Debt watcher Moody’s Investors Service is still bullish on the credit environment in the Philippines, despite the tapering of the quantitative easing program of the United States Federal Reserve.
In its “Outlook for South and Southeast Asian sovereigns in 2014,” Moody’s said that credit support for the Philippines comes from the country’s strong growth prospects, its track record of narrow fiscal deficits, and a declining debt burden.
The Philippine government is targeting a 6-percent to 7-percent gross domestic product growth for 2013, before growing further to 6.5 percent to 7.5 percent this year.
Meanwhile, latest data from the Department of Finance showed that the government recorded a P1-billion budget surplus for the month of November 2013, reversing the expected deficit of P20.5 billion for the same month.
In terms of national government debt, outstanding debt in September went down to P5.61 trillion, 0.6 percent, or P33 billion lower from the end-August 2013 level.
“Notably, the sovereign’s financing needs have been increasingly met using domestic sources. This source of funding, along with the structural current account surplus, renders financing conditions for the government less susceptible to external financial shocks,” Moody’s stated.
On the other hand, Moody’s said that sovereign ratings in South and Southeast Asia will be largely stable in 2014, reflecting the rating agency’s expectation that global growth prospects will improve while global risks will decline.
Moody’s also pointed out that the emerging economies of South and Southeast Asia will continue to face heightened credit pressures in 2014, owing in part to the US Federal Reserve’s tapering of its expansive quantitative easing policy.
The debt-watcher also concluded that overall, sovereign creditworthiness will be more vulnerable to common global risks than to region-specific exposures in 2014.
“The shared global risks include a disorderly unwinding of monetary stimulus in the US, persistently elevated event risks in the euro area, and uncertainty about commodity prices,” it stated.