PH gets highest credit rating from JCR

Japan Credit Rating Agency (JCR) has raised the Philippines’ credit rating by a step, which is just a notch away from the minimum score in the “A” category and the highest rating the country has ever achieved.

In a statement, Investor Relations Office (IRO), which serves as the government’s central point of contact for credit-rating agencies, said JCR raised the country’s credit status from BBB to BBB+.

This is the 22nd positive rating action—covering both improvement in outlook and actual credit scores—the Philippines received from international credit rating agencies since 2010.

According to IRO, the latest action places the Philippines’ credit rating two places ahead of Indonesia’s BBB- and at par with that of India, whose economy is seven times the size of that of the Philippines.

“JCR is of the view that the Philippine economy will, by and large, sustain an annual growth of around 6 percent in the years to come driven by strong domestic demand,” the rating agency said in a report released Monday.

In the report, JCR highlighted the ability of the Philippines to maintain sound fiscal position, high external liquidity, and solid economic growth.

It also cited general stability in the country’s political situation even as potential candidates for national positions gear up for the 2016 elections.

JCR also noted the stable social situation amid inroads in poverty reduction, with

the poverty rate falling from 28.6 percent in 2009 to 25.8 percent in the first half of 2014.

The new credit rating is assigned a “stable” outlook, which means adjustment is unlikely in the short term.

Government economic officials welcomed the upgrade, which marked the third positive rating action from JCR over the past five years.

“The latest ratings decision of JCR, which makes the Philippines very close to securing a rating within the ‘A’ category, appropriately reflects the strength exhibited by the economy,” Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said. He also cited the country’s inflation has remained low, external liquidity ample, and banking sys- tem sound despite a challenging external environment.

Meanwhile, Finance Secretary Cesar V. Purisima said the upgrade to BBB+ is a recognition partly of how the country’s fiscal sector has transformed since 2010. “Fiscal reforms, both legislative and administrative, have resulted in more buoyant revenue collections, manageable deficits, and lower debt service burden,” Purisima said.

“The pace by which the debt burden has declined over the years is one solid proof of the rare kind of fiscal discipline that the Philippines exercises,” he added.

Meantime, IRO underscored the need for public vigilance to ensure that the Philippines keeps its hard-earned investment grade sovereign credit ratings beyond 2016. “The Philippines has achieved unprecedented gains in its credit standing over the past five years. After suffering from stubborn speculative credit ratings not too long ago, the Philippines now enjoys a seal of good housekeeping from all major international credit rating agencies,” IRO Executive Director Editha L. Martin said.

“There should be no turning back. The need to maintain good governance – which boosts confidence of investors, creditors, rating institutions, and the general public – even after a change in leadership in 2016 cannot be overemphasized,” Martin said.