By CHINO S. LEYCO
The administration’s key economic officials lauded the Fitch Ratings’ decision to adjust upward the outlook on the Philippines, noting this latest favorable action is crucial in the government quest for a more inclusive economic growth.
Both Finance Secretary Carlos G. Dominguez III and Socioeconomic Planning Secretary Ernesto M. Pernia said that the country’s macroeconomic fundamentals have improved over the past three years amid the government’s strong spending on infrastructure and human capital.
Along with the two economic managers, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno also cited the country’s economic strength with moderate inflation and positive long-term prospects.
On Tuesday, Fitch Ratings has adjusted upward the outlook on its “BBB” investment grade credit rating for the Philippines from “stable” to “positive.”
The outlook revision, Fitch Ratings said reflected its expectations of the Philippines’ continued adherence to a sound macroeconomic policy framework that will support high growth rates with moderate inflation and progress on fiscal reforms.
“We have pursued an aggressive investment program while maintaining fiscal discipline. The upgrades in our ratings reflect an exciting inclusive narrative anchored on robust growth despite headwinds and a declining poverty incidence,” Dominguez said.
For his part, Pernia said, “Over the last few years, we have posted notable strides in making our economic growth more inclusive, as evidenced by the significant declines in the unemployment rate and poverty incidence.”
Diokno, meanwhile, said the “positive” outlook from Fitch is an encouraging development and boosted the Duterte administration’s bid to secure an “A” credit rating status within the next two-years.
“We deserve a credit rating upgrade from Fitch, and the ‘positive’ outlook should soon lead us there,” Diokno said. “As part of our Road to ‘A’ agenda, we are more vigorously communicating the economic milestones as well as the governance and institutional strengthening.”
Dominguez said that a higher credit rating is crucial for the Philippines because it will lower borrowing costs for the government and private sector investors, and eventually lower interest rates for the loans of ordinary Filipinos.
“Both will spur greater investments, which, in turn, will mean faster growth and more jobs,” Dominguez said.
Based on the Fitch report, the Philippines will remain among the fastest growing economies in the Asia-Pacific region until 2021.
Fitch Ratings expects the economy, as measured by the gross domestic product (GDP), to grow by 6.4 percent this year and 6.5 percent next year, faster than last year’s 5.9 percent.
Pernia assured the country’s present economic momentum will be sustained by the government.
“Heightened efforts to provide an enabling environment for science and technology innovation ecosystem, for instance, will help the economy leapfrog toward its long-term goal of becoming a high-income economy with zero poverty, and globally competitive,” he said.
On the external front, Fitch said the Philippines remains less vulnerable to capital outflows compared to its rating peers and that it expects the country’s external finances to remain resilient.