Standard & Poor’s (S&P), one of the most reputable credit-rating agencies in the world, has revised its outlook on the Philippine economy from “stable” to “positive” on the back of sustainable fiscal policies and consistent economic growth. Likewise, S&P affirmed the “BBB” long-term sovereign credit rating of the Philippines, maintaining the positive credit score of the country which is a notch above investment grade.
“We welcome the upward revision in the outlook for the Philippine economy,” said Budget and Management Secretary Benjamin E. Diokno.
“We are confident that sustaining our fiscal reform agenda, primarily with Tax Reform and Budget Reform, will lead to a credit upgrade within the year,” he added.
“The economy stands to benefit greatly as it will potentially translate to lower borrowing rates to finance our priority programs and projects,” the Budget Chief elaborated.
The encouraging news is especially relevant in the purview of the government’s medium-term financing program. On April 24, the Development Budget Coordination Committee (DBCC) adjusted the borrowing program of the government from an 80-20 mix, in favor of domestic borrowings, to a 65-35 mix in 2018 and then a 75-25 mix from 2019 to 2022. The adjustment is owing to the government’s strategy of diversifying its investor base and tapping to new markets to meet its financing requirements. A potential credit upgrade will only maximize the benefits of this revised financing program.
The S&P statement cited the government’s Comprehensive Tax Reform Program, improvements in the quality of expenditures, manageable fiscal deficits, and low levels of government indebtedness as the bases of its revision in the outlook of the Philippine economy.
Furthermore, the New York-based credit rating agency expects the Philippine economy to continue its robust growth trajectory underpinned by strong macroeconomic fundamentals and prudent management of public finances.
“We are only motivated to work harder given the international recognition with our fiscal reform agenda,” said DBM Secretary Diokno. “But we will not stop here as our ultimate aim is to expand economic opportunities and uplift the lives of our constituents,” he concluded.
The Duterte Administration is aiming for economic growth at the rate of 7% to 8% in the medium-term while cutting the poverty rate from 21.6% in 2015 to at least 14% by 2022.