MANILA, Philippines– Debt watcher Fitch Raitings kept its negative credit outlook on the Philippines due to the economic scars caused by the coronavirus pandemic.

Fitch said that the negative outlook “reflects uncertainty about medium-term growth prospects as well as possible challenges in unwinding the policy response to the health crisis and bringing debt on a firm downward path.”

The New York-based credit watcher also cited the results of the 2022 elections creating uncertainty around the country’s fiscal and economic strategy, although it assumes that the next administration will “assume broad policy continuity.”

Finance Secretary Carlos Dominguez III said, “The government has accommodated the huge cost of COVID-19 crisis response to help vulnerable sectors survive and recover from the crisis, largely because of President Duterte’s comprehensive tax reform program and his policy of prudent fiscal management and discipline.

“But we are also mindful not to pass on to future generations unsustainable debt. Estimated to have reached around 54% of GDP in 2021, the general government’s debt remains manageable, and we expect this to remain at around the same level this year and the next,” he added.

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While Fitch kept a negative outlook, it maintained the Philippines’ credit rating of BBB, a notch above minimum investment grade. A negative outlook, however, puts the Philippines at risk of a downgrade. (READ: EXPLAINER: What’s in it for us if the PH has good credit ratings?)

Fitch noted the country’s improved vaccination rates, falling COVID-19 infections, and normalized economic activities as factors for the retention of the investment rating.

Credit ratings serve as a badge of credit worthiness and reflect a country’s ability to repay its debt. An investment grade rating means that the Philippine government, as well as private companies, can enjoy lower borrowing costs.

Fitch projected the Philippine economy to grow by 6.9% in 2022 and 7% in 2023. – Rappler.com