Economic team touts ‘positive’ credit rating outlook amid political noise
Metro Manila, Philippines — The administration’s economic managers touted the financial community’s confidence in the country with the “positive” credit rating outlook of a US-based debt watcher amid the political noise in the leadership.
Finance Undersecretary Domini Velasquez said foreign investors were “insulated” from the leadership bickering.
“We’ve proven ourselves that, actually, we’re beyond this political noise,” Velasquez told a televised public briefing on Wednesday, Nov. 27.
Velasquez, the agency’s chief economist, cited the country’s track record and recent reforms, such as the CREATE MORE Act that reduced corporate taxes, in having a “positive” credit rating outlook. A credit rating is an assessment of the government’s creditworthiness.
Revised credit rating outlook
The S&P Global Ratings raised the country’s credit score outlook to “positive” from “stable” on Tuesday, Nov. 26. It also affirmed the “BBB+/A-2” sovereign credit ratings.
For the economic managers, the revision could signal a possible upgrade to an investment grade “A-” within two years.
“[T]he administration is ensuring that the transformation of the economy will not be set back by political challenges,” read their joint statement.
The economic team groups Special Assistant to the President for Investment and Economic Affairs Frederick Go, Budget Secretary Amenah Pangandaman, and Socioeconomic Planning Secretary Arsenio Balisacan.
“An improved rating or outlook helps the government borrow at lower interest rates, allowing it to fund more services and infrastructure,” the Bangko Sentral ng Pilipinas explained. “This also helps businesses borrow at lower rates, helping fund expansion and job creation.”
S&P said key factors for the improved rating were the country’s above-average growth potential, effective policy making, fiscal reforms, improved infrastructure and policy environment, and strong external position.
But the credit rating agency said downside scenarios for Manila would be if the “economic recovery falters” and “if persistently large current account deficits lead to a structural weakening of the Philippines’ external balance sheet.”
It also said that it would take “several years for fiscal balances to recover to pre-pandemic levels given the eroded fiscal headroom.”
“The economic managers note that the Philippine economy has proven time and again its resilience against both domestic and external challenges, whether arising from natural disasters, geopolitical risks, election cycle tensions, global or regional financial crises, supply chain gaps abroad, cybercriminal activities, or other crises,” the economic team said.
Political fall-out
The relationship between President Ferdinand Marcos Jr. and Vice President Sara Duterte has reached a new low with Dutere’s tirades against the First Family and the administration in the face of congressional scrutiny over her confidential fund spending.
Duterte said she has ordered someone to kill Marcos, First Lady Liza Araneta Marcos, and House Speaker Martin Romualdez should an assassination plot against her prosper.
The president’s close-in security has been tightened even as the National Bureau of Investigation has begun to probe Duterte’s threat.
