THE Philippines could achieve the coveted “A” credit rating before President Marcos Jr. steps down from office, according to projections by Finance Secretary Benjamin E. Diokno.
Diokno said the Philippines has been on the right path to an “A” credit rating until the Covid-19 pandemic happened, halting economic growth and development.
However, he expressed optimism that the country has regained its footing and is on track toward getting the elusive A credit rating that would enable the Philippines to borrow at lower costs.
“We are getting there. It is possible within this administration,” he told reporters in a recent press briefing.
Diokno noted that the Philippines already has an A- credit rating from the Japan Credit Rating Agency and an AAA rating from China Lianhe Credit Rating Co. (Related story: https://businessmirror.com.ph/2023/03/10/japan-credit-rater-affirms-phls-rating-cites-economic-resilience/)
However, the Philippines has yet to achieve an A rating from Fitch Solutions, Moody’s and Standard & Poors (S&P).
At present, the Philippines has a BBB rating from Fitch Solutions, a Baa2 from Moody’s and a BBB+ from S&P.
Diokno pointed out that the Philippine economy is doing well in achieving its A target, as it recently received an outlook upgrade from Fitch while noting that a third of the world was downgraded. “We have a road to A strategy,” he said.
Part of that strategy, Diokno explained, is maintaining the government’s fiscal consolidation plan and ramping up infrastructure spending, which he said would make the “big” difference.
“Our energy costs are too expensive. In the last 50 years before the [Duterte administration], our infrastructure spending was only 2 percent of GDP. Now it is at 5 percent to 6 percent,” he said.
“These will lift [the credit rating of the country],” he added.
Last month, Fitch Ratings reaffirmed its BBB credit rating for the Philippines and improved its economic outlook for the country as it projected a “return” to “strong” medium-term growth after the Covid-19 pandemic.
In its report, the credit rating agency revised its outlook on the Philippines’s long-term foreign currency issuer default rating (IDR) to stable from negative.
Fitch Ratings explained that the revision “reflects” its “confidence” that the Philippines is now “returning” to strong economic growth post-pandemic. (Related story: https://businessmirror.com.ph/2023/05/23/fitch-sees-phl-return-to-strong-growth/)