Japan’s R&I affirms PH credit rating, outlook

The Tokyo-based debt watcher keeps its credit rating and outlook for the Philippines, citing the country's improving fiscal position and current account surplus

MANILA, Philippines – Tokyo-based Ratings & Investment Information Inc has kept its rating and outlook for the Philippines’ sovereign debt, owing to the country’s strong economic fundamentals.

R&I affirmed its BBB- rating and stable outlook for the Philippines, it said in a statement.

It cited two reasons for this: the government’s low budget deficit and its strong current account surplus, a buffer against external shocks.

“With a continued current account surplus, the country keeps strong resiliency against external turbulences,” R&I said.

An upgrade in the rating will depend on improvement in the Philippines’ per capita gross domestic product (GDP), infrastructure spending and revenue base.

“Per capita GDP is at approximately $2,400, which is a major constraining factor for the rating. Although the country is required to maintain a strong growth under the pressure of population increase, expansion of investment takes a long time,” it said.

It added it would continuously “keep an eye on whether the Philippine government will be able to expand its revenue base and develop more sophisticated investment environment including upgrading the infrastructure to solve the investment shortage issue.”

“To promote investments, the Philippine government needs to play a leading role in improving the investment environment by expanding public investments. The government intends to use the scheme of public-private partnership (PPP) to accelerate investment in infrastructure while controlling spending.”

The government is banking on higher revenue collections and the rollout of its PPPs to meet economic growth targets this year.

In the first quarter, the Philippine economy grew by 6.4%, much faster than the 4.9% growth in the same quarter last year, surpassing market expectations. – Rappler.com