Debt watcher keeps PH credit score

A Tokyo-based debt watcher retained the BBB foreign currency issuer rating of the Philippines, less than two weeks after Fitch Ratings released the same grade.

Rating and Investment Information Inc. (R&I) on Tuesday announced the country’s BBB investment grade rating, projecting a “stable outlook” and “solid growth” driven by aggressive infrastructure investments.

An investment grade of BBB+, BBB, and BBB- means that the bond issuer (in this case the Philippines) demonstrates both the capacity and capability to meet debt payment obligations, but is vulnerable to changing economic conditions.

“R&I will keep an eye on whether solid economic growth will bring about a steady rise in income levels,” the debt watcher said, adding that it is looking at inflation pressures brought by tax reforms, higher oil prices, and weaker currency.

However, it noted that inflation is not expected affect the economy. “Eyes are on the BSP’s handling in inflation control while preserving economic growth momentum,” it added.

The debt watcher also pressed the importance of sustaining the momentum of investment from inside and outside the country by improving the business environment through continued reforms.

Meanwhile, President Rodrigo Duterte’s move of forging closer ties with China and diplomatic friction with the United States during the first few months of his presidency has not dampened the economy, said the debt watcher.

While there is an increased expenditure, particularly on infrastructure investment, R&I said the government gives due consideration to fiscal sustainability and revenue generation.

On the same day the investment grade was released Tuesday, Duterte signed into law the Tax Reform for Acceleration and Inclusion Act (TRAIN).

In addition, R&I said it would not immediately take a negative view of the shift to a current account (CA) deficit after 13 straight years of surpluses since 2003 due to strong capital goods imports that could help sustain economic growth. /