A POSSIBLE shift in the United States immigration policy under the Trump presidency spells credit negative for the Philippines because of its reliance on money transfers by overseas Filipinos, debt watcher Moody’s Investors Service said.
In general, political developments become relevant to ratings if they threaten to undermine a country’s economic resilience or a government’s fiscal strength, or if they undermine policy effectiveness, i.e., the ability to develop and implement credit-positive policies, Moody’s said in a report released Monday.
The credit implications of the US election results rest in part on future US trade, immigration and security policies, it said.
“A policy shift that would disrupt immigration into the US would be credit negative for countries more highly dependent on remittance flows, including El Salvador (B3 negative), the Philippines and Vietnam,” Moody’s said.
A main driver of economic growth, remittances from overseas Filipinos account for up to 10 percent of gross domestic product.
Central bank data showed the US as a major source of cash remittances besides Saudi Arabia, the United Arab Emirates, Singapore, the United Kingdom, Japan, Qatar, Kuwait, Hong Kong, and Germany.
In the first eight-months of the year, cash remittances or funds course through banks posted a 4.6 percent increase at $17.6 billion from a year earlier.
In same period, personal remittances stood at $19.48 billion—up 4.4 percent.
Moody’s has assigned the Philippines a credit rating of Baa2—a notch above the minimum investment grade. The rating carries a stable outlook, indicating it is unlikely to change in the near term.
An investment grade rating indicates a government’s ability to pay debts falling due, given a generally healthy economic and political conditions of the country.