Senator Loren Legarda congratulated the Administration’s economic team as she welcomed the investment upgrade of the Philippines’ Foreign-Currency Issuer Default Rating (IDR) from its 2013 rating of “BBB-” to “BBB” issued by the credit rating agency Fitch Ratings.
The new rating provides the country with a “stable” outlook, which means that the “upside and downside risks to the rating are balanced.”
Fitch Ratings cited the Philippines’ strong macroeconomic performance, solid domestic demand and inflows of foreign direct investment, and consistent fiscal policies geared towards a sustained decline in the gross general government debt (GGGD) ratio, among others, as key rating drivers for the investment upgrade.
“The Philippines’ investment upgrade is a product of prudent governance and our steadfast commitment to protect and improve the living conditions of our fellow Filipinos. I laud the efforts of both the public and private sector, especially the President and his economic team, in achieving this credit ratings status,” said Legarda, Chair of the Senate Committees on Finance, Foreign Relations, and Climate Change.
“The challenge really before us is to translate this positive outlook into actual actions, projects, and programs that will truly impact the poorest of our poor. May this good news serve as an inspiration for us to serve more, especially those whom we need to lift out of poverty,” the veteran legislator added.
According to the Department of Finance (DOF), the average GDP growth of the Philippines accelerated from 5.2% from 2003-2012–the period before the Philippines acquired an investment status–to 6.5% from 2013-2016. Moreover, for the first three quarters of this year, the economy grew to 6.7%, which the Duterte administration targets to grow by 6.5 to 7.5% this year, and 7 to 8% annually from 2018-2022.
The seasoned lawmaker said that Fitch Ratings, meanwhile, forecasts GDP growth of 6.8% in 2018 and 2019, which would maintain the Philippines’ place among the fastest-growing economies in the Asia-Pacific region primarily because of the government’s “Build Build Build” infrastructure development agenda to spend between $160 billion and $170 billion on infrastructure projects nationwide until 2022.
Moreover, Fitch Ratings also expects the Philippines’ fiscal profile to improve as a result of the government’s Tax Reform for Acceleration and Inclusion (TRAIN) initiative, which is targeted to be signed into law before the year ends. The first package is estimated by the credit rating agency to boost government revenues in the amount equivalent to 0.5 to 0.8% of the country’s GDP in 2018. “Moving forward, there is no other option for us but to sustain this level and strive to achieve a higher investment status. Our efforts through the ‘Build, Build, Build’ infrastructure development agenda and the TRAIN initiative are major efforts that will certainly usher in more growth for the Philippines,” the lady senator said.
“We also need to remember that all these efforts should be contextualized in the service of the millions of Filipinos. We cannot truly achieve real lasting growth if marginalized and vulnerable communities are not included in this development path. The more we invest in all of our people, the greater we transform our country,” she concluded.