Philippines deserves Moody’s upgrade, economists say

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Following the announcement of Moody’s Investors Service that it will review the Philippines for possible upgrade, economists said on Friday that it is high time for the country to receive its fourth investment grade status.

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Palace Deputy Spokesperson Abigail Valte also said that the Aquino administration is hopeful that the Moody’s upgrade will materialize.

“With the statement of Moody’s yesterday [Thursday], we are hoping to receive investment grade rating sooner than we earlier expected,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.

He added that a team from Moody’s will visit the Philippines next week, and they are expected to handle a committee meeting.

The BSP governor also hopes that the team would be convinced even more that the positive overall performance of the country and the reforms the government have taken are sustainable.

“The governance changes so far could cement economic growth on a higher trajectory,” he said.

Meanwhile, Finance Secretary Cesar Purisima said that the status of review for upgrade should be seen as recognition of the positive changes in the Philippine economy, brought on by the Aquino administration’s commitment to good governance.

“This designation is highly favorable as it signals that there has been undeniable transformation in the Philippine story, and a decision on our rating will have to be made with urgency,” he said.

Purisima noted that with Moody’s own implied bond ratings, the Philippines has long been one of the most underrated countries in the world, with strength far exceeding its current credit rating.

“I am confident that as Moody’s continues to evaluate the Philippines, they will see that the foundations for sustained, resilient growth have been laid, with a bright future for us on the horizon. I commend Moody’s commitment to quick action and look forward to their decision in the Philippines,” he added.

On the other hand, the National Economic and Development Authority (NEDA) also believes that the Philippines should receive the investment grade rating form Moody’s.

NEDA Director General Arsenio Balisacan said that, “The country’s credit-rating upgrade is long overdue.”

Cayetano Paderanga, former NEDA director general, also shared the same view and said that Moody’s should award the investments grade status for the Philippines, since other rating agency such as Fitch Ratings, Standard and Poor’s and Japan Credit Rating Agency Ltd. have upgraded the country.

Bill Luz, co-chairman of the National Competitiveness Council and one of the people who will be interviewed by Moody’s next week, said that he is very optimistic that the Philippines would get the upgrade to investment grade.

“It’s one notch below. Other rating agencies have already upgraded us, so I think it’s a matter of time that this would happen. I think that the news from the Philippines are generally quite positive. So I look forward to the interview and to the credit upgrade,” he said.

Furthermore, Alvin Ang of the Philippine Economic Society and a University of Santo Tomas professor said that the upgrade is expected “but it will complete the confidence picture of the Philippines.”

For her part, April Tan, president of Chartered Financial Analysts Institute-Philippines, also said that the Philippines deserves the upgrade.

“However, even without the actual upgrade of Moody’s, an upgrade from two major ratings agencies is adequate enough for a lot of foreign investors to put the Philippines in their radar screen,” she said.

Palace hopeful
Malacañang is also hoping for the possible upgrade by Moody’s on the Philippine government’s debt rating.

“Hopefully, we will get good news,” Valte said, adding that she believes that the Philippines will soon receive the credit-rating upgrade given the economic gains brought on by the Aquino administration.

“They’re reviewing the status. I am not quite sure how long the review will take but, hopefully, we will get good news soon,” the Palace official added.

Moody’s is the last of the global credit-rating agencies that still rate the Philippines a notch below investment grade.

Fitch was the first to upgrade the credit rating of the Philippines to the same status as A-lister countries in March this year, while Standard and Poors’ as well as the Japan Credit Rating Agency followed in May.

Mayvelin U. Caraballo  with report from Catherine S. Valiente

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