Aquino admin downplays Arroyo role in investment grade
MANILA, Philippines - The Aquino administration downplayed the contribution of the Arroyo administration in the Philippines' achievement of an investment grade rating from Fitch Ratings.
In a press conference on Wednesday, March 27, Presidential Spokesperson Edwin Lacierda said the only contribution of the Arroyo administration to the country's investment grade rating was the imposition of the Value Added Tax (VAT).
"When former President Arroyo entered or inherited the presidency, we were one notch below investment grade since then it went down," Lacierda said.
"What the Fitch Ratings were referring to, according to [Finance] Secretary [Cesar] Purisima, was the introduction of the value added tax and that's the only contribution of the Arroyo administration to the statement of the Fitch ratings group."
The VAT was imposed by the national government in 2005. Initially, the government imposed a 10% VAT but this was later increased under the expanded VAT to 12%.
Fitch, which upgraded the Philippines' sovereign credit rating to BBB- from BB+, credited the improvements in the country's fiscal management to the administration of former President Gloria Macapagal Arroyo.
The VAT reform law in 2005 "have made general government debt dynamics more resilient to shocks," Fitch said.
Only under Aquino
He added that the Aquino administration was the one that got the Philippines back on track to the road to investment grade. Lacierda said when President Arroyo took over the reigns of government, the country was already a notch below investment grade.
Lacierda said the country's credit rating also deteriorated during the Arroyo years.
View: INFOGRAPHIC: What a credit rating upgrade means for Filipinos
He stressed that the country received its first upgrade less than a year after President Aquino assumed office in 2010.
"It was only in the time of President Aquino...on June 23, 2011, that it (Philippines) was upgraded to BB+. And today, we have this delightful announcement that we have been upgraded to investment grade status," Lacierda said.
In a statement read by Lacierda, President Aquino said the credit ratings upgrade of the Philippines also helps the country become attractive to foreign investments. This could lead to more jobs for Filipinos. (READ:Why PH is one of world's sexiest)
The President also said that the credit ratings upgrade was an affirmation of the Aquino government's good governance agenda which highlights the role that 'integrity-based leadership' played in the country's economic growth and development.
"The upgrade represents the perception of lessening risk in our markets; it formalizes the investment grade level at which the Philippines has already been securing credit," the President's statement read.
"This is an institutional affirmation of our good governance agenda: Sound fiscal management and integrity-based leadership has led to a resurgent economy in the face of uncertainties in the global arena. It serves to encourage even greater interest and investments in our country," it added. - Rappler.com