Progress noted, rewards to follow?

and P188 billion in 25-year retail Treasury bonds.

The Philippines’ progress in debt reduction has been noted abroad, which will help boost the government’s bid to bag the country’s first ever investment grade credit rating.

“The Philippines is exploiting favorable financing conditions to accelerate its ongoing debt liability management program,” credit rater Moody’s Investors Service said of the latest debt swap.

It had estimated NG debt fall to below 50% of GDP in 2012 and payments to dip to only a fifth of government revenues, “providing fiscal space for much-needed capital expenditure and social spending.”

Fitch Ratings, meanwhile, recognized that public finances — traditionally a weakness of the country — now have a “neutral impact” on the credit profile.

“Favorable debt dynamics, a lengthened maturity profile, increasing reliance on domestic borrowings and improvements in the institutional framework offset longstanding weaknesses,” it said.

The country’s debt metrics are also falling in line with other countries with similar credit ratings, it said.

According to international standards the government is taken as one unit, thus NG debt is computed without state financial institutions’ holdings of government debt securities. Under this system, Fitch estimated that the Philippines’ debt totaled only 40.3% of GDP last year, aligned with the 39.9% median of other countries.

Foreign-currency denominated debt was also just 47.3% of the total debt stock, well below the median of 64.7%. The average maturity of debt was 10.7 years, much longer than the median of 3.5 years.

The Philippines is rated “BB” by Fitch and “Ba1” by Moody’s — both one notch below the much-coveted investment grade ranking.

CONTRARY VIEW

The Freedom from Debt Coalition (FDC) pointed out, though, that the gains were in the making long before the term of Mr. Aquino.

“There is nothing entirely novel in the Aquino administration’s debt management strategy as compared to that of [President Gloria MacapagalArroyo] — a mixed approach composed of a balanced budget, debt prepayment, bond exchanges and a shift to domestic debt...” FDC policy analyst Mark B. Batac said.

He even argued that many of the difficult but necessary steps to reduce NG debt were taken during the previous administration.