Fitch upgrade validates Duterte economic policy

N Fitch Ratings on Monday gave the Philippines a credit-rating upgrade that could only be seen as a validation of the government’s economic policy.

Fitch, one of the “Big 3” credit rating agencies and the most pessimistic on the Philippines’ creditworthiness, joined Standard & Poor’s (S&P) and Moody’s in placing the country one notch above investment grade.

The Philippines now has “BBB” ratings from both Fitch and S&P, and “Baa2” from Moody’s. All three have a stable outlook on their ratings, meaning no changes are expected in the medium term.

An upgrade is, of course, a rating agency’s opinion that a sovereign debt issuer’s creditworthiness has im- on the global bond market. - proved tremendously since Fitch’s last upgrade in 2013. The ratio of the country’s debt to gross domestic product (GDP) has shrunk to 41.7 percent, from 51.5 percent than halved to just 3.3 percent of GDP from 6.9 percent.

It took Fitch three years to match the ratings given by S&P and Moody’s, whose last upgrades happened in May 2014 and December 2014, respectively.

The fact that it happened one year and a half into the Duterte administration indicates that Fitch wanted held up after the exit of the Aquino administration, which saw the Philippines rise above junk-bond status.

The venerable Financial Times noted that the Fitch upgrade came “after the country’s gross domestic product rose 6.9 percent in the third quarter, besting expectations.”

The ratings action also happened despite the mas- government’s “Build, Build, Build” program, which would have been credit- negative without new tax revenue sources.

Fitch viewed with approval Congress’s passage of Duterte’s economic managers. The ratings action is, thus, an acknowledgement house in order, the right track.

A bonus for Duterte is Fitch’s commentary on his controversial drug war.

“Strong and consistent macroeconomic performance has continued, underpinned by sound policies that are supporting high and sustainable growth rates. Investor sentiment has also remained strong, which is evident its economic policy is, likewise, on direct investment,” Fitch said.

“As such, there is no evidence so far that incidents of violence associated with the administration’s campaign against the illegal drug trade have undermined