve to sustain and strengthen the macroeconomic fundamentals that have transformed the Philippines into Asia’s newest bright spot.