Japan Credit Rating Agency affirms PH’s BBB+ rating

Japan Credit Rating Agency affirms PH’s BBB+ rating
The rating comes with a stable outlook, indicating resilience to external shocks and a relatively sound fiscal position


MANILA, Philippines – The country’s credit rating seems to have weathered the potentially turbulent past few months, which included tight elections, the maritime dispute with China, and Britain’s decision to leave the European Union.

The Japan Credit Rating Agency (JCR) became the latest credit rating body to maintain the Philippines’ credit rating of BBB+,  a rating that is investment grade level and a notch away from a rating within the A category.

On Tuesday, August 2, JCR also assigned a “stable” outlook, which indicates there are no factors that can drag or lift the country’s creditworthiness in a span of at least 12 to 18 months.

JCR joins other credit rating agencies – Standard and Poor’s, Fitch, and Moody’s – which all maintained the country’s rating post-elections.

JCR said the rating was based on “the country’s certain resilience to external shocks, relatively sound fiscal position, and relatively sound economic growth potential underpinned by robust domestic demand.”

It also expects the Philippine economy, which grew 5.9% in 2015, to post a growth rate higher than 6% in 2016 due to strong domestic demand.

JCR added that the country’s fiscal position has been “maintained at relatively sound level as the central government’s fiscal deficit stayed below its target due partly to slower budget implementation.”

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo, for his part, cited the country’s “solid foundation.”

“Consistently registering one of the fastest growth rates in the region and the world, the Philippines has proven that boom-and-bust cycles are a thing of the past,” Guinigundo said.

“We credit our economic gains to a solid foundation that consists of decades of structural reforms.”

Welcoming reforms

JCR also welcomed the Duterte administration’s pledge to continue the previous administration’s macroeconomic policies, while ramping up infrastructure spending and initiating reforms on business regulations and taxes.  

The Duterte administration has said it plans to increase the deficit ceiling to enable more public spending using borrowed money on infrastructure projects that could come as early as this year.

It also pledged to lower both income and corporate taxes, with the Department of Finance (DOF) set to present a package of reforms in September.

JCR said it will keep an eye on how the Duterte administration’s economic policies will evolve.

“JCR’s decision to keep the Philippines’ BBB+ rating is a vote of confidence in the Duterte administration’s resolve to sustain and strengthen the macroeconomic fundamentals that have transformed the Philippines into Asia’s newest bright spot,” said Finance Secretary Carlos Dominguez III.

He added that the government would “pursue its 10-point socioeconomic agenda that is meant not only to keep the domestic economy on its upward trajectory but also to make it inclusive for all Filipinos.” – Rappler.com

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