Manila’s prospects are looking up. Source: Wikimedia
Seoul’s debt watcher NICE Investors Service has upgraded the Philippines’ credit rating allowing the country to secure a place within the investment-grade territory.
NICE’s upgrade by a notch to BBB or a step above investment grade from the minimum investment grade of BBB- amid the country’s governance reforms and intensified campaign for infrastructure development.
The Philippines has received investment grading ratings from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings.
It is currently rated a notch above minimum investment grade by both Standard and Poor’s and Moody’s Investors Service at BBB and Baa2, respectively.
Investor Relations Office Executive Director Editha Martin said the upgrades provided tangible benefits to the economy, including improved business confidence and reduced borrowing costs for the administration.
The South Korean firm said “improved government transparency as well as enhanced environment backed by expanded infrastructure and social overhead capitals in the form of public-private partnerships” accounted for the upgrade.
The upgrade came amid sustained rise in infrastructural investment as the administration of President Benigno Aquino has raised its infrastructure budget to 5 per cent of GDP this year from 1.8 per cent in 2010.
The agency lauded the award of several infrastructural projects under a public-private partnership (PPP) worth US$4.8 billion since 2010, making the Philippines one of the most active Asean markets for infrastructural development.
Compared with the rest of Asean, NICE said the Philippines was proving more resilient to shocks, including the impact of the Chinese slowdown and volatility arising from increased interest rates in Washington.
“Considering its trade structure and strong foreign exchange liquidity, the impact of global economic uncertainties such as slowdown of the Chinese economy and US interest rate hike will be manageable,” NICE reported.
It said it expected Manila to sustain a strong growth of 6.3 per cent over the short and medium term. It marks the 24th-positive rating action for the Philippines under Aquino.
Bangko Sentral ng Pilipinas Governor Amando Tetangco said the credit rating agencies’ confidence suggested the strength of the economy had increased in recent years
“Contributory to this process were forward-looking monetary policy, proactive bank supervision, and prudent external accounts management, which have played crucial roles in promoting a stable inflation environment and a strong financial system,” Tetangco said.
Finance Secretary Cesar Purisima said: “Virtuous cycles result from dogged discipline, even when political headwinds seem too strong. Expanded fiscal space has opened up a Pandora’s box of opportunities in infrastructure, allowing us to play a fast game of catch-up with our neighbours.”
“With increased transparency, we have empowered citizens who participate in the process of governance, and who – having known the gains reforms can bring – will refuse to roll back progress,” Purisima said.