Budget Secretary Emphasizes Whole-of-Government Approach Key to 'A' Credit Rating
"A whole-of-government approach to strengthening our economy will certainly help us achieve an 'A' credit rating."
This was the statement of Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman, following Senator Loren B. Legarda’s inquiry on the “Road to A Credit Rating Agenda” to the Development Budget Coordination Committee (DBCC) during the Senate briefing on the proposed FY 2025 National Budget.
"Strengthening our economic reliance and credibility is crucial, and I am committed to supporting legislative measures that will solidify our nation's standing in the global economic arena," Senator Legarda said.
The Budget Secretary expressed confidence that the country will achieve an “A” credit rating if we use a whole-of-government approach to sustaining the high growth trajectory of the Philippine economy.
Fitch defines an “A” credit rating as “high credit quality,” which means that “the capacity for payment of financial commitments is considered strong.” In June 2024, Fitch affirmed the country’s credit rating at BBB which is above the minimum investment grade with a stable outlook.
A higher credit rating means lower cost of borrowing externally and greater likelihood of investments coming in. However, the country will need to sustain growth at 6 to 7 percent annually and ensure that deficit is reduced consistently for the next four years to get a credit rating upgrade.
The DBCC projects the deficit to decline sustainably from 5.6 percent of GDP in 2024 to 3.7 percent of GDP in 2028. Meanwhile, the debt-to-GDP ratio will decline from 60.6 percent in 2024 to 56.0 percent in 2028, well within the internationally accepted threshold of 70 percent, as recommended by the International Monetary Fund.
“It is crucial that each and every lawmaker understand the strategies in place to maintain and build upon this positive trajectory,” Senator Legarda said.
Budget Secretary Pangandaman thanked the Senator for encouraging lawmakers to support the government's economic strategy for growth, adding the importance of ensuring that administration’s fiscal consolidation strategy is on track.
In an earlier interview, Secretary Pangandaman shared that through a whole-of-government approach, the DBCC's economic targets are being met, including the “A” credit rating by 2028, an upper-middle-income economy by 2025, and a single-digit poverty level by 2028.
“Sabi nga ng ating presidente, we don’t stop there until maramdaman po ng ordinaryong Pilipino ‘yung mga numerong ipinapakita natin. These are indicators that are well acknowledged by our international and development partners, but at the end of the day, gusto natin maramdaman ito ng mga ordinaryong Pilipino,” the Budget Chief said.
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