By Chino S. Leyco
One of three major international credit rating agencies maintained the Philippines’ investment grate status amid the country’s strong economic performance, stronger fiscal position and limited vulnerability to external shocks.
In a statement, Moody’s Investor Services said it kept the Philippines’ “Baa2” rating, which is one notch above minimum investment grade, and with “stable” outlook.
Moody’s said the present reflects the country’s “high” economic strength, “mnoderate” institutional strength, “moderate” fiscal strength and “low” susceptibility to event risk.
“Strong domestic demand provides a buffer against external economic shocks, such as those posed by cyclical swings in global trade and commodities prices,” Moody’s said.
“Moreover, the Philippines’ young and growing population supports private consumption and reduces the burden of ageing-related costs on the economy and government finances,” the rating agency added.
Moody’s, meanwhile, noted the Duterte administration’s focus on security and illegal drugs, as well as other political controversies, have thus far not weighed on economic growth or derailed fiscal reform.
But the credit rater also said there is “comparatively short window” for the current administration to pursue its legislative reforms, noting “we expect campaigning to detract attention away from reform ahead of the next general election scheduled for 2022.”
Meanwhile, Moody’s said they assess banking sector risk at “low” as the local banking system as a whole is well capitalized, profitable and competently managed, thus posing limited contingent risks to the government.
In addition, it cited the stringent oversight by the Bangko Sentral ng Pilipinas (BSP) supports financial stability, as illustrated by the adoption of international regulatory standards and preemptive macroprudential measures.