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— The Editors

PH gets credit rating affirmation from Moody's

By Joann Villanueva

July 16, 2020, 9:11 pm

MANILA – The Philippines continues to defy trends after Moody’s Investors Service on Thursday affirmed its Baa2 rating with stable outlook on the country, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
 
In a Viber message to journalists, Diokno said this latest decision by the debt rater is a welcome development since the latter has downgraded the credit ratings of 18 sovereigns and revised to “negative” the ratings outlook of 27 sovereigns as of last June.
 
“The affirmation from Moody’s, Fitch and S&P’s and the upgrade from Japan Credit Rating Agency support our view that the pandemic hit the Philippines from a position of strength. While the economy will contract this year, its prospects for a strong rebound next year and future years are bright,” he added.
 
This affirmation follows the debt rater’s decision last May 12, wherein it kept its rating and ratings outlook on the country despite changing its growth forecast for the domestic economy to a contraction of 0.2 percent for this year. 
 
It, however, projected a growth rebound of 9 percent next year.
 
“The rating affirmation and stable outlook reflect Moody’s view that the fortification of the government’s fiscal position in recent years provides a buffer against a rise in public indebtedness due to shocks, such as the ongoing global coronavirus outbreak,” Moody’s Investors Service said.
 
It added that the country’s “track record of prudent economic and fiscal management, and a robust banking system, contribute to the stable access to funding at moderate costs and support prospects for fiscal consolidation and debt stabilization after the shock subsides.”
 
Aside from getting the credit affirmation from Moody’s, the Philippines also registered other milestones recently after S&P Global Ratings affirmed its ‘BBB+’ rating with a stable outlook on the Philippines last May 30.
 
Fitch Ratings on May 7 affirmed its BBB rating on the Philippines despite changing the outlook from positive to stable on account of the economic impact of the coronavirus disease 2019 (Covid-19).
 
Last June 11, the Japan Credit Rating Agency (JCRA) upgraded its ratings on the Philippines from BBB+ to A- with a stable outlook even as it forecast a contraction in growth this year. 
 
It forecast domestic growth to expand by 6 percent to 7 percent in the medium term.
 
In a statement, Diokno said the country entered the Covid-19 pandemic “in a position of strength characterized in part by healthy external accounts, sound and stable banking system, and manageable inflation.”
 
These factors, he said, are complemented by “prompt, decisive, and extraordinary measures implemented by the BSP and the national government to save lives and livelihoods, and to make sure we emerge from this crisis stronger than before.”
 
Diokno said the central bank “has already done a long list of relief measures, and we stand ready to do more if needed, especially as our policy space and tool kit are far from being exhausted.” 
 
“The affirmation of our credit rating by Moody’s – together with the recent favorable actions on the Philippines by other credit rating agencies (CRAs) – show that important stakeholders from the international community recognize that the Philippines is on the right track as far as managing the effects of the Covid-19 crisis is concerned,” he added.
 
Finance Secretary Carlos Dominguez III described the pandemic as “a black swan that has shoved countries, including the Philippines, into what is shaping up to be the world's worst economic downturn since the Great Depression.”
 
“But what separates our country from most virus-hit economies is that we were caught up in this global health crisis with ample buffers to cushion its fallout while keeping our debt level manageable and without compromising our fiscal health,” Dominguez said.
 
With the current government’s prudent management of the economy along with the tax reform program, “the Philippines has wielded enough fiscal space ahead of the deepening coronavirus crisis,” he said, adding that this fiscal leeway enabled the government to formulate its PHP1.7-trillion recovery program, which accounts for about 9.1 percent of domestic output as of May 2020.
 
"On the back of such strong fundamentals, the Duterte administration is committed to a calibrated reopening of the domestic economy in order to quickly restore business and consumer confidence while holding on to certain mobility restrictions and strict health protocols meant to further slow Covids-19 spread, save lives and protect communities," Dominguez said. (PNA)
 
 

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