The Philippines should take advantage of its investment grade rating status and translate it better for government finances, a government official said on Tuesday.
“In terms of investment grade rating that has been bestowed to us, it’s something that we have to make use of and capitalize,” National Treasurer Rosalia de Leon said at the 39th Philippine Business Conference and Expo held on Tuesday in Manila.
To date, the Philippines achieved the investment grade (IG) rating status from three major credit rating agencies such as Moody’s Investors Service, Fitch Ratings and Standard & Poor’s. Rating firms Japan Credit Rating Agency Ltd. and Ratings and Investment Information Inc. (R&I Ratings) also raised the country to the IG status.
In the case of the Bureau of the Treasury, de Leon said that the agency has to monetize these credit upgrades, and to make sure that the country’s funding costs would be lower.
“All the funding requirements of the national government will be sourced onshore, unlike in previous years. For this year, we have been coordinating with the central bank. We have mobilized the internal savings to fund the Republic,” she said.
De Leon added that the Philippines has enough liquidity onshore which is coming out of the domestic savings.
She said that it is evident that a lot of foreign investors have expressed their interest in investing in government securities as well as the securities of corporates.
“It is also recognized by Moody’s that on our own, we’ll be able to fund our own requirements,” she added.
The national treasurer explained that in the case of tax collections, the government even has to borrow less now, as tax collections by the Bureau of Internal Revenue (BIR) have grown significantly.
She cited latest BIR collection figures, which increased by about 20 percent in September. Tax revenues for the month totaled to P86 billion, or P15 billion higher than the collections in the same month last year.
“This is not only because of the excise taxes, the sin products, but the tax measures that have been implemented under [the leadership] BIR Commissioner Kim Henares,” she said.
“Going forward, we would not let down our guards in making sure that we have maintained the gains that we have achieved in terms of revenue collections,” she added.
Furthermore, de Leon said that hopefully, with the support of the Congress, the government will be able to pass the additional priority bills like the rationalization of fiscal incentives, which will provide additional revenues and allow the funding of the priority projects of the government.
“We have nothing to lose, instead we have to move forward with all the upgrades and all the successes that we have achieved in the past, and also the recognition that has been provided to us by the credit rating agencies,” she said.