By CHINO S. LEYCO
US debt-watcher Fitch Ratings has upgraded its outlook for the Philippines’ credit rating to positive from stable, indicating that the country’s investment grade status is more likely to be raised to an “A” level.
Fitch, one of the three major international credit rating agencies, announced that it maintained the government’s long-term foreign-currency issuer default rating at “BBB,” while its stable outlook was revised to positive.
“The Outlook revision reflects Fitch’s expectations of continued adherence to a sound macroeconomic policy framework that will support high growth rates with moderate inflation, progress on fiscal reforms,” the debt-watcher said.
Fitch believes the fiscal reforms being initiated by the Duterte administration should keep government debt within manageable levels and continued resilience in its external finances.
Fitch is forecasting that the local economy, as measured by the gross domestic product (GDP), would grow by 6.4 percent this year and 6.5 percent next year on the back of strong private consumption and rising public infrastructure investment.
“On current projections, the Philippines will remain among the fastest-growing economies in the Asia-Pacific region in 2020-2021, well above the current ‘BBB’ median,” Fitch said.
The latest action by Fitch boosted the Duterte administration’s bid to secure an “A” credit rating status, which is currently just a notch away from “BBB.”
“Fitch expects the Philippines’ fiscal profile to improve over the coming year, supported by continued progress on tax reforms, which should lead to higher government revenues,” the credit rater said.
Fitch also said the Philippine economy is less vulnerable to the adverse effects of the evolving coronavirus outbreak.
“It is still early to evaluate the effects of the outbreak, but the economy appears somewhat less vulnerable than regional peers as tourism accounts for less than 3.0 percent of GDP,” Fitch said.