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MANILA, Philippines – The sin tax reform law and improvements in tax collection have prompted a South Korea-based credit rating agency to upgrade its outlook on the Philippines to “positive.”
On Tuesday, February 12, NICE Investors Services Co., Ltd. announced that it lifted the outlook on the Philippines “BB+” long-term foreign currency rating and the “BBB-“ long-term local currency rating to positive from stable.
This action means there is high chance the Asian rating agency will announce its verdict of a credit rating upgrade in the next 6 to 12 months.
Apart from improved tax collection and the sin tax reforms, NICE also cited the improving business environment to attract more investments, stable inflation, robust services and consumption sectors that support growth, sound bank lending practices, improving debt profile, and healthy external payments position.
More investments
Officials lauded the announcement, adding that this will help bring in more investments and business into the country.
Finance Secretary Cesar V. Purisima said the government is happy to be recognized positively by NICE Investors Service in this outlook upgrade. “We have always been confident that good governance will lead to good economics and this positive ratings action is a recognition of our commitment to removing the country’s constraints to growth,” he said.
Purisima added, “The market already prices our debt as it would a much higher-rated country, and I believe formal recognition of our investment grade status by the credit ratings agencies is imminent.”
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the positive rating action from an Asian-based credit rating agency confirms the strong credit story of the Philippines.
He added that NICE rating will help the Philippines in the Korean market and its investors, especially in projecting the improvements in the economy as well as in governance.
“On the part of the BSP, we will continue to implement monetary, external and financial sector policies that will help maintain a sound macroeconomic environment and a healthy financial system, supportive of non-inflationary growth,” Tetangco said.
To date, the Aquino Administration has earned 11 positive credit rating actions since assuming office in June 2010.
The following rate the Philippines at one notch below investment grade: Standard and Poors (BB+/Positive); Moody’s (Ba1/Stable); and Fitch Ratings (BB+/stable). – Rappler.com
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