{"id":19155,"date":"2024-06-10T03:01:37","date_gmt":"2024-06-10T03:01:37","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/recto-says-philippines-still-on-track-to-achieve-a-credit-rating\/"},"modified":"2024-06-10T03:01:37","modified_gmt":"2024-06-10T03:01:37","slug":"recto-says-philippines-still-on-track-to-achieve-a-credit-rating","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/recto-says-philippines-still-on-track-to-achieve-a-credit-rating\/","title":{"rendered":"Recto says Philippines still on track to achieve \u2018A\u2019 credit rating"},"content":{"rendered":"
\n

By Luisa Maria Jacinta C. <\/b>Jocson, <\/b><\/span>Reporter <\/i><\/p>\n

THE PHILIPPINES is still on track to meeting its goal of achieving an \u201cA\u201d rating status, Finance Secretary Ralph G. Recto said.<\/p>\n

This after Fitch Ratings aff<\/span>irmed the country\u2019s long-term foreign currency issuer default rating at \u201cBBB\u201d and retained its \u201cstable\u201d outlook.<\/p>\n

\u201cYes, as expected. We are on the road to an \u2018A\u2019 rating. A better credit rating will help us create more jobs and reduce poverty by 2028,\u201d Mr. Recto told BusinessWorld<\/i> in a Viber message.<\/span><\/p>\n

In a commentary dated June 7, Fitch Ratings aff<\/span>irmed the Philippines\u2019 \u201cBBB\u201d investment grade rating and maintained its \u201cstable\u201d outlook.<\/p>\n

A \u201cBBB\u201d rating indicates low default risk and reflects the economy\u2019s adequate capacity to pay debt. Meanwhile, a \u201cstable outlook\u201d means it is likely to be maintained rather than lowered or upgraded over the next 18-24 months.<\/p>\n

Fitch cited the Philippines\u2019 \u201cstrong medium-term growth, which supports a gradual reduction in government debt\/gross domestic product (GDP) over the medium term and the large size of the economy relative to \u2018BBB\u2019 peers.\u201d<\/p>\n

\u201cThe rating is constrained by low GDP per head, despite an upward trend. Governance standards are weaker than at \u2018BBB\u2019 peers, though Fitch believes World Bank Governance Indicator scores somewhat overstate this,\u201d it added.<\/p>\n

The Philippine economy grew by 5.7% in the f<\/span>irst quarter, better than the 5.5% in the previous quarter.<\/p>\n

The government is targeting 6-7% growth this year, although Fitch expects Philippine GDP growth to average 5.8% this year.<\/p>\n

\u201cWe forecast real GDP growth of above 6% over the medium term, considerably stronger than the \u2018BBB\u2019 median of 3%, supported by large investments in infrastructure and reforms to foster trade and investment, including public-private partnerships (PPPs).\u201d<\/p>\n

Meanwhile, Fitch noted the government\u2019s latest revisions in its fiscal consolidation targets, which \u201cscaled back\u201d both revenue and expenditure programs.<\/p>\n

\u201cWe believe there is some risk of further fiscal slippage, given the government\u2019s continued focus on economic growth and the approach of midterm elections in May 2025,\u201d the credit rater said.<\/p>\n

Fitch also expects inflation to average 3.8% this year, within the 2-4% target band but above the central bank\u2019s 3.5% full-year forecast.<\/p>\n

In a separate statement, Budget Secretary Amenah F. Pangandaman said that Fitch\u2019s assessment of strong growth prospects in the country is a welcome development.<\/p>\n

\u201cWe hope to sustain our momentum for growth and keep our lead as one of the fastest-growing economies in Southeast Asia,\u201d she said.<\/p>\n

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that the debt watcher has maintained its rating even during the pandemic.<\/p>\n

\u201cThese ref<\/span>lect the Philippines\u2019 improved economic and credit fundamentals, as well as improvements in f<\/span>iscal performance in recent years that could help attract a bigger roster of international investments and international credit at much lower cost and with better terms into the country,\u201d he said in a Viber message.<\/p>\n

Mr. Ricafort said Fitch\u2019s latest credit rating shows signs of the country\u2019s resilience and improved investor conf<\/span>idence.<\/p>\n

This was also ref<\/span>lected by the narrower credit risk premium in the Philippines\u2019 latest global bond issuance, he added.<\/p>\n

The Philippine government raised $2 billion from its dual-tranche issuance of dollar bonds in May.<\/p>\n

The Finance department earlier said it was able to secure funding at very cheap rates due to the country\u2019s \u201cexceptional performance beyond its current credit rating.\u201d<\/p>\n

On the other hand, Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said that the latest rating action is \u201cnothing to crow about.\u201d<\/p>\n

\u201cWhile it meets the minimum grade for almost all forms of investment agencies, it indicates a certain elevated level of risks. In this period of great uncertainty and greater protectionism, this rating does not provide any advantage for countries competing for greater investment, especially in the Southeast Asian region,\u201d he said in an e-mail.<\/p>\n

\u201cThe grade only reflects a financial good standing but has no complimentary regard for its real sector where growth should now emanate. Without a strong and stable real sector, even this f<\/span>inancial status is bound to weaken,\u201d he added.<\/p>\n

Mr. Lanzona also said that the country is unlikely to achieve an \u201cA\u201d rating unless there is \u201ccomprehensive industrial reform and structural transformation.\u201d<\/p>\n

The government is targeting to achieve an \u201cA\u201d level rating by 2028 or the end of the Marcos administration.<\/p>\n

In 2019, the Finance department and Bangko Sentral ng Pilipinas organized an interagency committee for the \u201cRoad to A Credit Rating Agenda.\u201d<\/p>\n

Apart from Fitch\u2019s latest rating action, the Philippines currently holds investment grade ratings of \u201cBaa2\u201d with Moody\u2019s Ratings and \u201cBBB+\u201d with S&P Global Ratings. Both have also assigned a \u201cstable\u201d outlook to their ratings.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By Luisa Maria Jacinta C. Jocson, Reporter THE PHILIPPINES is still on track to meeting its goal of achieving an \u201cA\u201d rating status, Finance Secretary Ralph G. Recto said. This after Fitch Ratings affirmed the country\u2019s long-term foreign currency issuer default rating at \u201cBBB\u201d and retained its \u201cstable\u201d outlook. \u201cYes, as expected. We are on [\u2026]<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[2440,6925,14644,9581,1572,4508,14983,192,1477,6919],"class_list":["post-19155","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-a","tag-achieve","tag-bworldonline","tag-credit","tag-philippines","tag-rating","tag-recto","tag-says","tag-still","tag-track"],"yoast_head":"\nRecto says Philippines still on track to achieve \u2018A\u2019 credit rating - Energy Buzz<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/energybuzz.ph\/recto-says-philippines-still-on-track-to-achieve-a-credit-rating\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Recto says Philippines still on track to achieve \u2018A\u2019 credit rating - Energy Buzz\" \/>\n<meta property=\"og:description\" content=\"By Luisa Maria Jacinta C. Jocson, Reporter THE PHILIPPINES is still on track to meeting its goal of achieving an \u201cA\u201d rating status, Finance Secretary Ralph G. Recto said. This after Fitch Ratings affirmed the country\u2019s long-term foreign currency issuer default rating at \u201cBBB\u201d and retained its \u201cstable\u201d outlook. \u201cYes, as expected. 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