Finance Secretary Carlos Dominguez 3rd said the latest positive outlook on the Philippines by Fitch Ratings is proof enough that the “political noise” surrounding the Duterte administration’s reform agenda and tough anti-drugs war has failed to damage the country’s growth story.
The investor relations unit of the central bank said it even sees signs of a possible upgrade in the future.
Dominguez welcomed Fitch’s move to affirm the Philippines’ “BBB-” minimum investment grade rating, as well as its positive outlook.
“Fitch Rating’s latest affirmation of its positive outlook on the Philippines only means that the political chatter emanating from certain quarters has failed to dent the country’s sustained-growth narrative resulting from its strong economic performance, continued political stability and aggressive infrastructure and human capital investments under the Duterte presidency,” the finance secretary said in a reaction statement issued Thursday.
Referring to Fitch’s acknowledgment of broad policy continuity with the Duterte administration’s 10-point socioeconomic plan, Dominguez said:
“To maintain broad policy continuity, the Duterte administration will continue to pursue its 10-point socioeconomic agenda on high—and inclusive—growth, with a focus on closing the infrastructure gap, improving the ease of doing business to attract more investments, and attacking poverty by spending big on human capital formation.”
“Given the positive outlook of Fitch Ratings and other institutions,” he added, “the government has more reason to highlight on the country’s growth story by moving ahead on such policy reforms as its Comprehensive Tax Reform Program to ensure the financial sustainability of its ambitious program to eradicate poverty and transform the Philippines into a high-income economy in one generation.”
‘Years of discipline’
In a separate statement issued earlier, BSP Governor Amando Tetangco Jr. said Fitch’s latest assessment was driven mainly by the solid performance of the Philippine economy across various metrics – robust and broad-based economic growth amid a stable inflation environment, strong external payments position, and sound and stable banking system.
“These macroeconomic conditions did not happen by chance,” the governor said.
“The country’s economic gains have been built from deeply rooted structural and sound policy reforms implemented over the years. Economic gains are the results of years of disciplined macroeconomic policy making,” Tetangco stressed.
Govt unit sees upgrade signs
The central bank’s Investors Relations Office (IRO) said a positive rating outlook indicates an upward trend for a credit rating over a one-to two-year period.
Of the 114 sovereigns rated by Fitch, only six have a positive outlook, 21 bear a negative outlook, while the rest have a stable outlook, it explained.
Fitch is the only one among the three major international credit rating agencies to maintain its minimum investment grade rating of “BBB-”.
Moody’s Investor Service and Standard & Poor’s both rate the Philippines a notch above the minimum investment grade, at ‘Baa2’ and ‘BBB’, respectively.
But IRO Executive Director Editha Martin said the Philippines has made significant strides since it clinched the investment grade rating from Fitch in March 2013.
“Its macroeconomic performance and public finances have significantly improved, and vital governance reforms have been entrenched. We have also seen how the country outperformed other emerging economies in 2016 with our robust GDP growth, among other metrics,” she said.
“We remain confident that the continued strong performance of the economy, relentless pursuit of its governance agenda and implementation of vital structural reforms will finally translate to a long overdue upgrade from Fitch,” she added.