By LEE C. CHIPONGIAN
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the immediate passage of four crucial structural reforms including amendments to the anti-money laundering law will fast-track the Philippines’ bid to achieve its first “A” credit rating as early as next year.
“Our target is (still) to get it within two years and to me, the key here is more structural reforms,” Diokno said.
The BSP chief, who is also President Duterte’s former budget secretary, said that if Congress will pass the four key measures in the next two quarters, the government’s “Road to A” strategy will be realized sooner.
The measures identified by Diokno are the revisions to the Anti-Money Laundering Act (AMLA) of 2001, the Human Security Act (HSA) of 2007, the Agri-Agra Reform Act of 2009 and the Financial Consumer Protection bill.
“In the next two quarters if we have these laws passed (it could be faster),” said Diokno, adding that the four measures will make it possible to get the “A” credit rating – “maybe in 2021” or before 2022.
“That is just in time because by next year we’ll graduate into a higher upper middle-income (status) economy,” he said. “So an ‘A’ credit is consistent (with higher status) by next year or even earlier this year.”
Having a higher income class is significant mainly in socio-economic development. This would mean that the Philippine per capita GNI will be in the range of $3,900-$12,200 by 2021.
“Securing higher credit ratings requires the Philippines to post even better numbers on various metrics on the economy and parallel to those exhibited by higher rated and richer economies,” said Diokno earlier.
On Friday, Diokno reiterated that the BSP will be working closely with Congress to include and prioritize the measures that are crucial to the BSP’s legislative agenda.
He said that the changes to the AMLA and HAS will make the Philippines compliant with international anti-money laundering/counter-terrorism financing standards set by the Asia Pacific Group which the country is a founding member.
The BSP is also advocating for the immediate passage of the deposit secrecy law.
“We believe that these structural reforms will provide robust support to the country’s economic goals and to the government’s objective of securing an ‘A’ credit rating. Down the road, we see this having a favorable impact not just on the country’s development efforts but on the lives of Filipinos as well,” said Diokno.
An “A” credit rating means lower borrowing costs for the country and a “favorable investment environment which support economic growth.”
The Philippines’ credit ratings were upgraded to investment grade in 2013.
Currently, the country has a “BBB/Stable” ratings from Fitch Ratings, “Baa2/Stable” from Moody’s Investor Service, and a “BBB+/Stable” from Standard & Poor’s.
The Philippines is currently rated one notch above the minimum investment grade by Fitch and Moody’s, and just a notch off an “A” rating from S&P Global.