PH’s credit rating intact amid strong fundamentals: S&P
Ratings agency Standard & Poor’s has retained the Philippines’ investment grade of “BBB” with a “stable” outlook, citing fundamentals and prudent management of the economy that point to sustainability of the country’s economic gains.
The long-term rating of “BBB” is one notch above minimum investment grade, while a “stable” outlook indicates balanced risks or absence of factors that can lead to a change in the rating over the short term.
Ratings within the investment-grade scale, which help boost investor confidence, is a seal of good housekeeping that indicates ability of a country to meet its financial obligations given a host of factors, including favorable economic conditions.
“High household consumption, investment, and exports (mainly of electronics, commodities, and services) continue to support economic activity. These strengths will likely be underpinned by strong household and company balance sheets, sound growth in jobs and income, inward remittance flows, and an adequately performing financial system,” S&P said.
S&P estimated per-capita income in the Philippines would grow by 4.4 percent to $3,000 this year, and further rise to 4.6 percent from 2017-2019.
This is on the back of the robust growth outlook on the Philippines, which in turn is supported partly by its’ “young,” “educated,” and “flexible” workforce that is complemented by rising investments and a financial system able to fund consumption and business activities.
S&P also projected current account to remain in surplus, averaging 2 percent of GDP annually up to 2019. This is due to continued rise in remittances, electronics exports, and revenues from business process outsourcing (BPO).
The current account has been in surplus for 13 consecutive years since 2003, helping boost foreign currency reserves..
Gross international reserves stood at $85.8 billion as of end-August, enough for over 10 months’ worth of the country’s payments for imported goods and services. .
S&P said its outlook of sustained decline in the general government’s debt as a proportion of GDP, from 28 percent in 2010 to 18 percent in 2019, is due to prudent fiscal management.
In a statement, Central bank governor Amando Tetangco, Jr. said keeping “its credit rating well within the investment grade scale, which has transcended change in political leadership, is a testament that the country’s economic gains have been built from deeply rooted structural and sound policy reforms over the years.”. DMS