Vote of confidence from Japan rater
Economy suffered a severe contraction due to the Covid-19 pandemic in 2020 but is expected to recover primarily through aggressive public investment.
The economy continues to receive “a vote of confidence” as the Japanese debt watcher Rating and Investment Information Inc. (R&I) kept its investment credit score view for the Philippines.
Affirming its BBB+ outlook, R&I recognized the country’s post-pandemic growth prospects.
“The Philippines’ economy suffered a severe contraction due to the Covid-19 pandemic in 2020 but is expected to recover primarily through aggressive public investment, which had driven the economy in the past several years,” R&I explained.
According to the credit watchdog, the country’s fiscal and monetary policies will boost growth for some time,” it added.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno welcomed the latest outlook as such represents a vote of confidence to the Philippines’ ability to recover from the health crisis.
Near prime grade
“The favorable inflation outlook and stable banking system, plus the speed of financial digitalization happening in the economy are good reasons to be confident about the Philippines’ medium and long-term growth prospects,” Diokno said.
Finance Secretary Carlos Dominguez III shared the same sentiment as he reiterated that the country’s strong macroeconomic fundamentals allowed the state to accelerate spending and implement urgent programs both to save lives and keep the economy afloat.
“With a manageable debt profile, a steady revenue stream brought about by tax reform and the continued practice of fiscal prudence, the government is confident it will not run out of resources in waging the protracted battle against the Covid-19 crisis,” Dominguez explained.
The BBB+ credit profile is a tad away from the coveted A investment grade territory. State economic managers earlier said the goal to achieve such could be pushed back as addressing the pandemic comes first.
Among the factors that contributed to R&I decision to retain the country’s credit score include the strength of its external accounts and the enactment of vital laws to aid economic recovery.